All Forum Posts by: Peter P.

Just listened to this podcast

Legal Joint Ventures in RE

https://open.spotify.com/episode/0WbqDU6nPvLP7irjmYCBBT?si=4...

The meat and potatoes starts at about minute 20. They go over basic structues, parties involved, duties, profit and loss sharing and the importance of having a defined exit strategy.

 Thanks Gino I'll give it a listen!

Looking for some learning materials on JV structures for Real Estate, any recommended books, blogs, podcasts? I'm familiar with LLC structures and have been a managing member of 5 different LLCs in the past but those have always been either single member LLCs or small partnerships with investors where I was the managing member and partners were passive. Thanks in advance.

So as with anything it all depends. There are fixed costs you won't be able to get away from utilities, insurance, etc and are typically stable year to year or with some measured growth. The variable costs can fluctuate more year to year. Smaller facilities have smaller operating budgets so any one bigger repair or required maintenance item can blow your annual budget. Whereas larger facilities have a larger budget and staff on hand that can handle some of the surprises. 

Hi Arya, some feedback on some of your assumptions in your analysis. Your target occupancy of 100% and expense ratio of 33% is a bit optimistic. The national average for occupancy has fallen to 87% (2023). If you're new to this asset class you might want to use 85%. Expense ratios vary dramatically depending on project size, age and other factors, but basic rule of thumb is the smaller the project the higher the expense ratio's, using a 33% expense ratio for a small facility (less than 150 units) is optimistic, smaller facilities are probably closer to 40%. You are not crazy :) cap rates on storage got pretty crazy in the last decade as the space has become crowded and money was cheap, starting to see some reversal of that now, but its tough to find deals at a true 10 cap (10 x NOI or NOI / .10). Hope this helps!

 The cost approach (land value + depreciated cost of improvements) is typically the least reliable indicator of value. It's really only relied upon in new construction and even then I would place more value on a discounted cash flow with assumptions for time to stabilize to market occupancy. Income approaches (direct cap) are most relied upon in MH parks because the buyer is buying them as an investment and its the income stream that you are essentially buying. Sales comparison can be a good sanity check to make sure that the price per pad/site is within market norms. 

Hi Jaime,

Loopnet and Crexi are two good free resources for commercial listings. You can set filters on both sites to just return MH parks. You could also pay CoStar for data but I don't anymore. Used to be a commercial appraiser and thats how I did it for reports I was getting paid to write because we had to show proof the comp was confirmed and Costar provides that service. Now that I'm investing I dont' pay for comps, what I do is I'm always on the lookout for new deals, so constantly scranning listings for deals that look interesting. When I find one I reach out to the broker to learn more and see if they have an Offering Memorandom OM they will share. I usually give them a little background on myself and what type of deals Im looking for. If they're a good broker they put me into their mailing list and start sending me any new listings they have. So my inbox is full of recent market data and now I have a pulse on rents and values. The other very old school option is to just knock on doors, my first apartment appraisal thats how I collected rental data on competing complexes. Their are definatly easier ways to do it now, but if all else fails... good luck!

The carrot or the stick? find some way to incentivize them if you do x I'll do y (the carrot) or you can threaten small claims court or collections (the stick). Not knowing the situation its hard to guess what an incentive could be. Only other advice is this is usually what the deposit is for so is their a deposit in play, try to negotiate for it to be transfered to you as part of the deal. 

Hi Dave,

Thanks for sharing details of your first deal! Two questions for you:

- As it seems like you've done quite a few 1031s I'm wondering if its possible to do a partial 1031? What I mean is, it looks like as a married couple filing jointly we pay $0 in cap gains on first $94k, so could we use a strategy to pull out $94k in cap gains then 1031 the rest? Thus maximizing the 0 tax allowance and deffering cap gains on the rest?

- Did you ever get the sail boat?

Thx in advance

Hey Bruce,

We've got a few destination RV parks and have done very well advertising on Hipcamp. Seems the past two years the traffic on their site is really growing. As Kate mentioned above there is definitely some marketing efforts needed but once established its about keeping up good reviews and that's all about the guest experience. I don't know anything about your property but I can tell you folks these days love a unique experience, so think about what you can offer to your guests and build the sites to cater to that experience. Just a hookup and level site probably won't do too well, but if you put a little extra into it folks will be more interested. I'm not a horse person, but think about what a great setup for a someone with horses would be and curtail the sites for your target guest. Do you setup a small holding pen for the horses, water troughs etc? or throw some flagstones down add a fire pit and couple of chairs? just some ideas for you to ponder, good luck if you go for it.