Posted by Tony Colella on August 16, 2005 at 07:53:00:
There are many ways to create positive cash flow. Lonnie’s system is very safe, takes little money and teaches a tremendous amount about money and investing. I would not forgo it for anything.
Our land/home book combines mobile home investing with real estate investing. We invest in these types of deals not only for positive cash flow but for the ability to increase net worth and allow us access to lump sums of cash (for more deals).
As for you CAP rate question. CAP rates are intended for multiple unit, commercial type properties and should not be used with individual properties. Furthermore, I argue they should NEVER be used by investors when analyzing the property. Too risky. Once an investor has determined the value of a property (such as a small mobile home park) for themselves, then they can determine the CAP rate to impress the bankers and appraisers.
To me, the only numbers that matter are the bottom line figures (what goes into my pocket at the end of the month after all bills are paid, including the mortgage and reserves).
I must admit that I haven’t read any of the literature other than the postings on this sight. I’ve been considering purchasing a DW (1985 model)w/lot 3/2 for 60k , $575 rent occupied, owner financing. I was going to offer 5-8k down and the rest over 20 yrs, hoping for reasonable interest terms. i’m interested in cash flow of a couple hundred $. What should I look for in an inspection. Is this worth it? Should I not look for MH since i’m not a flipper?? PLEASE HELP. I’m more interested in obtaining multiple units over time w/+ cash flow, MH or traditional housing.
Re: Please Help, L/H rental opp. Any Suggestions? - Posted by MichaelH
Posted by MichaelH on August 15, 2005 at 09:21:51:
I just finished reading Tony & Scott’s book on mobile home/land deals and will be going back in for a more detailed study course forthwith. They have an excellent approach to what we’re all trying to do here, and have worked out systems for number analysis & hands-on repair. I’m sorry I can’t make the boot camp this year. I’m sure it’ll provide the keys for many of the particpants. Get their book! (Yet another unsolicited testimonial.)
Re: Please Help, L/H rental opp. - Posted by Tony Colella
Posted by Tony Colella on August 15, 2005 at 07:28:12:
Like anything new that we try, what hurts us the most is what we don’t know that we don’t know. Reading a few posts may not cover all the pitfalls and opportunities for you.
As for the example you gave, if you are seeking a couple of hundred positive in cash flow per month, the price and terms are cutting it very slim.
The payment, as you are looking to structure it, would likely be over $400 per month. That leaves less than $175 per month to cover all other expenses, vacancies, repairs etc. and your profit.
You may be able to make this into a deal but as it stands now, rent is low for that price and structure.
I think you are on the right track with the doublewide land/home deals for cash flow, wealth building and the opportunity to tap into lump sums of cash for bigger deals.
That is the approach we use in our Investing in mobile homes with land book that we have here. Not a sales pitch to you, just letting you know that the info you seek is contained somewhere. Always easier to make a better wheel yourself than it is to create one from scratch.
thanks for the reply’s. Tony, i went to borders today to try to get an overview of your books before deciding to purchase a particular one, but they were unavailable. i think that that is to the advantage of mh investors, as others will not know the business, i.e. less copmpetition. i will buy the book on pay day. not sure if i should get DOW or your mh/land book. once again, my interest is in l-t positive $ flow. thanks again. by the way, is their any heavy credence placed on a 9.5% cap rate from a purchase?