All Forum Posts by: Ross Kalmbach

Hello,

So purchased mobile home w/ land in Northern Louisiana - HUD property for 50k, put 30k into it, and renting to parents at 800/mo. Rent should be around $1000 maybe $1100. Insurance and taxes around 130$/mo. Paid cash; no mortgage. Property and mobile home estimated worth $80-110k, half acre, large yard, everything updated, new fence, carport, etc. Neighborhood is a mix of bring and mortar but mostly mobile homes. Actually lots are around $25k (only about 6 lots left in this subdivision). Would like to sell it and get all equity out but would need parents to stay till I can find them a property in Texas (3-4 months) after sale at same rent. Cash out financing seems to go off HUD price not appraisal so that doesn't do **** and rate is 8-10%.

Need suggestions - just bought a property in Texas and have another mortgage so can't finance personally right now with my W2 income.

Any advice appreciated!

Ross Kalmbach

Hello,

So purchased mobile home w/ land in Northern Louisiana - HUD property for 50k, put 30k into it, and renting to parents at 800/mo. Rent should be around $1000 maybe $1100. Insurance and taxes around 130$/mo. Paid cash; no mortgage. Property and mobile home estimated worth $80-110k, half acre, large yard, everything updated, new fence, carport, etc. Neighborhood is a mix of bring and mortar but mostly mobile homes. Actually a few bring and mortar next construction as lots are around $25k (only about 6 lots left in this subdivision). Would like to sell it and get all equity out but would need parents to stay till I can find them a property in Texas (3-4 months) after sale at same rent. Cash out financing seems to go off HUD price not appraisal so that doesn't do **** and rate is 8-10%.

Need suggestions - just bought a property in Texas and have another mortgage so can't finance personally right now with my W2 income.

Any advice appreciated!

Get an engineer/foundation report - it will cost you $ to save $$$$$.  Could be nothing or could be a $20k repair.  I've had experience with foundation repairs and they are not fun or cheap (in my experience). If you plan for them though you can still end up with a good deal.

IMO you should open up an business account and keep everything separate. Never mix assets and make sure you label your personal investments and withdrawals as such.  Probably won't see a benefit on one property but once you get several it helps to have it separate, instead of having to look at a spreadsheet to determine how much money is "your" money and how much should be in the business account. Also, your accountant will probably thank you and recommend something along the same lines.

Podcast 274?

https://www.biggerpockets.com/blog/biggerpockets-podcast-274-because-of-these-3-simple-rules-ive-bought-over-600-units-and-never-lost-money-with-paul-morris

Also - seems like Buffett:
"Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."

As @Bob Daniels said check those numbers. I know going from a 3/1.5 to a 3/2 will make a significant increase in rents but not sure about 4/2 to 4/3 etc. I feel like there would be diminishing returns and that $1k increase seems unrealistic. 

I had this exact issue and hired a engineer to come look a the property.  He said it was normal settling, that the previous work had fixed the issue, and that no more damage should occur (something along those lines). Anyway, 12k later I had the foundation repaired because it was shifting a lot during the seasons still. I tried to hire a lawyer to go after the engineer for the completely BS report he gave but b/c I made the mistake of having the original owner pay for the engineer report I didn't have "consideration" to recoup my losses. I couldn't go after the engineer for a wrong report that cost me 12k b/c i was too cheap to dish out the $800 and made the owner do it instead.

Either way - I got the property cheap (offered way less b/c of known issues) and ended up about even. So two points of advice: 

1) Offer way less and factor in 10-20k for repairs 

2) If you get an engineer report make sure you pay for it and don't try to make the owner pay instead like I did!

Hope some of that helped and good luck!

@Greg H. How long have you had the rental? High turnover? If not get me a few please :)

TLDR: Not really worried about this crisis atm.

My opinions only: I think you are worrying too much about this political situation having an affect on the US housing market. With or without a war people need a place to live so rents should be fine. If it triggers a recession and people lose jobs then maybe values would drop but rentals should stay the same or increase. Real estate around military contractors might go up if it was a long term war would be my guess - no impact for short term that production can handle. We don't really trade with Russia or Iran so that's a mute subject.  China we are already in a trade war with. I don't think much research has been done about real estate values during war times - Schiller probably has some would be my guess. 

So far - HUD mobile home for 58k and put 14k into it. Currently renting at $800/mo and estimated value @ 100k - might sell and use for down payment on other properties later this year. Probably could get upwards to $950 in rent as most in the area that size rent for a little more and don't look to be near as updated.

I'm wondering who has the cheapest with best rent but my guess it's a HUD or foreclosure :)