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REAL ESTATE Financing and owning many properties

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Bozigian

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Awesome. If you were to tell a beginner about doing real estate investing for cash flow.

Would you guys pick houses, or mobile homes since mobile homes are not as expensive as homes?


I learned something today, just because you see mobile homes for sale on a website, it doesnt necessarily mean they are being sold so that you can buy them and rent them out right.

When I am going to purchase a mobile home in the future, I will let the seller know if the mobile home can be rented out
 

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Runum

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Would you guys pick houses, or mobile homes since mobile homes are not as expensive as homes?
Expensive is a relative term. What is expensive to you may not be expensive to me. Mobile homes are one way in real estate investing to make profit. You can flip them for capital gains, you can sell them on terms, or you can rent them out.

I learned something today, just because you see mobile homes for sale on a website, it doesnt necessarily mean they are being sold so that you can buy them and rent them out right.
This is true about any type of real estate. Just because it is listed doesn't mean it is selling. A realtor can get you "days on market"(DOM). The large majority of properties you look at will not make number sense for you as an investor. It may make sense for you as a homestead but not as an investment property. You will literally look at hundreds of properties before you find your diamond in the rough. As you look at more properties you will cut your look time down and waste less time on properties that won't work.

When I am going to purchase a mobile home in the future, I will let the seller know if the mobile home can be rented out
NO WAY. It is not the seller's business as to what you are going to do with the property. If you feel comfortable you may tell him AFTER the papers are signed and you take possession of the property. If you tell someone that you're going to rent it out or sell it, it changes their attitude. I'm not telling you to lie to them, but you don't tell anyone your business.

If you want to know the policy of the MHP you NEED to talk directly to the park manager. They can be your best friend because they know everything happening in their park. If a MH is coming up for sale or is vacant, the manager knows it.
 

Bozigian

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Ok. Maybe I may have misinterprited about what bflbob said. A person can buy/sell mobile homes but is it ultimately the park managers decision whether you can rent out the mobile home in his park?



I think the 'land' they are speaking of is land you are buying. If you are in a mobile home park, you rent the land.

While you can do Lonnie Deals on MH's in parks, owning and selling them on plots of land (as opposed to lots in a park), means you are selling a total package -- home and land.
 

Runum

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Ok. Maybe I may have misinterprited about what bflbob said. A person can buy/sell mobile homes but is it ultimately the park managers decision whether you can rent out the mobile home in his park?
What Bob was saying is that if you are buying the MH and land then you own both and you can rent out or sell both.

If you buy a MH in a MHP you MAY be able to rent out the MH and you will have to pay the space rental or make sure the tenant pays it. If you sell the MH in the MHP the space rent will still need to be paid by the buyer. The MHP may not allow you to rent the MH out in their park. That is the MHP owner or manager's decision.
 

Bozigian

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Ok now I definately understand it.

I will be reading more on RE
 

Runum

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Boz:

Start here if you want to learn about mobile homes.

Lonnie Scruggs knows a lot about the art of MH selling.


Bob
I agree that Scruggs is a good place to start. His principals are sound. Just remember that his stuff was written 20-30 years ago. The prices and quality of the deals is going to be different now. Also, in Texas, if you sell more than one MH a year you are required to be a dealer. You have to go through the dealership license process. Your state laws are probably different, better check them out. When Scruggs wrote his book the buying/selling state regulations were different.
 
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DeletedUser2

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expensive....

hmmm I think I bought Lonnie Scruggs book for 20 bucks or so. and I think you can find it on ebay or amazon for a used price

oh wait, here it is.

Lonnie Scruggs Books


my mother got to page 63 before going out and buying her 1st mobile home
 

andviv

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Thanks all of you... I wish we had more and more quality threads like this around here lately.

After apartment buildings, MH parks have always been in my mind as cash flow generating assets. As some of you know, I got tired of SFHs (well, did quit a few things wrong and got burned) but the multis are more friendly, at least to my investment strategy.

Again, thanks a lot. I thank'ed and rep'd quite a few people in this thread.
 

Chitown

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This is true. The first deal you do with them will be your toughest. After you have proven that your deals will cashflow and they are viable each deal becomes easier.

