Investment Info:
Other commercial investment investment.
Purchase price: $395,000
Cash invested: $253,000
Purchased RV park with 13 pads. There was also an RV outbuilding and an existing office. I turned them both to permitted living spaces. This was a MLS deal that i found from a client of mine. The original idea was after construction i was going to pull out all the cash i invested to do another deal. The rates went up so i decided to leave the cash trapped for now. Based on a 9 times gross multiplier i should have over $300,000 in equity and making about 20% interest on my money.
What made you interested in investing in this type of deal?
Cash flow and equity position. Also There is only 2 structures on the property the rest are RV pads so little to no maintenance.
How did you find this deal and how did you negotiate it?
I am also a Mortgage Broker. A client of mine tried to purchase it. He did not qualify for financing and asked if i wanted it. I gave a slightly higher than asking price and offered cash and i tied up the deal.
How did you finance this deal?
I paid cash then did a cash out refi to get 70% of current appraised value back in my pocket.
How did you add value to the deal?
I converted two structures to the property to living space. I also had my property manager actively market for monthly renters and raised the rent to below market rates to get the property full. That allows me to have a full park and still be below market rents by $100 a pad. I can now raise rents every year, stay full and still be below market.
What was the outcome?
I think over all it was a really good deal. Had the rates stayed low i would have done a cash out refi and got all my money back, still had great equity position.
Lessons learned? Challenges?
It all went as planned but interest rates and values can change on a dime. If you stay in this industry long enough you will run into one of those times.
