All Forum Posts by: Toben B.

Yes I am looking for a new lender as the one I used for my last 2 commercial loans will not do mobile home parks. 

When I hired a property manager the first year was terrible as they set about fixing all kinds of small things I never had and the tenants never noticed. However after a year the bleeding stopped, the houses were fully fixed up and cash flow was stable. My property manager provides tons of receipts and itemized repairs monthly with my invoices. I had hear horror stories of property managers and did not hire until I found a personal referall. Now I will never go back to managing them myself as I am way too busy.

If your property manager can't provide receipts then they are missing out on one of their core duties. Time to find a new PM.

Hello,

I have a broker that wants a pre-approval letter prior to releasing the financial details of the property for sale. 

Although I think this is backwards, I can't really move forward without a letter and the location is prime so I want to learn more. 

Asking price is $1.5M and I can provide a 20% down payment assuming the financials make sense. 

This is a lakefront Mobile Home park.

I have a banker that provided me a letter on an apartment complex I purchases, but he will not underwrite parks.

Can anyone point me in the right direction?

Thanks in advance!

How can a bank pre-approve a loan if they do not know the income and expenses on the park?

I have some duplexes with 2 meters and some with only 1. If you have 1 meter you can split the bill in 2 and give it to the tenants every month. I decided I did not want to bother with this and just increased the rent and tell them it covers water, sewer, and trash. 

I am dealing with a broker that wants a pre-approval letter prior to showing me finances on a mobile home park. 

He is a residential real estate agent and this is a ridiculous request. However does anyone know a lender or a bank that will generate a pre-approval letter? My bank will on apartments but not mobile home parks. 

Obviously this letter will have a be non-binding and depending on the park financials. 

Thanks

Yes there is value because it gets you to the next stage even if it is at a slower rate. 

I owned a few duplexes and a house and was trying to get into apartments but had trouble making the jump. 

I considered not buying any more 1-4 units because it was fairly slow to grow this way, but I listened to a podcast that suggested it is OK to have small successes. Just because you are not hitting home runs doesnt mean you should give up on the smaller successes. 4 first base hits are still the equivalent of a run. I took this to heart and kept buying up houses, duplexes, and a quadplex. Eventually I got too busy and hired a property manager.  Last year I landed a small 16 unit apartment building and now I have a total of 30 units and only do a fraction of the work on them. 

It would be nice if we could all jump straight to 100 unit apartment complexes, but if you don't yet have the ability then it is better to build up slowly than keep waiting for a home run. 

I found the local MLS where the seller hired a residential real estate agent has much less competition. The price can be all over the place because they don't know what they are doing but I found a few deals this way on multifamily over 10 units.

I paid a few hundred bucks for the Michael blank training last year and closed my first apartment building with some of the knowledge I learned. The training was for how to do a syndication but I found the info on how to do the valuation most helpful and did not do a syndication. It’s only 16 units but I bought it right and it is doing slightly better than expected. This year I am now looking at larger apartment buildings in the 30-40 unit range.  Not really an expert yet but I can give some free advice.

Are there a top 10 questions to ask before buying/bidding an apartment complex? I would do the Michael blank training  

What are the top 5 financials that one should focus on first the see if the deal is even worth bidding on? Ebitda then drill in to the details.  

Do the 1%, 70% rule etc. apply to apartment buildings as well? No they do not. First calculate ebitda then find out the correct cap rate.  A rule of thumb to get you started is take the monthly rent roll  x 12.  Then assume 90 percent is collected and multiply by 0.9. Then assume 50% expenses and multiply by 0.5.  This would be a ballpark ebitda on a class C apartment.  Now apply whatever a local and reasonable cap rate to the specific location and class.  Also I found brokers severely inflate the asking prices so just do your own analysis and ignore asking price. 

Once bid is accepted, top 5 things to do before closing on the property? #1 get 3 years financials. If they don’t want to then the bank will require it anyway.  I posted a thread asking for due diligence items and then created my own list from it.  You can find the list in these forums. If your loan is over $1 million there are great rates right now. You will get higher rates for lower loan and lower population 

I have tried several. Cozy.co is still the best and free if you can wait a few days between deposit and receipt. 

Tenantcloud.com was disappointing but I still have several tenants on that one. 

One tenant pays via apple pay. 

Others direct deposit to my bank. 

I quit accepting checks and attempted to move all tenants to Cozy. 

Some of the tenants can't get the technology. Some don't have checking accounts or credit cards. So the remainder give my property manager a cashiers check or money order. 

Cozy is my favorite but now Zillow has an option and I would try that if Cozy didn't already do such a good job.