All Forum Posts by: Tim Braun

Good morning all, I have my first deal that I am working on and I am trying to figure out the best exit strategies:

1. Fix and sell

2. Fix, rent, refinance

This is a single family home - 2/1 but I may be able to make it a 3/1. I have a purchase price of $35k, ARV of $80-$90k, I am thinking about $15k worth of repairs, maybe $20k if I can add a room. There isn't much wrong with it, it needs interior paint, flooring, updating in the kitchen and bathrooms - it was a rental and the owner is sick of getting bad tenants. The only major issue I have seen is that the living room floor is sagging but I didn't see any major issues from the basement. I'm working on getting an inspector in there to investigate that and make sure the foundation is fine, lets assume it is for this conversation.

I am bouncing between using hard money to purchase, rehab, and take my profit or using a conventional loan plus doing a light rehab, rent it out, then refinance. I guess I wasn't super excited about keeping it as a rental as I was hoping to target multi-family homes, but I also think I'll be into it at a decent price point that it wouldn't be bad to hold on to for a while. I have been flipping mobile homes for a while now so I have a little experience with finding qualified tenants and contractors but nothing in buy and hold rentals so maybe I'm just not thinking about it the right way.

Does anyone else have any thoughts? Anything else that I should be looking at? Like I said, I'm not an expert, I've been successful with mobiles and am looking to step over into flips and holds so that I can scale.

Quote from @Matt Hurley:

I’m not familiar with MHP, but I’m an investor and work in the title industry. Land contracts are different state to state (from what I’ve seen) and you 100% need to go through a title company and use a real estate lawyer. A hand shake agreement with a handwritten contract is super risky and ownership could never properly transfer. Then you’re out years of payments. 

For any land contract deal, I would suggest that the signed deed is held in escrow by a 3rd party (like a lawyer or title company) and released once the terms of the LC are met. If he has a loan on the property, or if you’re allowed to keep taxes in his name (here in MI, we can’t do that. Taxes must transfer), then you should also put your payments into escrow or with a servicing company so there’s no way the owner takes your payments then bails on making his payment obligations. 

Don’t take my word on everything, talk to a real estate specific lawyer. Good luck on the rest of negotiations!

 Thanks for the response Matt, that is confirming what I have been thinking. Again, I don't have much concern with the sellers character, but who knows what could happen down the road - just too much risk. Maybe thats just the way things used to be done but there are better ways to do it now is all. I'm in touch with a RE lawyer, just waiting to hear back.

Quote from @Chris Seveney:

@Tim Braun

We have bought and sold 100+ land contracts

What state is this in?

A land contract is a fine option but as buyer I would make sure it is recorded and confirm title is clear

I would absolutely use a title company to do the deal - make sure also the deed to you includes a warranty deed and title insurance

 Thanks Chris, this is in New York, let me know if I need to be more precise on location.

What do you think is the best way to get it recorded? That's why I was thinking about getting an attorney involved, then its not just something that happened between him and me, but maybe that's not the best way to do it either.

I'll start looking into a title company, that has been on my list. Any suggestions on who is good to use?

Hello everyone, are there any Investors in the Auburn NY, Geneva NY, or Ithaca NY area on here? I am working on switching from flipping mobile homes to SFH and thought it would be good to start networking.

Hello all, hopefully this is the right place for this. I am considering purchasing a small mobile home park (6-11 pads) on a land contract. I'm addressing the site details on a different post, so I was hoping to get some info on land contracts here. I have another post about the park, this is more about the financing side of it.

I asked the buyer if he would consider seller financing, and he said he would be open to a land contract. The purchase would be $55,400, the payments I have proposed to him would be $5k down, $450/mo for the first year, then $700/mo until paid off. I asked about seller financing, he suggested a land contract with some sort of deed transfer at around 50% purchase completion. He made it sound like we wouldn't be an attorney and that we could do it as soon as I was ready. I have to do some work on the property and bring in some homes so I don't want to get $20k-$30k into it and find out that I might be in a pickle and lose it - especially since I'll be adding quite a bit of value to the property. I have talked to a few people about the seller and everyone says he is a good guy, sort of a public figure in the area so I don't have any real character concerns but I'd rather be safe than sorry.

Does anyone see any issues doing something like this? Anything to watch out for? I am working on researching land contracts, I have never done one before.

Quote from @Kerry Noble Jr:

With opportunities like that.....commit and then figure it out as you go.

 That was my thinking too Kerry, I'm trying to let the project manager in me take the reigns and mitigate as much risk as possible though!

Quote from @Eugene Fedotov:

1. When you are dealing w municipality, try to get everything in writing. If it is not on paper it does not exist. The official you are talking to now may not be around or suffer from "amnesia".

2. If you intend to sell mobile homes, you will run into Dodd-Frank Act. You will need an attorney who is familiar w it.

3. Test your market by placing Craigslist adds and see how many responses you get. 

Thanks Eugene.

I am doing my best to get everything in writing, I am used to doing that in my day job, the problem is getting everyone else to do it.

