All Forum Posts by: Trevor Hatchard

@George Blower thanks for the information, I believe I qualify and I feel like I am now even more aware of the terms and repayment methods.

Since you seem to be so well versed in the topic, would you recommend using this type of financing? I am looking for insight to the mind of an active real estate investor, someone who has used this method and has a pros and cons list, or maybe a couple tips of things they wish they would have paid more attention to the first time around. ( I understand that the CARES act is knew so their wont be any specific examples from this, but perhaps similar experiences to share)

Thanks for the help!

Thanks Greg for the ease of mind knowing you have done it several times and it seems to be working?

What are you reservations or things to look out for?

Why have you done it so many times, and for what type of properties have you had the highest degree of success? 

Hey y'all,

Looking for any help and advice with this process, I want to use my 401K Schwabb from my previous employer and reinvest it into a multifamily property in southern california. I understand this takes creative financing to a different level, but I do believe in real estate and believe that this model will serve me better long term than the investment account. (Side note: I will still be paying into an account, over the course of the next three years so as to replenish the amount I end up borrowing) 

Thanks in advance for any help!

Sorry I am not able to help with the listing fee, but I help a group invest in MHP's, can you post the link here to see if it fits our criteria?

Thanks!

Edit: did 10 seconds of due diligence and saw that it was a 17 pad park, which is too small. Best of luck and hope this thread gets more traction for you though!  

Ethan, depending on your enter/exit strategy it has the bones of a good deal, but can you get it at a good price?

In my opinion, I think the MSA is too small but i know nothing more than the facts you have stated so use your best judgement. I have seen some good replies thus far about doing quick calculations, if you get to the point where you start your to do your due diligence be sure to reference this check list below as a starting point.

Good Luck!

Due Diligence Basics

• The purpose of due diligence is to lower risk and increase the probability of achieving the target ROI over the hold period of the investment. The process starts when a buyer asks that first question and ends when a commitment is made to purchase, close of escrow or cancellation of the purchase agreement.
• The process is something like a solving a puzzle with the goal of building a complete and accurate profile of the property. This is accomplished by gathering, validating and analyzing data in the following 3 areas:
  • Financial
  • Physical
  • Locale
• Each due diligence process is different based on the unique elements of the deal and features of the property. The “key” elements of the transaction are explored first and usually, the most intensively.
• The buyer should provide the seller a comprehensive disclosure statement and include a term in the purchase agreement that obligates the seller to return the document within 5 days of acceptance.
• Professionals are hired to complete Phase 1, 2 & 3 reports that identify potential or existing environmental contamination and all other elements of elements that are difficult for the buyer to effectively evaluate.

Financial Checklist

• 3 years profit & loss statements
• Rent roll with space number, name of resident, move-in date, renter or owner occupied, number of occupants, monthly rent, additional charges, current balance due and any relevant notes about the resident
• List of capital expenditures for the last 3 years
• 3 years of tax returns
• 12 months of bank statements
• Current accounts receivable statement
• List of park owned home including copies of “rent to own” or sales contracts
• Copy of all current insurance policies, binders and premiums
• Spreadsheet detailing who pays all utilities including water, sewer, gas, electric, trash, cable, etc…
• For all utilities and charge backs, formulas, calculations and meter readings for the past 12 months
• 3 years of utility bills
• Property tax bills for the last 2-3 years
• Current staffing list including position, wages, job descriptions
• Copies of any contracts that will transfer to buyer including laundry, trash, phone, equipment, etc…
• Dates and amounts of the last 3 rent increases
• Signed rules and leases for each resident
• Names and contact information of professional service providers including lawyers, accountants, engineers, insurance brokers, inspectors, appraisers, realtors/brokers, etc…

Physical Checklist

• Spreadsheet for utilities that details age, composition, capacity, physical locations, etc…
• Any drawings or maps of the park and infrastructure including lot sizes
• Sewer plant or septic system repair and maintenance records
• Water well tests and compliance records
• Disclosure from seller of current or recent problems with infrastructure including buildings, water, sewer/septic, gas, electric, etc…
• Names and contact information of contractors including plumbers, tree surgeons, electricians, gas inspectors, septic companies, roto-rooter services, etc…

Locale Checklist

• Profile local housing market:
  • “Stick-built” – current foreclosure rate, months of available inventory, median home price, average rent per month, vacancy rate
  • Apartments – average rent per month, vacancy rate, prevalence of move-in specials…
  • MHPs Comps – average monthly charges (rent, utilities, etc…), vacancy rate, # of homes for sale, etc…
• Profile local economy including population, major employers, unemployment rate and trends
• Copies of city, county and state permits, licenses or certificates of occupancy
• Check zoning for recent or pending changes to target property and adjacent parcels
• Check for known environmental issues with target property, adjacent parcels or in the community
• Check for major development or construction projects in the community
• Review existing surveys or environmental reports
• Consider geographic factors including elevation, annual snow fall, rain fall, proximity to bodies of water, etc…
• Disclosure from seller of current or recent lawsuits, regulatory or compliance issues, fines, fees, etc…

I cant remember the link to the Bigger pockets thread i found this on but see a good checklist below for starters!

Due Diligence Basics

• The purpose of due diligence is to lower risk and increase the probability of achieving the target ROI over the hold period of the investment. The process starts when a buyer asks that first question and ends when a commitment is made to purchase, close of escrow or cancellation of the purchase agreement.
• The process is something like a solving a puzzle with the goal of building a complete and accurate profile of the property. This is accomplished by gathering, validating and analyzing data in the following 3 areas:
  • Financial
  • Physical
  • Locale
• Each due diligence process is different based on the unique elements of the deal and features of the property. The “key” elements of the transaction are explored first and usually, the most intensively.
• The buyer should provide the seller a comprehensive disclosure statement and include a term in the purchase agreement that obligates the seller to return the document within 5 days of acceptance.
• Professionals are hired to complete Phase 1, 2 & 3 reports that identify potential or existing environmental contamination and all other elements of elements that are difficult for the buyer to effectively evaluate.

Financial Checklist

• 3 years profit & loss statements
• Rent roll with space number, name of resident, move-in date, renter or owner occupied, number of occupants, monthly rent, additional charges, current balance due and any relevant notes about the resident
• List of capital expenditures for the last 3 years
• 3 years of tax returns
• 12 months of bank statements
• Current accounts receivable statement
• List of park owned home including copies of “rent to own” or sales contracts
• Copy of all current insurance policies, binders and premiums
• Spreadsheet detailing who pays all utilities including water, sewer, gas, electric, trash, cable, etc…
• For all utilities and charge backs, formulas, calculations and meter readings for the past 12 months
• 3 years of utility bills
• Property tax bills for the last 2-3 years
• Current staffing list including position, wages, job descriptions
• Copies of any contracts that will transfer to buyer including laundry, trash, phone, equipment, etc…
• Dates and amounts of the last 3 rent increases
• Signed rules and leases for each resident
• Names and contact information of professional service providers including lawyers, accountants, engineers, insurance brokers, inspectors, appraisers, realtors/brokers, etc…

Physical Checklist

• Spreadsheet for utilities that details age, composition, capacity, physical locations, etc…
• Any drawings or maps of the park and infrastructure including lot sizes
• Sewer plant or septic system repair and maintenance records
• Water well tests and compliance records
• Disclosure from seller of current or recent problems with infrastructure including buildings, water, sewer/septic, gas, electric, etc…
• Names and contact information of contractors including plumbers, tree surgeons, electricians, gas inspectors, septic companies, roto-rooter services, etc…

Locale Checklist

• Profile local housing market:
  • “Stick-built” – current foreclosure rate, months of available inventory, median home price, average rent per month, vacancy rate
  • Apartments – average rent per month, vacancy rate, prevalence of move-in specials…
  • MHPs Comps – average monthly charges (rent, utilities, etc…), vacancy rate, # of homes for sale, etc…
• Profile local economy including population, major employers, unemployment rate and trends
• Copies of city, county and state permits, licenses or certificates of occupancy
• Check zoning for recent or pending changes to target property and adjacent parcels
• Check for known environmental issues with target property, adjacent parcels or in the community
• Check for major development or construction projects in the community
• Review existing surveys or environmental reports
• Consider geographic factors including elevation, annual snow fall, rain fall, proximity to bodies of water, etc…
• Disclosure from seller of current or recent lawsuits, regulatory or compliance issues, fines, fees, etc…

Hi y'all,

I am getting close to being able to purchase a quadplex (triplex or similar) in Southern California (South LA/North OC) areas. Different lenders have been giving different advice, and I think I am looking for a lender who understands REI and will be able to help best structure a deal for me. This will be my first home purchase, and I want to use a owner occupied loan.

Any recommendations or general tips would be greatly appreciated!

This sounds like a good deal. The things I would be weary about are the expenses (try to get a break down or better T-12 financials), the amount of money you plan to put into the deal, getting off the septic system and onto all public utilities (seperately metered) and of course try to infill resident while you add the those new lots (which you hopefully approved with the city prior to purchase).

Hey @Jessop Adams I work on an acquisitions team pricing out MHP's. The most important factors to our team and potential investors when buying a park seem to be: to make sure it has value add, public utilities, ideally 100+ pads, near a large MSA (100K population), 70% occupied and T12 financials.

It sounds like you have a lot of the initial items thought about it, i would say get the park cleaned up and try to get tenants in asap before trying to sell.

Good luck

regardless of what you decide to do make sure you have a healthy amount of time for due diligence on these types of deals. That way you can secure financing, get management in place, bid out contractors and set up a schedule to get your park open at max capacity ASAP.