All Forum Posts by: Christopher B.

Due to the SAFE Act, etc?

Reading through the forum it sounds as if Lonnie deals and turning MH's is now a broken, and possibly dangerous activity due to the increased regulations by our great government

Jefferson Lilly : Please buy in the Knoxville, TN metro area! That is a win/win/win situation for all involved. Sounds like you have a good formula.

btw, Clayton Homes is located in this area, there is, imo, a good market for the mobile home industry here. Especially in the smaller, more rural communities surrounding Knoxville.

Sam Parkins : that is a lot. I'm not surprised, I just hadn't gotten to that point yet in the process. I guess I'm not correct on calling it a Lonnie because right now I am in need of capital so I would sell it for cash only unless a buyer has a DP that cashes me out.

Here are some more details I got from the MH owner tonight in an email (apologies for the length, even if I don't move on the deal I want to learn as much possible by using it as a case study):

1973 2/1 846 s.f. clean title. 1 current leak through the kitchen window, leaks damaged LR floor, and water rings on ceiling in bedroom.

pics provided:

http://s1359.beta.photobucket.com/user/rowan52/library/

The $3k was to move from city to city, about 45mins. Don't have to do that. I also drove through some parks today and found a trailer in decent shape, asking price is $5k. Will call on it tomorrow.

Bill. You echoed some of my very thoughts. I haven't gotten all the details but the seller is sending me pics and more info soon.

I live in Knoxville, TN. Clayton Homes is located in the area so there are a good amount of MH's in the around. This leads to me to think there would be a good amount of Lonnie deals around and maybe I haven't dug deep enough but the majority of homes in my area seem to be selling for $15k, $20k, up to $50k. The only other low priced home I've found was $2k for an abandoned MH that had to be moved. When I saw a $1200 price tag I was surprised.

I'll probably pass but will update with pics and info when received.

Don't know much about mobile homes. Have remodeled houses, have contractors, etc but this would be my first Lonnie deal. One of the largest U.S. manufacturers of mobile homes is located in my area so there is a decent amount of them around. Here is what I know and I'll post pictures soon as he is going to email them.

2/1 12x70

Needs floor work in kitchen and living room, outer pane of glass broke in kitchen causing leak, roof needs new coat of Cool Seal (3yrs since done), leak in roof caused floor damage in living room before seal was done, LR and Hall carpet cleaned/replaced, will Not come with heat/air, will Not come with appliances.

I will have to move the property because they purchased a new MH. Talked with a mover and to move it into the city where I live, located in an outlier of my city about 45mins away, it will cost $3k. I could also move it somewhere inside the city it's now, I'll have to find a park to move into.

Asking price is $1200 obo. Similar sized homes sell for roughly $7500

Correction, cap rate is 18% subtracting debt service. Between vacancy and repairs I'm setting 15% aside each month which is in-line with HUD recommendations if I have read correctly.

I've found what I think is a good deal a .25 mile (maybe that far) from my current duplex. One thing is holding me up but here are the details and #'s:

Blue-collar, c-class neighborhood
847 s.f.
2/1
detached garage/workshop
directly across street from school

asking $19k
ARV $35K
Mortg. $184.92/month (financing $25k)
repairs $10k
Taxes $34/month from current tax records
Vacancy 10%
Repairs 5%
Ins. $100/month (est. based on what I'm paying at duplex)

I'm confident I can pick-up the property for $15k and rent it for $600 (currently rent 1 side of duplex that is 950 s.f. for $650). No major repairs like roof, foundation, etc. I will be updating kithen, bath, lighting, etc.

Satisfies the 2% rule and 50% rules
50% rule = $115.08/cash flow per month
Cap Rate = 14% (based on 50% rule)

I have a HELOC on my duplex that will allow me to purchase the property and then refinance at 75% LTV to repay my HELOC. I have already spoken with my bank and can get a loan at 4% but my bank is offering a 15yr term with 5yr fixed. I am afraid after 5yrs the interest rate will go up and my cash flowing property will turn into a cash vampire.

I've thought about keeping for 5yrs for cash flow and then selling for a small profit to avoid the interest rate hike. What do you pro's think?

Buy cash, rehab, and use the gained equity as the down payment. My first deal, and only thus far sadly, I had a $106k in the duplex, it appraised for $140k and I got a 70% LTV loan through WF for $98k. My $8k was only 6% down. It was odd financing because I was in college and was using a co-signer. Had difficulty financing the property honestly and got lucky it worked out but no risk no gain I suppose.

I refinanced the deal about 18-months later to decrease my rate by 2.75%, set-up a HELOC, and ultimately build a working relationship with a local bank. It was a portfolio loan for them and I paid nothing but closing costs of about $3k. I had 39% equity in the property by this time.

I don't have access to the cash anymore so now I'm just trying to find the financing to wash and repeat my way to a nice stream of passive income.

@Randy F.

An exceptional tile installer I worked with gave me a great tip. He did a lot of high-end work and built his showers to last, they were bullet-proof when it came to leaking. He always used dura-rock (we sold permabase) concrete board for his showers. Before tiling he would then roll-on a waterproofing membrane on the concrete board. This make the showers 100% waterproof before you even lay a single tile. I worked at The Tile Shop and our product was Pro-Shield, HD sells other brands as well. The stuff works, if you haven't done it before I'd suggest looking into it.

@randy F. Thanks for the post. I worked as tile salesman in the past and got a lot of training and knowledge on the subject. Your post was spot on and would be how I would tile if I choose to go that route. I brought the question here to get some more insight on what has worked for experienced landlords like yourself.

I agree the glue-on surrounds are crap. It's what I have now and after almost 3yrs I'm gonna have to replace them. It's been a headache almost the entire time I've had them in.

Stone is porous, some more so than others as well. Obviously marble is a very, very porous stone and I wouldn't consider natural marble for a rental.

Granite is porous. The problem with granite is the pores are so small it doesn't retain sealer very well which is why it's always been considered higher maintenance. They have new sealers out now that are penetrating and last longer so people don't have to re-seal their counters 1-2x's a year. I've always been a bigger fan of quartz though, they're almost as hard as granite for durability but the pores are larger which allows for better sealant retention.

Thanks for the tip, It's good to hear what has worked from experienced landlords. I'm starting to lean towards white porcelain tile.