All Forum Posts by: John Jacobus

@Gulliver R. I've outlined my crude analysis below based on rough assumptions to give you one perspective.  Feel free to reach out with additional questions/comments.

I found @Charlie Dehart's 4 part series on "How to Evaluate a Mobile Home Park Opportunity" informative:

• https://www.biggerpockets.com/blogs/9911/63502-how...
• https://www.biggerpockets.com/blogs/9911/63561-how...
• https://www.biggerpockets.com/blogs/9911/63507-how...
• https://www.biggerpockets.com/blogs/9911/63509-how...

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Scenario 1 - Current State Operation

Income:

1. Gross Potential Rent ($220/month lot rent x 36 lots x 12 months):  $95,040
2. Vacant Lots (8 vacant lots (6 vacant POH's, 1 manager lot (assuming no rent collected), 1 storage home) x $220/month x 12 months):  $21,120
3. Economic Vacancy (10% of net rent - 10% x ($95,040 - $21,120)):  $7,392
4. Collected Rent (Gross Potential Rent - Vacant Lots - Economic Vacancy):  $66,528

Operating Expenses:

1. Operating Expenses (Assumed 50% of collected rent due to a) owner paid utilities b) POH repairs):  $33,264

Net Operating Income ($66,528 - $33,264):  $33,264

• Value of Park Based Exclusively on Lot Rent @ 10% Cap Rate:  $332,640
• Value of Park Based Exclusively on Lot Rent @ 9% Cap Rate: $369,600
• Assumed Value of 23 POHs on RTO Contracts (you'll need to find the value of the remaining balances due on these POHs; I've valued the POHs under purchase agreements at 50% of the remaining balance of $10,000 per home): $115,000
• Assumed Value of 8 Vacant POH's ($2,000/home):  $16,000

Total Estimated Value of Lot Rent and POH's @10% Cap Rate ($332,640 + $115,000 + $16,000):   $463,640

Total Estimated Value of Lot Rent and POH's @9% Cap Rate ($369,600 + $115,000 + $16,000):  $500,600

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Scenario 2 - Improved Operations

Improvement Assumptions:

• Raise lot rent $20/month to $240/month (assuming market can support this)
• Reduce operating expense ratio to 45% of collected rent through utility bill-backs or other methods
• Fill 4 vacant POHs with lot renters (assuming market can support this)
• In general, it's best practice to buy based on actual operations (scenario 1) but it's helpful to see whether you may be able to meet your return criteria by creating a pro-forma.  You'll need to think critically about these assumptions to determine if they're achievable and conservative. 

Income:

1. Gross Potential Rent ($240/month lot rent x 36 lots x 12 months): $103,680
2. Vacant Lots (4 vacant lots x $240/month x 12 months): $11,520
3. Economic Vacancy (10% of net rent - 10% x ($103,680 - $11,520)): $9,216
4. Collected Rent (Gross Potential Rent - Vacant Lots - Economic Vacancy): $82,944

Operating Expenses:

1. Operating Expenses (Assumed 45% of collected rent): $37,325

Net Operating Income ($82,944 - $37,325): $45,619

• Value of Park Based Exclusively on Lot Rent @ 10% Cap Rate: $456,192
• Value of Park Based Exclusively on Lot Rent @ 9% Cap Rate: $506,880
• Assumed Value of 23 POHs on RTO Contracts (you'll need to find the value of the remaining balances due on these POHs; I've valued the POHs under purchase agreements at 50% of the remaining balance of $10,000 per home): $115,000
• Assumed Value of 4 Vacant POH's ($2,000/home): $8,000

Total Estimated Value of Lot Rent and POH's @10% Cap Rate ($456,192 + $115,000 + $8,000): $579,192

Total Estimated Value of Lot Rent and POH's @9% Cap Rate ($506,880 + $115,000 + $8,000): $629,880

+1 on Gene Trowbridge's book.  Additionally, @Michael Blank published a great eBook on raising private capital for multifamily synidications.

