All Forum Posts by: Frank Jiang

Can't say I disagree that he might win if he buys these.  The rent to price ratio on these is just high enough that you can start absorbing the pains involved in owning these types of properties.  That said, there's a huge difference between having your eyes open and walking into a blighted area expecting future gentrification and buying what you think are "cash cows" only to get stuck with pigs and have to pray for gentrification later.

Note how all the people in this thread advocating that a higher commission is fair are agents and brokers.

Might as well get used to the margin compression now folks, AI is coming for you.  I'd say you have another 10-15 years before people look back and go "these middle men were paid 6%??? for something a computer can do???"

The MHP is small. For this size of property, I think you'd want at least a 7-8% cap. NOI of $49K on $54K lot rent is completely bogus. The average MHP exp/rev ratio is closer to 40%, meaning your NOI is probably closer to $32,400. You can probably confirm this by going back further than the TTM. On a 7% cap, that's $463K, so $475K estimate is close, but on the high end IMO. A good outcome for you would be at an 8% cap, closer to $405K.

If you think the $400K house valuation is accurate, $805K sale price is a really good outcome for you, and somewhere between $850K and $900K being closer to a fair value depending on how you value the house.  Good luck!

I used to have two in Bartlett.  Really liked Terry Kerr at MidSouth Best Rentals for PM.  What zip code is your property in?  How is the remote rehab?  What’s expected rent after rehab?  Congrats!

I’m assuming the 100K includes both lot rent and rent for the POHs? I believe the correct way to value a MHP is through lot rent, so cap rate is somewhere around 67,200 / 800,000 * 60% (guessing 40% overhead) = ~5%.   Too low for a park of this size IMO.

Your goal #2 is going to be tough in this environment.  SD market is tough for cash flow, at least when you initially purchase the home.

Your best bet is a live in flip / house hack, meaning you buy a house in need of some love in a nice neighborhood at a discount, fix it up and then house hack. Airbnb, ADU, student housing etc, are nice options to consider as part of the house hack as they bring in a bit more income than a traditional rental.

You mention wanting to house hack your way into 3 properties at 1 per year.  It makes sense to find at least one property where you reside in it for at least 2 years, preferably one where you can force appreciation, since you get the capital gains tax exemption after 2 years.

Paying off the mortgage is highly unlikely to have higher velocity than leveraging up and buying more property.  The math is very basic.  The rate of return you get from paying off a mortgage is equal to the rate of the mortgage.  On a rental property in this environment, we're talking 3.5-5%.  Not very good.  You should be able to easily beat that by buying more property.

That said, the reason you would want to pay off as opposed to lever up is about safety and risk.  If your risk tolerance is low, then it makes sense to pay off early.  This is a perfectly valid reason.  But to think your cash flow will go up faster from paying off a low rate loan is just wrong.

You're smooshing two questions into one.

Is it smart to drop out of college? No

Is it smart to invest in rental property? Yes

Seriously, don't do drop out.  Here are my main points why:

- School isn't just about the random facts you learn in class.  It signals to any person you work with in the future that you have the discipline and patience needed to see something through.  What makes you think you'll succeed in real estate if you can't even finish this?  Real estate is MUCH HARDER than school. But you're passionate and interested in real estate you say?  Please see point 2 below:

- How do you even know you want to do real estate?  If you've never actually done any deals, you actually know remarkably little about real estate.  That's fine.  We all start somewhere.  But you decided to go to school and now you're thinking "this doesn't feel like what I want."  I can guarantee you that if you drop out and pursue this path, you'll have this exact same thought a year or two into your journey about real estate.  Then what? Are you actually interested in real estate or do you just admire the end results of other people who are in real estate?  You have to love the process, not just the results.  And the process isn't always fun.

- You can do real estate and school at the same time.  You can even take real estate related courses to help you in your journey.  You can take on a real estate related part time job while in school (think property management or something). The requirement to drop one to do the other is a fallacy.

D-F class properties.

OOS CA investor who doesn't understand that cap rate isn't an SFR metric.

No accruals for deferred maint, capex, vacancy, etc.

I feel like I've read this story before.

I as a buyer wouldn't pay 5-6% for dual agency.  3.5-4% is a very reasonable expectation IMO.  I did this same deal on my current primary.

That said, the broker gets to pick his rate and given the hot market now though, it's unlikely that any parties will have much leverage in this sort of negotiation.