Posted by Chuck (AZ) on July 27, 2001 at 15:45:53:
1.5 actually… LOL.
possible FIRST DEAL !!! - Posted by ken
Posted by ken on July 23, 2001 at 14:19:52:
Sorry if this gets posted twice, somehow I accidently posted it before I was finished writing it out.
Here’s the deal …
I am looking at a mobile home park for sale with 2 mobile homes on the property. The property is 1/2 acre and both mobile homes are about 20 years old with lots of repair work done on them.
The guy who is selling the MHP currently rents these out on a 7 day lease. This way, he collects rent once a week and is able to evict a tenant quickly if need be. The first mobile home rents for 150 dollars a week, has a tenant that’s been there for 3 years and pays his own utilities.
The second mobile home rents for 220 a week and includes water and up to 150 dollars in gas and electric. (everything above this is the responsibility of the tenant)
There is also a 15 by 20 building on the site with gas and electric that would probably rent for 150 a month.
I have never heard of collecting rent on a weekly basis but the current owner seems to think this is the best method. I also can’t imagine that someone would pay 880 dollars a month to live in a MH but the owner tells me he has no problem finding tenants. – Is this a common method in MH’s?
Anyways, the owner is currently asking 90K for the park and the trailors.
Here’s the math …
220 X 4 = 880
150 X 4 = 600
- 150 (other building)
total Rev. = 1,630
now subtract out expenses for water, elect,gas (200)
Total is now = 1,430 .
If I put 20K down and get a loan for 70K @ 9% , that would leave me spending about 600/ month on the loan.
Thus my positive cash flow would be around 830 / month.
That sounds pretty good to me. However, that involves me refinancing my home and taking out the 20K to put down.
I’M NEW AT THIS !!! Does anyone have any thought? Input?
Is there a better way to get the 20K to put down on the property besides pulling that out of my house?
Any help would be greatly appreciated.
Thanks,
Ken
Re: possible FIRST DEAL !!! - Posted by kaar
Posted by kaar on July 24, 2001 at 17:23:01:
Kevin,
Here is a different view on your situation,
Since you have access to CASH then offer him less than 90k
If he won’t go that way then offer to pay him the asking price as long as he will finance you at 7 to 8% interest.
No money out of your pocket and a monthly income for him without the headache of managing the park.
Good Luck
Earl
Re: possible FIRST DEAL !!! - Posted by Gary (TX)
Posted by Gary (TX) on July 24, 2001 at 17:04:37:
With 20,000 cash you could do alot of Lonnies deal and have more cashflow than 830 a month. During the time you are doing these deals you could run across another park that makes more sense. With that kind of cash you could compound your investments like a rocket if you be patience. But with one deal like you are talking about you will be stuck right there for a while. Just my thoughts and good luck.
Gary
Re: possible FIRST DEAL ?? - NOT!! - Posted by Chuck(AZ)
Posted by Chuck(AZ) on July 23, 2001 at 15:49:06:
Let me guess… your in Florida right?
This is commonally know as a “transient” trailer park, and they are a huge pain in the a##.
Due to the frequent turnover in tenants, you’d spend the majority of your time cleaning, repairing and trying to recover lost income due to non-payment.
There are better opportunities out there… this is a definate pass.
Re: possible FIRST DEAL ?? - NOT!! - Posted by Kevin (FL)
Posted by Kevin (FL) on July 24, 2001 at 02:43:56:
Do you mean that Florida is bad to do MH deals? I was interested in doing this. By the way I am in Ft. Laudedale.
Re: possible FIRST DEAL ?? - NOT!! - Posted by Ken
Posted by Ken on July 23, 2001 at 21:35:52:
I actually live in Atlanta. I can see how this probably looks like a bad scenario from the outside, however, it still seems like there’s pretty good potential here.
- The half acre lot backs up to commercial land worth a good deal of money.
- One of the two trailors has steady rentors. - He’s been there for 3 years and has been very reliable with rent.
- The owner insists the new trailor should be easy to keep rented. Especially since the area is pretty heavily populated.
- The main upkeep would be mowing the lawn, collecting rents, and fixing things here and there.
The owner made it sound as though he kept the trailors “liveable” but didn’t spend a lot of time keeping them immaculate. - This said, with a positive cash flow of 700 dollars or so, the main drawback would be tying up 15K - 20K of cash for the down payment. – any ideas for aquiring financing? Again, he’s asking 90K. - the current mortgage is 11K through a friend of his.
-Still mulling over this.
Thanks for the replies
Re: possible FIRST DEAL ?? - NOT!! - Posted by Charlie Roberts
Posted by Charlie Roberts on July 23, 2001 at 18:03:20:
Chuck,
I’ve been following your posts for quite a while now. It’s good to hear that someone is doing it here in AZ.
