All Forum Posts by: Timothy W Hanson

I am scheduled to close on a Trailer Park (All tenant owned homes) on April 1st. 

The current lender sort of threw a curve ball into the mix a week ago by changing the amortization from 20 years to 15 years. The cash flow still would be (true net) of $4000 per month. However the interest rate is 5.24%. 

With this change, I am thinking of letting the buyer know that the lender changed terms on amortization. And then shopping around the loan. Do you believe the Fed cutting interest rates to near 0% could be taken advantage of here? 

I plan to reach out to a different lender tomorrow to begin this process and will report back my results. 

@Chris Pellicone 

Thank you for the reply! I now have this park under contract, pending inspections of the Septic and Well. (Private Septic and Well).. Which is the worst part of the deal for me considering I have just never managed one before. And I will need a good inspector to give me detailed instructions, so I will be there with him during the inspection. 

Park is not listed on any websites, but is in North Dakota and I found this through my agent. There are 50 lots with 41 lots filled. Lot rent is about $310 varying slightly on each lot (there is an increase in rent happening next month for $20, which I did not include in my original numbers but will increase rent total by about $10,000. (The numbers in my first post did not include this increase). The area has about a $750-$800 apartment rent. I'm not entirely sure what other parks rent for in the area, I have tried to look but the websites do not list this so I may start calling the two other parks in the city. I have driven through the other parks, one is pretty rundown and the other is a retirement park with age restrictions (Have to be above 55 I believe). The main expenses are for utilities (paid by the park but included in the numbers I sent you. Total rent rolls are $155,000 (without the $10k increase happening next month), and $50k of that is set aside for the park manager (free rent + $200 per month), insurance, taxes, street lighting, septic and well maintenance and landscaping/shoveling. I have seen the 2018 and 2019 profit and loss statements that show the breakdowns of these expenses. This leaves about a $105,000 for the financing and profits. I am in an agreement with a banker for a 5.00% interest rate loan, fixed for 5 years amortized over 25 years. And so the fixed mortgage expense will be $60k yearly.  

I hope this gives you good insight at the deal, do you have many thoughts on this? I do have it under contract because I believed it seemed good but I wanted your opinions. 

Sorry, the homes are all owned by the residents (They are TOH's). Not POH's. 

Hello everyone, 

I'm in negotiations of a mobile home park deal, this would be my first mobile home park. I wanted your impression on these numbers. 

Rents: $13,095 per month. 

Financing: $4910 per month. 

Expenses: $4000 per month.  (For insurance, taxes, landscaping/street maintenance, and park manager, well/septic)

This means, $4185, profit per month. Or $50,220 per year. My down payment will be about $140,000. So about a COC return of >33%, what are you guy's thoughts? I know lots of you have more experience on this. The homes are all park own besides 4 which are under contract to own.

I am currently working on buying a mobile home park. I have gotten far enough along in the purchase process to make an offer twice, but both sellers declined my offers (one said my offer was too low, the other said he wants to wait until January because he is "busy" working on a different park he owns). So I am back to square one. 

That's interesting Anthony. When it comes to a second property, I will have to keep all funding options in mind with FHA likely off the table.. I think building a cash reserve is the popular option to put 20% to 25% down. But also BRRR is popular if one can swing it with a hard money lender, but is risky, and I think relies on looking for flips.

@Nick Rutkowski Thank you! :) 

@Chad Leton Thank you! And of course. The terms of the FHA loan were 3.5% down, which is great. I also purchased down the interest rate with the seller's credit, so my interest rate is 3.0% which makes up for the PMI fee that comes with FHA loans. I included the PMI fee in my expenses, and honestly I may never re-finance out of the PMI fee because I would lose the 3.0% interest rate making it a wash. I will have to see what interest rates do in the future when it is time to make that decision.

@Anthony Wick Thank you Anthony. You're right, the property taxes are not great in Wisconsin right now either,  in 2018 the total taxes were $5000, but they are held in escrow by the bank with monthly contributions, and they are already calculated into my expenses so will not impact the end of the month cash flow! 

 
I am now looking for my next property and simultaneously searching for the best finance methods (duplicate FHA after waiting one year / saving up cash to go 25% down commercial loan / or other methods that I will learn about through Bigger Pockets). Thanks for all the feedback everyone I really appreciate you guys!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in New Richmond.

Purchase price: $400,000
Cash invested: $20,000

My first investment is a 4-plex in New Richmond WI. I wanted to take advantage of the FHA loan option while picking up four "doors" at once. New Richmond Wisconsin is 45 minutes East of St. Paul MN and scheduled to be one of the fastest growing cities inside Wisconsin over the next two decades. After all expenses, the cash flow for this property is currently $800.00. It could be more, because right now the current leases are beneath market value and each could be raised by $100 over the next year based on the neighborhood. Each unit has 2 bedrooms, a living room, a patio in the back.

That's one hell of a goal. I appreciate your replies to my question it helped me understand more questions to ask my CPA when working on tax returns / deductions. I wish you a lot of luck moving forward with that endeavor! We are clearly in different stages in our investing journeys and I envy you in a lot of ways! Thanks again!  :) 

@Jonathon Weber thanks for that detailed reply! I like your answer!