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).