All Forum Posts by: Patrick Sears

Hello,

I've recently become interested in the NNN space due to its inherent scalability, but was wondering how someone can buy multiple properties before running out of sown payment money? Can you use the equity build-up due to loan pay-down as collateral for another NNN deal? Also interested in zero cash flow deals, since they apparently require less down pmt/higher leverage/quicker payoff in exchange for the immediate cash flow that could be saved up for another down payment.

Also, if anyone has experience with NNN, what kind of down pmts are banks typically looking for (both standard and ZCF deals)? I listened to both the Matt Onofrio and Joel Owens podcasts, and they seem to have very different ideas on what are realistic bank-required down payments in this space...

Thoughts?

Karen, what are your thoughts on my question/concerns above? Are you not concerned about all of your rental income going towards paying off an asset that will be declining in value?

Thanks Mark!

@mark wurtemberg

I've tried running the numbers if I bought a new Class A for say ~$150k, and I can't get past the amount of depreciation you would suffer on your vehicle. You're basically paying off an asset that will have virtually no residual value after 10 years (unlike real estate). Have you done IRR calculations on this business? Everyone always loves to talk about the great cash flow of asset-based businesses (like trucking) but they always conveniently forget about the depreciation and CAPEX, which often leads to a big fat nothing on exit.

On the surface this business gets me excited--I hope you can point out where I am wrong!

Hello,

I've been looking at some RV parks for sale, listings on RV Park Store, Marcus & Millichap, Loopnet, etc..  Based on some podcasts from the past I have been listening to, I expected to see cap rates 10-12% and higher since they are more work than a mobile home park and much more than apartments.  However, I'm seeing RV parks listed at what looks like ridiculous valuations of 8 cap and under for plain-looking facilities.  Some of the big parks are damn near the same as large B and A-class apartments.  

What's the story?  Is the secret out on RV parks now too?  I'll be an SOB before I pay a 6-8 or less cap on an RV park, with all of the hand-on headaches that would go along with it.  Are they suffering from the same cap rate compression as everything else these days?  

Real estate really isn't looking all that attractive lately.  Kinda depressing...

Thoughts?

@Bob Malecki thanks for the reply!  Some of these lenders advertise FICO below 600 and 5% down, but I guess I can still offer it and they can either take my financing or I can get cashed out immediately.  Either way, not a bad scenario!  

I plan on using an MLO (or taking the test myself) for these originations, and then sharing the risk by selling partials to get my money back out.

P.S. I'm from Everett and have taken the Kingston ferry many a time.  Sister lives in Pt Townsend.  Beautiful area but getting crowded!

@Marco Bario thanks, Marco!  I Googled Andy Teasley and have a podcast already queued up for tonight's drive home!

Hello,

Had a couple of questions on the current MH seller financing market:

1)  With all of the subprime lenders that appear to be offering low-down financing on owner-occupy mobiles (especially on land) is there still a demand for offering seller financing on mobiles on land that I might want to fix up and offer to sell on terms?  Or should I forget about that business model and just get good at hooking up my buyers with these specialty lenders and cashing out immediately?

2)  If I am still able to create a steady flow of seller-carry paper for these deals, are there any note buyers interested in seasoned mobile home on land paper?

Thanks!

@Colleen F.

Thanks, Colleen!  There is a definite need for affordable housing in this area (and everywhere else), but it seems the "powers that be" like to make it near-impossible to solve the problem.

@Eric Teran wow that is amazing.  $16,000 for 8 rooms?  $2000/room?!?!  

Something to definitely think about.

Thanks for the replies!

@Eric Teran How many square feet total was this place?  Cost per sqft to build?  What rent rates is your client shooting for? (I know how expensive NoVa is!)  If you're in Alexandria are we talking Quantico or a surrounding base?  Wouldn't these people just live on base?