I’m just starting out here in Glendale/Peoria. I have the books (Lonnie’s & Ernest’s) and have studied them extensively. I have my LLC’s set up and should test for my D-8 next Tuesday. I’m just having trouble finding units in the 2-3K range that shouldn’t be hauled to the dump. Am I shooting to low for our area or what do you think? There can’t be too much difference between here and Tucson can there? I’m checking the PM’s and local dealers regularly in the area. Any suggestions greatly appreciated. Keep up the good work and the good posts.
Thanks,
Charlie
You can’t be that stupid… - Posted by Chuck (AZ)
Posted by Chuck (AZ) on July 24, 2001 at 11:04:42:
No… I’m not saying that Florida is a bad state to do deals in. Neither is any other state a bad state to do deals in.
What I am saying is that he doesn’t want to do THIS particular deal… there are BETTER opportunities out there.
First he’s gonna use his savings of $20k as a down payment… that’s gone, non-refundable. Then he’s gonna take a 2nd on his home of $70k for 30 years. He’ll pay that $70k to get this dinky a## little mobile home park, consisting of TWO 20-year old trailers, that he’ll rent out weekly. That of course means constant turn-over, cleaning, repairs, maintenance, and collections.
On top of that, he’ll have to worry for the next 30 years about someone not paying or not being able to rent them out, which would mean he’d miss a payment or several himself on that 2nd, and risk loosing his home.
What are these trailers gonna look like in 30 years when that 2nd is paid off? What happens if they burn down? The land itself isn’t even worth the $90k.
Now just to give you a comparison… I own a 9 space that I paid $139,900 for. It generates $3k a month in lot rentals, I “Lonnie’d” all 9 homes out and that generates another $5,200+ a month. So for my $139,900 investement, I’m getting $8,200 a month in cash-flow (less debt service) and have NO tenant worries.
Here’s another one… I decided recently that I wanted to pick-up a few small commercial properties. So I retained a broker who’s looking, based upon the criteria I provided. Here’s the first one he found for me.
Branded Gas Station property on very busy corner of two main streets in a major metro city in Florida. It includes Convenient Store, Cafeteria, Car Wash, Auto Repair Shop and Flower Shop.
Purchase Price - $189,000
Income - $10,800 monthly net
Property Lease - until 2006, renewable for another 10 years at 3% per year increase
So, for a investment of $189k (what you’d pay for a decent home), I own this nice little commercial property that’s got 4 years left on the current lease and a 10 year renewal option, with a 3% per year increase. No management headaches, no maintenace, no tenants, no PM’s… just a nice fat rent check of $10,800 a month (or more) for the next 15 years.
That’s only $3k less a month than my 55+ park pulls in right now… with the increases on the renewals it’ll surpass that easily.
Clue-up.
No, no, no, no, no. - Posted by Chuck (AZ)
Posted by Chuck (AZ) on July 23, 2001 at 22:04:09:
My wife use to manage a transient park in Florida in the 80’s… so I’ve heard the horror stories first hand.
Based upon that… it appears to me that this seller is asking you to pay him $90k for the privelage of taking HIS headache off of HIS hands… and you’d have to get a 2nd on your house to do it.
There are better deals out there… pass.
The Outer Limits… - Posted by Chuck (AZ)
Posted by Chuck (AZ) on July 23, 2001 at 18:38:26:
Sounds like you’ve got the bases covered propsect-wise. You might try a “I buy mobile homes” ad for a while and see what happens.
I get the Sunday Phoenix paper weekly, as well as the Tucson… and the market is tightening up from what I’ve seen lately. Maybe it’s a short-term thing, maybe not… but the lower priced homes seem to have disappeared for the moment.
So… I’d start looking at $4-8k homes, and then at $8-15k homes, and then at the $15k+ homes.
Lonnie’s concept works on all of these, you just have to find a motivated seller, a qualified and willing buyer and a PM you can work with.
I know that start-up money can be an issue for alot of people (deal-wise), and financing for the mid-priced mobiles ($15k+) can be impossible to find (as a buyer)… not to mention that it severly ties up your cash (as an investor).
So… I’ve been working on a plan that will allow alot of folks to ease into this angle of RE, with almost no cash out of pocket, and work with mid-priced homes in the tighter markets… at least until things loosen up a bit.
I should be able to make this available in a couple of weeks or so… and it won’t be limited to Arizona.
“Please stand by…”
Blow 'em away Chuck! - Posted by Karl (Oh)
Posted by Karl (Oh) on July 24, 2001 at 22:27:45:
Way to slam the door! That’ll teach those darn new guys to ask innocent questions. Don’t they know how much that puts you out?
Karl
Re: The Outer Limits… - Posted by Steve-AZ
Posted by Steve-AZ on July 26, 2001 at 15:48:21:
Hi Chuck,
Would you mind putting me on your list for that new plan of yours? I’d sure appreciate it. Thanks.
Steve
Re: The Outer Limits… - Posted by Doris - Va.
Posted by Doris - Va. on July 24, 2001 at 13:45:25:
Hi Chuck -
You are always right on the money with your posts. I know it must be frustrating trying to get your message across sometimes but you hold your cool pretty well - most of the time! LOL
What I see in your posts is basic good old common sense enhanced with intimate knowledge of the subject matter. Thank heavens for people like you on this board. Your time and effort here is appreciated by all of us who are trying to learn and make good decisions.
I am in the same position as many - trying to get that first deal going but struuggling with very limited funds. If you have come up with a good idea to assist me in getting that first deal, I would be first in line to listen.
I have a deal I could go with this week. Repo - purchase and rehab for about $4000 total but don’t have enough to do it. I plan to talk to my PM partner about it. He may help me but I wanted to do this one on my own.
Sincerely,
Doris
Get a Clue… - Posted by Chuck (AZ)
Posted by Chuck (AZ) on July 25, 2001 at 01:05:20:
You missed the entire point of that post Karl.
I wasn’t slamming the guy, I was trying to educate him.
IF he’s listening, I just saved him from making the mistake of a lifetime.
Even a blind man could see that.
Re: The Outer Limits… - Posted by Chuck (AZ)
Posted by Chuck (AZ) on July 26, 2001 at 16:17:09:
You got it.
Re: The Outer Limits… - Posted by Chuck (AZ)
Posted by Chuck (AZ) on July 24, 2001 at 14:39:01:
Fustration? Oh, yea… I know that one… LOL.
Pardon me while I go off the deep end…
I’m sort of a good o’ boy type, born and raised in the midwest, who was a blue-collar worker until the age of 43… factories mostly.
In fact, I held a full-time factory job while still in high school (on 2nd shift). I made $2.50/hour.
Yes, $2.50 a hour. It was before the minimum wage law and was considered good money at the time.
I “got a clue” as to what RE could do for me when I was 42… and I did my first no money down deal (with a $17k profit and 5 acres of land free and clear) when I was 43.
I immediately quit my “10 hour a day to make ends meet” JOB (about $11/hour), moved west… and I haven’t looked back… not once.
I spent the majority of the following 3 years getting practical hands-on property management experience on my resume. I short, I worked where I lived (rent-free) and got a nice paycheck and some invaluable experience too boot. Experience that that now benefits me in the management of properties that I own.
In the last 6-12 months I’ve bought 2 mobile home parks in Arizona, and I’m now branching out into small NNN-lease commercial properties. The upside to all of these is that each and everyone of them can support any of the others, if necessary.
If you look at the numbers I’ve posted, I’m now pulling in around $30k a MONTH in PASSIVE income (around $25k after expenses and debt service), and it’s going nowhere but up.
My EARNED income from my former JOB was about $28k a YEAR… working 10 hours a day, 6 days a week.
Care to calculate my yield?
I have no credit cards in my name and no credit card debt. I have no cash-draining liabilities… I do have INCOME-PRODUCING assets. Since I’m living on one of these properties, I have no personal mortgage or rent to pay out.
I do WHAT I want, WHEN I want. I don’t punch a time clock, and I don’t give up half of my day to earn a living… nor do I give 50% of it to Uncle Sam in taxes. I answer to no-one, save myself. That my friends, is what FREEDOM is.
My point to this little triate is that, IF you use your head and start thinking differently, you could do it too.
Your on the list Doris.
Re: Get a Clue… - Posted by Karl (Oh)
Posted by Karl (Oh) on July 26, 2001 at 07:45:22:
Chuck,
Although I was joking with you, my point was you just called Kevin from Ft Lauderdale ?stupid? for asking if Florida was a good state for doing mobile home deals. Yes, that was harsh, since Ken was the one asking specifics about the mobile home park for sale. I doubt that any new investor would find that either encouraging or educational. Based on your later posts, I think you just got the two posters confused.
Sorry for chiming in, I?ll step back now and let you carry on your good and noble work. (Hey, has anybody seen my white cane?)
Karl Kleiner
Re: Get a Clue…Hey Chuck!!! - Posted by Kevin OK
Posted by Kevin OK on July 25, 2001 at 23:01:21:
Hey Chuck…I thought yours was a great post, and I took it for the educational value you intended.
Anytime I post something that shows you I’m headed for trouble, I’d appreciate you telling me straight out too! A stinging and direct post here is a whole lot better than having to tell the inlaws they were right when they belittle my investment hopes…
I’m as green as a newbe-wannabe-can be!!, and I sure appreciate learning from what you’ve earned the right to say. Keep sharing!! I read all the good posts here, and I’m always looking for your next one.
Kevin in OK
Re: The Outer Limits… - Posted by Amy VA
Posted by Amy VA on July 27, 2001 at 07:36:07:
Chuck,
What is this list that everyone is talking about?