Thanks for the tip, I have been selling used mobiles in the area and I am careful with doing so. This is always important to keep in mind though.

I don't expect this area to be booming with tenants, but I am focusing on it because there has been a demand - I have been working in the area for a bit now selling mobiles in other parks 

Quote from @Bryan S.:

Great stuff by the other BP members!

Definetly zoning and environmental confirmation ahead of time. Along with any other open permits / tax liens / check county for footprint / normal stuff   

BP did a podcast on it too - #345 that was pretty good. 

 Thanks Bryan, I listened to it, it was good.

Quote from @John Boutros:

Quote from @Tim Braun:

Good morning all, first post!

I have been rehabbing/flipping mobile homes in parks for a little over a year now, I would say I've been doing okay - making mistakes, getting better, and learning along the way. My goal is to do this as long as it makes sense to build up some working capital then move over to doing houses to purchase multifamily buy-and-holds. I came across a small "park" that I may have the opportunity to purchase with seller financing - bear with me I'm just getting started in real estate investing, I wanted to see if I could get some opinions on it.

It looks like its got enough space and has 6 pads, the owner says it can do 11 (some of its a little overgrown and I haven't walked the property yet. There are currently 4 homes on the lot: 3 vacant and one tenent-owned that is paying lot rent. Maybe the 3 homes can be fixed up to be occupied, maybe not, I should know that soon. That lot rent is average for the area from what I've seen. Its got public water and sewer, its in a smaller rural town but I've been working the area and I think there is enough demand to fill it.

I've started researching the code for the town and I'm working on getting someone on the phone to clear some things up - what its currently licensed for, what happens if I buy it, am I grandfathered in to anything, etc. I'm working on going over to the property in the next few days to check it out, see how many hookups there are and what condition they are in. Is there any thing else to consider? Any mistakes anyone else has previously made that could be passed on?

My "exit" strategy is to fill it with homes and manage it properly - if the 3 aren't too far gone then I can fix them, sell them, and rent the lot ASAP. I also have another free home that I can move to the park soon. Then I'll fill the remaining spots, likely with used homes in good condition. I think if I can fit 6 homes in it then it would be a decent hold for the 2 acres it is, but if I can get 11 homes in there then I could possibly sell it too. Any thoughts?

 Whatever number of pads the seller says the park can have can be nonsense. What matters is what the city says the park is zoned for. Id recommend (strongly) getting a zoning letter from the city clarifying if park is grandfathered (and current status), number of pads, sunset provisions, park violations, and so on...what happens typically (especially in small towns) they can make up rules as they go and enforce them arbitrarily - get everything in writing, so you're not bullied down the line. Trust me on this one. 

I would also obtain a phase 1 environmental test performed to ensure grounds aren't contaminated, if they are - run! City can shut you down immediately, to correct ground contamination can easily cost $1M. Worth also inspection water/sewer lines professionally to make sure they're not crumbling or need extensive repair soon. Survey is also a smart idea. The point is - make sure you do your proper due diligence. Good luck. 

 Thanks John, I am working on seeing what the town knows. Typical small town, someone said the place has a permit, another department doesn't know about it. One tells me how many homes I can have, the other asks me how many I want to put there.

Good call on the inspection too, I am working on getting someone out there to see if they can inspect the water and sewer lines. I have no idea what it would cost to run new lines, its only a 1.5 acre lot but I can imagine it would get pretty expensive.

Good morning all, first post!

I have been rehabbing/flipping mobile homes in parks for a little over a year now, I would say I've been doing okay - making mistakes, getting better, and learning along the way. My goal is to do this as long as it makes sense to build up some working capital then move over to doing houses to purchase multifamily buy-and-holds. I came across a small "park" that I may have the opportunity to purchase with seller financing - bear with me I'm just getting started in real estate investing, I wanted to see if I could get some opinions on it.

It looks like its got enough space and has 6 pads, the owner says it can do 11 (some of its a little overgrown and I haven't walked the property yet. There are currently 4 homes on the lot: 3 vacant and one tenent-owned that is paying lot rent. Maybe the 3 homes can be fixed up to be occupied, maybe not, I should know that soon. That lot rent is average for the area from what I've seen. Its got public water and sewer, its in a smaller rural town but I've been working the area and I think there is enough demand to fill it.

I've started researching the code for the town and I'm working on getting someone on the phone to clear some things up - what its currently licensed for, what happens if I buy it, am I grandfathered in to anything, etc. I'm working on going over to the property in the next few days to check it out, see how many hookups there are and what condition they are in. Is there any thing else to consider? Any mistakes anyone else has previously made that could be passed on?

My "exit" strategy is to fill it with homes and manage it properly - if the 3 aren't too far gone then I can fix them, sell them, and rent the lot ASAP. I also have another free home that I can move to the park soon. Then I'll fill the remaining spots, likely with used homes in good condition. I think if I can fit 6 homes in it then it would be a decent hold for the 2 acres it is, but if I can get 11 homes in there then I could possibly sell it too. Any thoughts?