Dallas, TX Platinum Properties Investment Network Analysis - Part 1 In an economy where only small jobs in the service sector seems to be booming, the trend is away from high-end properties as demand is growing for the rented sector. Meanwhile, the window of opportunity narrows to enjoy a market that has been both maligned and neglected - mobile home parks. In episode # 168 actions Creating Wealth See Dave Reynolds guest expert on the subject. Reynolds was born in the enterprise, but it was not infatuated with him until he saw his father managing profitable park with the prospect of a degree in accounting in recent years. Her own entry into the park property came with a cash advance by credit card to fund a down payment. This inauspicious start began a career in the acquisition of the mobile home park management that has lasted a dozen years and several states.
Mobile Home Park value added strategy
Reynolds prefers to deal in land, lease of lots rather than homes. He called Lonnie deals - investing in mobile home park, rather than lots - "the worst of both worlds" because the investor is required to hire a lot regardless of occupation. His strategy is the transition provisions home park belonging to the space only deals. In addition, mobile home parks benefit from the IRS Figure 15 year amortization, while the ratio of the value of improvement - 70% of the land land improvement/30% - is comparable to other sectors of real estate. Improvements for mobile home parks include infrastructure like roads and utilities.
Formulas for evaluating mobile home park Deals
To assess what might work at a park agreement, Reynolds uses a basic formula with a variable depending on the party responsible for utilities. If utilities are paid by tenants: Number of lots multiplied by the monthly average rent many times 70. If utilities are paid by the park, instead of multiplying by a factor of 60. Although vacant lots are a potential revenue, they should be assigned a lower value when purchasing. The metric that applies when the lots occupied price is based on the rental space. He spent ~ $ 5000 for one lot that rents at $ 100/mo.; Double that if the rent is much double. Reynolds prefers a price of $ 5 to 15.000 per batch, by subtracting the value if vacant.
Best Management Practices mobile home park
Reynolds uses both offsite and onsite management, the latter acting as his "eyes and ears in the park." Redeemed with free rent and possibly additional charges, on-site managers manage operations on a day day, maintenance, and tenants. He advocates the use of a cashless system - and a good accounting system - to discourage theft. Software like Microsoft Excel and QuickBooks assistance. When Jason tackles the topic of the use of a contract clause prohibiting the Master Lease illegal or immoral activities by tenants, Reynolds says that in his experience, he has rarely encountered this problem, and that the bad reputation in a mobile home park is often undeserved.
Find the ideal opportunity mobile home park
In general, Reynolds looks smaller mom and pop type of parks, which he said has more than one third of the market because he found they are often well managed, but not so profitable. His ideal is 5 to 10 acres of property with 35-40 seats offering the opportunity to intervene and rent increases in line with the current rate. Generally there are no leases in place, and he praises his own parks primarily on a monthly basis, allowing greater price flexibility.
Methods of financing for the acquisition of mobile home park
Owner financing seller / with 10-15% down (often with an assumable note) is the main strategy since they are non-recourse deals meaning that the park itself is vulnerable as security. Moreover, he used REO deals and local bank financing, usually two to 25% prepaid.
Posted on July 26, 2010.