Here are a few resources that I found valuable when I was learning about the details of investing in mobile home parks:

Books:

1. Mobile Home Park 10/20 Investment System by Dave Reynolds, Frank Rolfe
2. Mobile Home Wealth Part 2: How to Become Even Wealthier investing in Mobile Home Parks by Zalman Velvet, Stuart Silver
3. The New Investor's Guide to Owning A Mobile Home Park by Laura Cochran, Erin Cochran
4. The 21 Biggest Mistakes Investors Make When Purchasing Their First Park and How To Avoid Them by Charles DeHart and Kevin Bupp (available for free from www.mobilehomeparkacademy.com)

Podcasts:

1. The Mobile Home Park Investing Podcast with Kevin Bupp and Charles DeHart
2. Mobile Home Park Investors with Jefferson Lilly & Brad Johnson
3. Mobile Home Park Mastery with Frank Rolfe 

Websites/Blogs:

1. Park Street Partners - http://parkstreetpartners.com - This is the investment firm run by Jefferson Lilly and Brad Johnson. They focus on mobile home parks and have solid educational content on their website.
2. Mobile Home Park Investors - http://mobilehomeparkinvestors.com - This is the LinkedIn group led by Jefferson Lilly. It's the largest group on LinkedIn that is exclusively focused on mobile home park investing.
3. Mobile Home Park Academy - https://mobilehomeparkacademy.com - This is the educational site that's run by Kevin Bupp and Charles DeHart. They also run an investment firm, Sunrise Capital Investors, that is focused on investing in mobile home parks.
4. BP Member Blog - Mobile Home Park Academy- https://www.biggerpockets.com/blogs/9911-mobile-ho... - This is the BP blog maintained by Charles DeHart from the Mobile Home Academy.  In various posts, he walks through the basics of finding and analyzing mobile home parks. In recent posts, he walks through case studies and outlines how to analyze and underwrite opportunities.
5. Mobile Home University - http://www.mobilehomeuniversity.com - This is the site maintained by Dave Reynolds and Frank Rolfe. I recommend subscribing to their newsletter.

@Derek Buescher I'm interested in acquiring mobile home parks in the Phoenix and Tucson metro areas.  I sent you a direct message and am interested in exploring opportunities to partner on prospective acquisitions.

@Joshua Fulenwider Here are a few resources that I found valuable when I was learning about the details of investing in mobile home parks:

Books:

1. Mobile Home Park 10/20 Investment System by Dave Reynolds, Frank Rolfe
2. Mobile Home Wealth Part 2:  How to Become Even Wealthier investing in Mobile Home Parks by Zalman Velvet, Stuart Silver
3. The New Investor's Guide to Owning A Mobile Home Park by Laura Cochran, Erin Cochran
4. The 21 Biggest Mistakes Investors Make When Purchasing Their First Park and How To Avoid Them by Charles DeHart and Kevin Bupp (available for free from www.mobilehomeparkacademy.com)

Podcasts:

1. The Mobile Home Park Investing Podcast with Kevin Bupp and Charles DeHart
2. Mobile Home Park Investors with Jefferson Lilly & Brad Johnson

Websites/Blogs:

1. Park Street Partners - http://parkstreetpartners.com - This is the investment firm run by Jefferson Lilly and Brad Johnson.  They focus on mobile home parks and have solid educational content on their website.
2. Mobile Home Park Investors - http://mobilehomeparkinvestors.com - This is the LinkedIn group led by Jefferson Lilly.  It's the largest group on LinkedIn that is exclusively focused on mobile home park investing.
3. Mobile Home Park Academy - https://mobilehomeparkacademy.com - This is the educational site that's run by Kevin Bupp and Charles DeHart.  They also run an investment firm, Sunrise Capital Investors, that is focused on investing in mobile home parks.
4. BP Member Blog - Mobile Home Park Academy - https://www.biggerpockets.com/blogs/9911-mobile-ho... - This is the BP blog maintained by Charles DeHart from the Mobile Home Park Academy.
5. Mobile Home University - http://www.mobilehomeuniversity.com - This is the site maintained by Dave Reynolds and Frank Rolfe.  I recommend subscribing to their newsletter.

@Cody L. I'm expanding my search for 20-75 unit class C multifamily property to include Houston.  Which submarkets do you find attractive for decent, stable and safe workforce housing?  Which submarkets should I stay away from?  Are you working with a broker in the market that has been particularly helpful?  What resources would you recommend to multifamily investors looking to learn more about the desirable submarkets in the Houston metro area?

