All Forum Posts by: Shea Spinelli

@Janene Tompkins sounds like I may have the whole thing over valued. I hope your project turns a corner quick. I have a vision of a clean, quality MHP, but I may be valuing this too high based on what needs to be done. I think I’m going to walk away, unless I can get a substantial discount to rehab quickly. Thank you. 

@Natalie Schanne sounds like one of those deals where you wish you could buy the whole block. Then you could improve it to the degree necessary. There’s some areas here that we could do the same. In the long run it would be very profitable and give families some quality housing. 

@Natalie Schanne I agree with the clean-up. It could take longer than that. He wants $500k, owner-financed for 20 years at 5.5% with 60k down. I think the least he’ll go is $450k. But, I can’t see him coming down another $100k unless it sits for  a while without interest. How long have you had your rental vacant for? Is it in a neighborhood that is headed for revitalization?

We have been presented with a pseudo mobile home park just outside of town by the college where we live. I'm enticed, it grosses (when full) $13k/month and appears to cash flow roughly $4k/month. The owner received an appraisal on pro forma stating $550k. But, when I crunch my numbers I come up with a ballpark value 'as-is' of $350k. The units are half MH and half SFH. There are 25 units and they all need a lot of work. He has them filled with a rough crowd aside from 7 empty units. I like the numbers, if I have the value right when looking at a MH. If we improved the property and filled them with a higher quality tenant, there is tremendous upside. I am skeptical on how to value 20-30 year old MH's. From an income approach without looking at the units, it would be valued higher than the appraisal, but there is ALOT of work needing to be done. Any tips? How do you value MH's? I have been reading and researching, but don't really have a strong hold on this.

Thanks!

Way cool - congratulations! 

@Steve Vaughan we had the appraisal done through a different FI and they’re going to re-assign it to the FI we decide to borrow with. It was $2500, you’re right. I asked the seller for a discount a few weeks ago. He declined unless we wanted a steep discount and then gifted them so funds back to save them taxes.  

@Jason D. originally, the main goal was to get our original investment, re-invested profits and any additional cash out so we could continue to buy. We were ok with the reduction in cash flow on the short term to put the equity to work elsewhere. I’m going back to re-calculate the numbers based the insight provided by everyone with more experience. 

@Chris Youssi good analogy. I didn’t take into account what Thomas shared until now. CF is our primary goal, but to increase CF we wanted to purchase additional units. Currently, we CF $2750/month on the community as a whole. 

@Thomas S. what if we maxed the cash out and CF $88/door? Then we could increase rents to increase CF. We are still a little below market. We have made so many changes, we were moving slowly to allow the tenants to adjust with us. 

I guess I’m stumped @thomas. I think I understand that because I’m not able to max out the cash out and still generate the minimum level of cash flow is why there is dead equity? Even though we increased the value through forced appreciation in the last year, any equity within the investment is producing the monthly return so it’s too much equity in correlation to such little cash flow...we will have to discuss selling it and crunch the numbers with the view you’ve given me.

This isn’t our first deal, so there is still a lot to learn.