Also, this has worked for me 100% of the time, when you present a property for financing build a presentation. I buy a decent folder from an office supply store. On the left side I put all the stuff I am currently doing and how it is cashflowing. I include my history of my business and I include the bank's required financial statement. I make spread sheets and show(vacancy rates, cashflow) the not so good and the great. I explain why things were not so good and how we survived.

On the right side I include details about this deal and how it will fit into my business model. I include pictures and every fact I can gather about the place. I will get a CMA from a realtor and include that. I include a statement of property tax and an estimate of insurance. Also, include spreadsheets about this property's income projections based on best and worst case scenarios. I want to answer every question the banker would have before he asks it. I am showing him how important this is to me and my commitment to the deal.

I print it all up in color, put it into the folder( a bright red one), and present it to him when I make my pitch. You should see his eyes light up when he sees all the info I provide. It makes him look good to his boss and it greases the wheels significantly.

Good luck.
My bad -- I forgot to mention this. Runum broke it down with regard to the presentation package. It works wonders by showing the seriousness with which you take your business and their time.

Good call, Runum.
 

hatterasguy

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Its not that hard just find better deals and use private money. Banks are useless.

Go find a property where you have $100k in equity as soon as you buy, and can refi that out and buy more.
 

hatterasguy

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BTW you guys are getting killed on hard money, I pay 8% max, nothing due until the property closes, and for about as long as I want. Which is usually 6 months or less.

I just pay for the attorney to draw it up, and give them first position on the property so if I default they are covered.

Hard money is great for me because I don't have to pay a cent on it every month until I want to, I won't take on money that requires me to pay. IMHO that means they are not my kind of lender, or maybe solvent enough to deal with me. The people I deal with do this as a side deal and don't need the money to live.
 

rc08234

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hey zen*******, can you recommend any good books on owner financed properties or notes?
 

DeletedUser394

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This thread is great! Haven't been able to sleep since I read this. Thanks to everyone who contributed!

I have a question;

1) What about JVing my first few deals? The average mh in my city costs $40,000 (expensive city haha). Assuming a 20% downpayment for seller financing, we are talking some serious coin (at least for me in my present situation).

I don't see any harm in accepting partners provided I keep the majority position.. or at the very least make them sign a contract giving me final decision.

And I would buy them out eventually.
 

DeletedUser394

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One other question... seeing as mh are so expensive where I am, in a few outlying towns they are much cheaper. Towns with 10,000 residents+ homes are around $20,000... towns with 5,000 residents are around $13,000.

Would you invest in such small markets, or should I go play with the big boys in my city (population 1M+)? (for lack of a better term)
 
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DeletedUser2

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BTW you guys are getting killed on hard money, I pay 8% max,
it all depends where your at, and the comfort level of your investors.
I have a group I loan to, and I only loan in a couple of states. but I charge so much because, they keep borrowing all of it. :)

I have paid high rates before because the deal was worth it.
 
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DeletedUser2

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Would you invest in such small markets, or should I go play with the big boys in my city (population 1M+)? (for lack of a better term)
well I found all real estate is local :)

seems to work everywhere.
not all strategies work everywhere. but everywhere I have been I have been, boom, there has been real estate.

Take some time and dig into some books, ect. there is alot of free stuff out there. better yet, go find someone already doing it. and take them to lunch.
 
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DeletedUser2

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hey zen*******, can you recommend any good books on owner financed properties or notes?
there are alot out there but here is what I suggest
1. if mobile homes, lonnie scruggs, just because the guy has a great conversational tone, and explains some complex ideas well.
2. if for apartment deals, then I recommend David Lindahl (sp?)
3. if short sales ( i hate those btw) cory boatright, or the short sale kid, (Nathan)

there are so many strategies, and tactics.

I really suggest you take an inventory of yourself first.
what do you like to do?
what is your main disposition? what do you suck at? what do you excel at?
go get strength finders 2.0 and take that test. or the DISC tests.

in any case, you will need to determine if your a deal guy, a people person, a numbers guy,
if your a long term manager of the day to day, or if your hands on, get paint on your shirt kinda guy. (or gal)

the reason is, different models require diff skills, and different dispositions.
let me give you an example

Im a deal guy. I absolutely suck at the day to day running of apartments. I brought on a partner that loved it.

if you need paint, and an apartment ready to rent. he was it.

if you needed to find a deal asses it, negotiate it, and buy it with 20 bucks in your pocket, then I was that guy.

Im kinda a deal junkie. 1 hr after i close a deal, im looking for the next one, never mind managing it.

I have a friend that does well with about 18 houses. had em for ever. fixes everything himself. they are all paid off, and he collects great rent. and just moseys around. never in a hurry, just plods along all day. he expects to pass them to his kids. never sell, just rents.

i would shoot myself if i had to do that.

he told me he doesn't understand why i do what I do. why cant I just close a big deal, and take care of it? why am i always rushing off to the next deal? just does not fit into his world.

so. once you understand what your like, THEN you can go read up on some tactics. or directions.

is it houses? Commercial? storage? mobile Homes? Paper, Lending? brokering? buy and hold? fix and flip? arbitrage? each requires different skills, and a different disposition.

once I understood what I did best. I focused on just that, instead of 1 mile wide and 1 inch deep, I got really good at 1 inch wide and 1 mile deep.

like oil and gas, all the profits are deep. find your thing, and become the best at it until your in the top 10.

then you only have to compete with 10 guys :) that's easy!
 

roc

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Feb 12, 2011
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I looked into the doing "lonnie deals" and to reiterate what Run said, the biggest hurdle I found was the most MHP will not let you rent out a mobile home and there also a hesitate in allowing you to be the bank on the deal. The shear fact is that most MHP finance most of the transactions going down in the park.

The other hurdle is that most of the mobile homes I found were $30K, and not $10K or less as Lonnie illustrates in his book.


All of those look like they are in mobile home parks. All of them appear to be asking retail price.

Some MHP do not like investors working in them. Some will let you buy and sell but not rent them out. Some will let you rent them out. If you are going to begin dealing with MHP's you need to get to know what each park will and will not allow you to do.

I do not think any of these MH's on your website are motivated sellers but you can call them to find out. You ask them about the condition of the MH. You ask them why they are selling and when it needs to be sold. You ask them if there are any outstanding liens, lot rents, or taxes on the MH. You want to make sure they have clear title to the MH. Then you can go by and take a look if it sounds promising.

While you are there you want to learn how to haggle. You are looking to verify everything they told you on the phone. You also want to find anything wrong with the MH right now. You are looking for evidence of roof leaks and soft floors. You want to check all the electrical and plumbing things you can. You want to see what kind of HVAC they have and if it is working.

After you have gone over the property you need to begin leaving and acting kind of disinterested, indifferent. Don't make an offer if you can help yourself. Try to make him tell you what he will take for it. Even then, unless its a killer price you need to give him your card, thank him for his time, and nicely leave. Write down everything about the place because he may call you back soon with a better price.

Oh yeah, you do not want to have to move a MH, ever. It is expensive and will eat your profits.

You need to be clear on what this MH will do for you and how you are going to manage it. Then you also need to know how you will get rid of it. Plan, plan, plan. Your first deal will not be your best deal. You will look at a whole bunch of them before you will make a deal. That is good, you will learn the market.

Take lots of notes, written or on voice recorder. You will look at so many houses you will get them confused. Take lots of digital pics. Take a flashlight and tape measure. Wear work clothes. Drive an older car. Look like a tired working man.

I will not buy anything with less than 3 bedrooms in it any more. It's just my market, it is hard for me to rent anything out with less than 3 bedrooms. Your market may be different.

Look on the HUD website for mobiles on land. Usually they are on an acre of land or more.

Questions?
 

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D

DeletedUser2

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I looked into the doing "lonnie deals" and to reiterate what Run said, the biggest hurdle I found was the most MHP will not let you rent out a mobile home and there also a hesitate in allowing you to be the bank on the deal. The shear fact is that most MHP finance most of the transactions going down in the park.

The other hurdle is that most of the mobile homes I found were $30K, and not $10K or less as Lonnie illustrates in his book.
all depends on what parks you look at.

there is always something out there.

my friend just did a deal 2 weeks ago for under 7K
so.....
keep looking
 

roc

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This is true, there are always deals out there but you have to do homework to find em.
 

ryanpal

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BTW you guys are getting killed on hard money, I pay 8% max, nothing due until the property closes, and for about as long as I want. Which is usually 6 months or less.

I just pay for the attorney to draw it up, and give them first position on the property so if I default they are covered.

Hard money is great for me because I don't have to pay a cent on it every month until I want to, I won't take on money that requires me to pay. IMHO that means they are not my kind of lender, or maybe solvent enough to deal with me. The people I deal with do this as a side deal and don't need the money to live.

care to share this hard money source? those rates are better than my source for private money.
 

rc08234

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I looked into the doing "lonnie deals" and to reiterate what Run said, the biggest hurdle I found was the most MHP will not let you rent out a mobile home and there also a hesitate in allowing you to be the bank on the deal. The shear fact is that most MHP finance most of the transactions going down in the park.

The other hurdle is that most of the mobile homes I found were $30K, and not $10K or less as Lonnie illustrates in his book.
The biggest hurdle for me also is trying to find a cheap mobile home. Most in my area or 30-50k and some even upwards of 100k.
 

hakrjak

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Sep 15, 2007
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Hello all,

So I've finally gotten around to investing in my first rental property and all is going well. However, I have a few questions about financing and hoped some people on here would be able to help out.

So, according to just about every lender out there, banks will only count 75% of your rents as income towards purchasing the next house.

For example, I make $60,000 a year, have a $1,600 a month mortgage on my home I live in, and would have a rental that rents for $1,000.

So, the banks will only count $750 of that $1,000 a month towards my "income" to qualify me for the next property I purchase.

Thus, it seems like it would be harder and harder to get financing as you accumulate properties.

So, my question is how do you get around this? I'd love to be able to pick up say 10-15 properties over the next 3-5 years, but it seems like that is very unlikely, unless I can figure some way around this issue.

Secondly, I keep hearing people talk about hard money loans to purchase my properties, then immediately refinance them with a normal bank. Is this a good strategy, and would it work around the 75% issue?

I have about $25,000 in cash at the moment, and have found a property listed for $135,000 and I offered $110,000. The seller accepted and now we're waiting for bank approval (short sale).

Any and all tips would be greatly appreciated. My goal is to have about $3,000-$4,000 a month in cash flow within 3-5 years.

This plan has been a long time coming, and now it's almost here!

Thanks in advance for all your advice.
Reality Check --> You get around it by buying only properties that cashflow well, and in some cases putting the 20% down on them so you can increase your cashflow. Don't believe the BS about buying with hard money and instantly refinancing -- It's no longer possible due to tighter lending restrictions. You must now own a property for 6 months before you can refi it. Forget about taking cash out of a non-owner occ too, it just doesn't happen.

Cheers,

- Hakrjak
 

40000

New Contributor
Aug 3, 2010
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I bought the house, or property,
sold it carrying the note like I was the bank.
they paid me

360 a month, at 12.5% for 8.75 yrs years.

I collect the money like a bank.

pay no taxes, fix no toilets, don't touch the house.

when was the last time the bank stopped by your house to check to see if you had broken windows, or leaky sinks?

if you act like the bank, less headache. and you can outsource the management of the note, for 7-15 bucks a month.
If you don't mind me asking... How do you cover your A$$ in case of buyer's default?

I heard too many horror stories in my condo building with lawyers selling services to defaulted home owners that stopped paying their mortgages and they (the lawyers) managed to keep then living in the property "rent free" for up to 2 years...

After the 2 years (or even 6-12 months) with non-payments of mortgage, + accumulated property taxes + HOA fees.(if any).. + your foreclosure expenses + decline on property value/ repairs expenses... aren't you up to a HUGE loss + HUGE headache even if you recover the property and re-sell it?

Your response is highly appreciated, Thank you!
 

Dory

PARKED
Sep 25, 2011
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San Diego, CA
Hi. I'm new here. I'm also interested on how to get funding after having multiple properties in my name. I currently have my personal residence, and two rental properties in my spouse's and my name. We closed on the first property 1/2011, and the new property 9/2011. After expenses, taxes and all fees the cash flow is $1200 total. But the second property was a lot harder to get financing, so it seems like we reached our limit. So what's the best way to purchase another property or two without bank financing. Thanks in advance.
 

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