@Derek Robinson Great info above. I'm curious why you prefer to establish a partnership entity for your property acquisitions (e.g., Florida Estates Partnership) instead of an LLC? From the example above, I see that your MHP Equity entity is an LLC so I wonder why you have a different entity for ownership of each property. What are the benefits of this approach? Any material reasons why someone looking to establish a private equity firm for property acquisitions should pursue an "all LLC" approach versus an approach that involves multiple entity types?

@Gino Barbaro  I listed a few top questions and barriers preventing progress below based on personal experience and discussions with other multifamily investors.  I think any of these topics would trigger rich discussion in a mastermind.  I'd be very interested in participating.

1.  How do I develop relationships with brokers in new markets when I have limited experience?  How do I convince them that I am a serious buyer?

2.  How do I perform a market analysis to determine if rents are below market?  What are credible sources of comparable market rent data?

3.  How do I create robust deal flow?  What are the 2-3 most effective methods for identifying quality deals?  Where should investors focus their time for maximum impact?

4.  What are the key metrics to analyze when identifying markets in which to invest?

5.  What are the rules of thumb for estimating operating expenses, cap ex reserves and other key considerations when developing a pro-forma and/or calculating an offer price?

6.  What are the common red flags in a deal that should cause investors to flee?  What, if any, are possible remedies to these red flags?

7.  What if I don't have enough liquid capital, don't meet the net worth requirements, or don't have key principal experience?  How do I approach others who can help me meet the capital/experience requirements to qualify for a commercial loan?

8.  Once I close on a multifamily property, what are the key operational tools needed for bookkeeping, rent collection, tentant screening, maintenance scheduling, etc., that I need in place in order to "keep the lights on"?

9.  What are the top 3 tricks that brokers/owners use to trick unsophisticated buyers into paying too much for a multifamily property?  What can investors do to see through the nonsense and respond with offers that are taken seriously?

10.  How do I approach a conversation with an owner after I have discovered material items during due diligence?  How do I proceed in a way that will allow me to avoid developing a reputation as a re-trader?

@Alonzo Avents Here are some of the resources that I found valuable when I first started transitioning to multifamily investments:

Books:

1. Wheelbarrow Profits by Jake Stenziano and Gino Barbaro - Focuses on purchasing, financing, and re-positioning "mom & pop" multi-family apartment communities.

2. The Ultimate Guide to Buying Apartment Buildings with Private Money by Michael Blank - A step-by-step overview of how to identify multi-family apartments and raise money from private investors to acquire and re-position them.

3. The ABC's of Real Estate Investing & The Advanced Guide to Real Estate Investing by Ken McElroy - Solid detail on the process as well as case studies and advice based on personal experience.

4. The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges - A nice overview of the apartment investing process from beginning to end with case studies and personal stories.

5. How to Create Lifetime Cash Flow Through Multifamily Properties by Rod Khleif - A nice overview of the apartment investing process from beginning to end with case studies and personal stories.

6. The Perfect Investment: Create Enduring Wealth from the Historic Shift to Multifamily Housing by Paul Moore - I enjoyed this because it outlines the merits of multifamily relative to other investment options.

Podcasts:

1. Old Capital Real Estate Investing Podcast - Lots of good stories about newbie investors getting started with multi-family investing

2. Wheelbarrow Profits Podcast - While they have a variety of different guests, Jake and Gino have several interviews with individuals who have scaled quickly and achieved success in the multi-family arena. The Jake & Gino personal story is also a great success story in the value-add multi-family area.

3. Apartment Building Investing with Michael Blank - Same comments as Wheelbarrow Profits

4. The Lifetime Cash Flow Through Real Estate Investing Podcast with Rod Khleif 

5. Best Real Estate Investing Advice Ever with Joe Fairless - I recommend the "Follow Along Friday" episodes to you. In these episodes, Joe shares updates on his investment activity and shares lessons learned, mistakes, and best practices from acquiring multifamily properties. He has scaled from 3-4 SFR's to ~2,000 multifamily units in just a few years.

@Nicholas Sheridan, Jr., I found the following books useful when learning to analyze small multifamily investment property: