Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Zachary Smith

Zachary Smith has started 2 posts and replied 4 times.

Hello, I have been doing some mass letter campaigns for wholesale deals in Colorado to try and build up my savings for my own properties since most things here are out of my budget. Initially it was for my own portfolio but realized I do not have the funds available for this market. I have been lucky and received a few responses back. They have given me prices for some land in some high demand areas. My only problem is I am a little hesitant to try to make a wholesale deal. I am wondering if there is anything specific I should know about wholesaling in Colorado? I assume that I would have a contract signed and have it be assignable. I then market the contract. Not the property since I am not licensed. I have told the owners about the process and they seem open to it. I would like to try wholesaling even if the contract can't get assigned. I feel like it has been a good experience so far talking and learning about the properties. It would be nice though to take it one more step and close a deal. Any suggestions for doing a wholesale deal in Colorado would be appreciated. 

So Im thinking of putting in an offer on the park. From my calculations it is way overvalued at the current ask price. I am thinking of putting in a $60,000 offer and hoping to settle in at the $75,000 mark. Formulas I found on BiggerPockets and Mobile Home University. Let me know what you guys think. I came up with an offer price based on trying to make it fit within the cap rate percentage that I wanted. 

My calculations:

_________________________________________________________

Income:

4 Mobile homes X $350 lot rent = $1400/month

$1,400 X 12 = $16,800

1 2bed/1bath house X $650 rent = $650/month

$650 X 12 = $7,800

Total Income = $24,600

___________________________________________________________

Expenses *Estimated:

Taxes = $1,750 Yr

Insurance = $1,500 Yr

*Landscaping = $1,200 Yr

*Utilities = $850/month = $10,200 Yr

*Maintenance = $25/month X 5 units = $125 X 12months = $1,500 Yr

*Capita Expenditures = $35/month X 5 units = $175 X 12months = $2,100 Yr

Total Expenses = $18,250

_________________________________________________________

Net Operating Income:

Total Income / Total Expenses = Operating Income Percent

$18,250 / $24,600 = 0.74

1 - 0.74 = 0.26 = 2.6%

Net Operating Income Ratio = 2.6%

______________________________________________________

Cap Rate with current asking price:

Cape Rate = NOI / Property Value

Cap Rate = $6,350 / $260,000 = 0.025

Cap Rate = 2.5%

___________________________________________________________

Cap Rate with $100,000 offer:

Cape Rate = NOI / Property Value

Cap Rate = $6,350 / $100,000 = 0.0635

Cap Rate = 6.4%

__________________________________________________________

Cap Rate with $60,000 offer:

Cape Rate = NOI / Property Value

Cap Rate = $6,350 / $60,000 = 0.1058

Cap Rate = 10.6%

_________________________________________________________

Cap Rate with $75,000 offer:

Cape Rate = NOI / Property Value

Cap Rate = $6,350 / $75,000 = 0.0846

Cap Rate = 8.5%

So the mobile home park is in Southern, CO. The Profit and loss statement is from 3 years ago and is pretty horrible. Numbers are not accurate at all. Basically can't use them. I did more research and found it is a non conforming lot as far as zoning goes. Wondering if this would pose an issue? The laws basically state that you can continue to use it in the same capacity as long as there isn't a break of over 12months. I was told by a tenant that they believe the sewer lines need to be completely replaced. Would this keep anyone away? I would assume all this just needs to be taken into the offer price. They have had multiple people back-out of an offer. I assume maybe this is a good warning sign?

I am new to mobile home parks and I am looking at potentially purchasing a 6 unit park with a 2bed 1bath rental house. I currently have 5 rental units that I manage remotely. 2 duplexes with a garage converted into another. I am trying to crunch numbers for an offer and to present to investors. I am not really sure what should be included in the expense estimates. Current lot rents are $350 but only 4 lots are rented. Owner pays water/sewer. The homes are owned by the tenants. I am trying to figure out what the below questions and any help or guidance would be appreciated.

1. The type of insurance I would need and amount of liability? State farm, which currently insures my properties said they don't cover mobile homes. 

2. Expenses and costs that I am unaware of? Currently, only thinking about Insurance, snow plowing, mowing, taxes, and utilities. I want to try to manage the property myself. Good idea or bad for a small mobile home park?

3. What are lot rents in your area?

4. Should I create a separate LLC for the mobile home park or keep it under my other properties?

5. What type of loan is possible with this if I am unable to secure full price purchase? 

Any suggestions or guidances is greatly appreciated.