All Forum Posts by: Frank Jiang

You can find a condo that fits your criteria in Linda Vista, Clairemont or Serra Vista.  3bdrm in your quoted price range and rehab budget that isn't just a poorly redone floorplan with 3 closets will be tough.  It might even be getting pretty tight in those areas unless you're willing to go further south or east.  Honestly, Chula Vista isn't really that far away.  I understand your desire for your family to be close but your idea becomes much more feasible with a broadened area of search.

Mobile Home Due Diligence Checklist

This calculator is really hard to read.  It looks like it was designed more for multifamilies or apartments than for single families.  Three things immediately jump out at me:

1) Utilities: Are you sure that you would be paying these as opposed to the tenant?

2) Property Tax: You're paying an effective 4.5% property tax rate.  I know that Texas property tax can be tough but this sounds ridiculously high to me.

3) Rent: You are only getting 1,500 per month on an ARV of 240K? Eek.

Forget the ring.  Buy the house, put her on the deed so that she gets an appreciating asset.  You can even get one of those lab-made diamonds with the deed to the house engraved into it.  That's romance right there.

No, as long as you lived in it for 2 of the last 5 years, you qualify for the exemption.

The only other caveat is that you can only take this exemption every 2 years, so if you sold a different primary and took the exemption within the last two years, you would be ineligible.

I'm not in your area and can't give clear advice with limited information.  But if you can confirm that the rent estimates are good (rentometer can be horrifically inaccurate), then it looks like a good deal.  The major problems with this property are:

- I don't know what normal CAP rates are for your environment, but it seems like the seller is asking for a premium for future expected rent increases. I certainly wouldn't give the seller a premium for work that they themselves could not implement and that I will have to.

- That sort of price fall could indicate degentrification in a neighborhood.  You may be buying into a community that is devolving.

- First, as a buyer, late fees are not operating income. You exclude it from the CAP rate calculation.

- They increased rents and lost 2/4 tenants.  Remaining tenants may or may not be living paycheck to paycheck and paying late.  I'd research whether rent levels are sustainable and what actual market rents are.

- You take this information, build your own proforma to determine annual NOI, and then divide by an acceptable CAP rate for your area to determine the purchase price. e.g. if you determine an NOI of $21K after appropriate rent assumptions and a 6.5% CAP rate is normal in yoru area, you would offer 21K/0.065 = $323K (or less).

Why does the proforma revenue jump from a current 28,500 to 39,600 (39%) to 47,500 (20%)?

Are there current vacancies that the proforma expects to fill?  Are there rent increases that contribute to the income increase?  Is it just complete ********?

The numbers tell you to look at the assumptions to validate them for feasibility.

@Tony Ardison

Your deal is more complicated than the standard sale of an established mobile home park with stabilized rental income.  It sounds like it would actually be more of a development project.  You'd likely need a specialist as a buyer.  Here's a good article describing the risks inherent with that sort of project.  Best of luck!

Totally agree with you.  At current, it makes sense for you to be held at arm's length for the actual ownership of the house since he is the only one committing funds towards equity.  If you get into an arrangement where you start paying for things like remodeling or other capex, you guys are going to have to come to an arrangement. You paying for capex and not having any stake in the house does seem unfair to you.

You guys could also just get married and sidestep the whole issue.