All Forum Posts by: Sam G.

Sorry if this is something that has been asked a million times before. I did a forum search and couldn't find a good answer. Full disclosure, I know nothing about mobile homes and just wanted to get a quick "yes" or "no" before I went digging further into this.

Is anyone using a mobile home as a vacation rental for cash flow? I was looking at mobile homes in the Rehoboth beach area (this property, just as an example) and it seems like the possibility for cash flow could be significant. After $300 a month for your mortgage payment and $600 a month lot rent, you have a property that could likely rent for ~$200 a night during peak season (based on a quick glance at similar properties on Airbnb). Even accounting for some vacancy, repairs, and upkeep, it seems like the cash flow should be pretty reasonable. 

I figure there must be a reason why everyone isn't doing this, and I just wanted to find out what it is.

Thanks!

@Grant Anderson That makes a lot of sense. Thanks for the help. All this information will be super useful once I find a property that I want to take action on.

@Larry Fried Good advice and good points. Thanks

@Mike Knowles That's good to know. I'll have to make sure to verify all those numbers in the future rather than take the seller's or broker's word.

@Mike Knowles I saw your reply after I had already made my previous post. Thank you thank you thank you for spelling it out like that. It makes sense and I can follow what you're saying. I also think you make some good points about the likelihood of the poor quality tenant eating into the profits. 

@Rodney Kuhl Ah. That does complicate things. I guess those reports can't be shared as simple links. Let me see if I can type it out in a way that makes sense. 

Down payment= $17250 (25% of $69000) + Closing cost= $3000 + $1000 for repairs (I figure this number can be low, at least initially, because the property already has a tenant in place)

So this gives me a total of $21250 down, with a monthly mortgage payment of $262/mo or $3146/year. 

Rent is $825/month or $9900/year

Taxes are $715/year (according to the Roofstock website)

Insurance is $423/year (according to the Roofstock website)

Vacancy, cap ex, maintenance, management @ 10% each works out to $3960/year ($9900 x 0.1 x 4)

So, taking all this into account the annual income minus annual expenses works out to $1656 ($9900-$8244). Based on the numbers that I used, the CoC return I'm getting is 7.79% ($1656/$21250).

I hope this makes sense enough that it can be followed. Thank you again for taking a look at this. I'm still really new to real estate and want to make sure I'm learning the right way to do everything.

@Rodney Kuhl, @Mike Knowles, @Brent Coombs

Thanks for the replies. I probably should have phrased my question differently. I'm not interested in purchasing this property (for the many reasons that you all listed above), so I'm not really worried about the pricing or the long-term appreciation. I'm just using it as an example for calculating short term returns and monthly cash flow, and I want to make sure that I'm doing it correctly. When I find a property that I am actually interested in, I want to be confident that I can evaluate it without leaving anything out.

Even when I increase the vacancy, maintenance, cap ex, and management to 10% each, it still shows an over 8% CoC return. I know that's not a phenomenal number, but it's not terrible either.

So I guess what I'm asking is, what else should be taken into account when looking at when calculating monthly cash flow and short term cash-on-cash returns? I know that there are a million things to be taken into account before purchasing a property. But just as a quick, back of the envelope evaluation to determine if a property is worth looking into further, is there anything that I am leaving out or under-estimating that would significantly change these numbers?

I'm trying to educate myself about turnkey properties and have stumbled across this property on Roofstock. I know nothing about Indianapolis or if the house itself is well-priced or really any of the due diligence that would go along with buying a house. 

However, I ran some rough numbers myself and came up with a cash-on-cash return of over 15%.  I then punched everything into the BP rental property calculator and came up with around the same numbers, depending on things like vacancy and repairs and whatnot. 

These seem like good numbers at first glance. Is there some huge error I'm making or something major that I'm leaving out? I just want to make sure that I'm doing this the right way moving forward.

Thanks!

@Tim Youse- That sounds like fun, and it looks like it's on my way home from work. I'll try to make it to the next event.

@Ned Carey- I'll check that one out also. Thanks

@James A., @Ned Carey- That's great feedback. I'll look into the BWI meetup and some others in the Baltimore area. Hope to see you at a meetup in the future!

@Natalie Nelson- Welcome! It's good to hear from a relatively new investor that has already had some success in Baltimore. After hearing from some other local investors on here, I think I definitely need to expand my searching to include different areas of Baltimore. As far as the meetup goes, I would definitely be interested in doing a happy hour or something like that. Feel free to message me with details if and when you organize something.