The answer depends a lot on your specific situation. Can you get enough money now to pay off your mortgage and transaction costs? If so, I'd say sell now. I definitely don't think that you should rent. L/O depends on your situation and your goals w/ the property. Why are you avoiding selling outright?

[QUOTE=spex x;4455621] Thank you. I was just asking out of the sake of curiousity. My family was recently thinking about buying a 6.2 million dollar property in Westwood(30k sq. feet)(prime LA commercial real estate). The building was garbage, but the location was fantastic. I was looking for advice more along the lines of how to deal w/city bureaucracy and/or how to be able to increase the amount of floors that you could build. Also, what are other significant challenges have u had in developing and rezoning? Moreover, how do you deal with city building inspectors. Also, how much money do you think one would need in reserve to be able to complete this project w/out risk of ruin. 4 floors, and 1 floor underground parking in Los Angeles. 20million, 30 million?

Ok Patcho, give me one sec to go through and read 700 posts.

If you don't want to invest the time please GTFO.

Imo.

search function

Or control+F, type 'book'
noob

requires you to have an add-on to view-all. if he's not searching he probably doesnt have that.

search function easier than ctrl-f on 8++++ pages
noob

I just figured I wouldn't get a good price for the property in today's market. Bad assumption? My only goal is to not carry two mortgages. Yes, we have enough equity where if we sold, although I assume we wouldn't get top dollar, we would definitely cover the mortgage and transaction costs.

lol I wasn't calling you noob but I can see why you were confused
noob


And I agree search function is easier, just saying there are many ways to search

Have some questions for spex et al about "Lonnie" mobile home deals.

Situation:

Found a guy that writes

"i paid 69000 one year ago its like new inside i want 8000 cash and take over my payments i owe 36000 36000 plus 8000 is 44000 im losing 25000 but i need to move please call me its a1999 model"

Questions:

1) It seems like a good deal to me on the surface and I'd like to make the guy a lowball offer. But there's really no room to negotiate on the 36k he owes, right? Only the 8k down is negotiable. Am I right about that? What's the best way for me to negotiate here?

2) I remember in his book that Lonnie councils against doing deals that are greater than $10,000 for various legal or tax reasons (I can't remember and I don't have the book in front of me). Does this rule apply to the current deal? Only $8000 cash would change hands, assuming I didn't negotiate a better price.

3) This $10,000 rule is really a hinderance. 90% of the mobile homes I see advertised are for more than 10k, so the pickings are really slim if I stick wikth this rule. What do you think?


Thanks in advance for your help.

Big thanks for all your time spex x. Just read the entire thread over the past few days. Hopefully I can put this info to use.

Wow, great thread. Spex x you are a saint. If you're ever in Sarasota, PM me; dinner at the restaurant of your choice is on me. Thanks!

wow. I just spent 7 hours reading this thread. Incredible work, thank you so much for sharing your knowledge, Spex. Also thanks to all the others that helped answering questions.

- Karl

There's seriously more real estate wisdom in this book than any 4 year university course could ever compile as well as years and years of experience.



Someone should make this into a book or something. Compile all the spex posts and turn it into a book.

the reason this thread is so good is the direct examples. most real estate books in my college courses cover these topics somewhat broadly without great examples like the real world ones in this thread give.

this thread really is great

Question for Spex or anyone else that may have an answer:

I recently looked at a three unit apartment building. Total rents would be around $2100 a month. Without getting into too many details of the financials...the asking price is $175,000 and the property is taxed at a $90,000 value. However, insurance is around $900 a month according to the owner. The insurance company appraised the property at roughly $300,000. Obviously an insurance cost this high destroys any viability of this deal. Why would the insurance by so incredibly high? Is this due to an error on the current owners part? Is it worth exploring how to get that number down? The number just seems so odd and the owner was sort of hesitant to talk about it - it was clear this was the reason he was trying to sell the property. Any thoughts?

Thank you,
-dustyn

Insurance companies will normally insure for the cost of reconstruction, which is a totally bogus number that you shouldn't even consider when looking for comparables.


900$ a month for insurance? Maybe 900$ a year.


What are the comparables of SOLD triplexes? This is the only thing that matters.

Most real estate books in school were written by people that have bought no more than 1-2 properties in their lifetime.


Same as business books being written by "experts" that have never owned / operated a business in their life.

Same as marketing books being written by marketing doofuses that have never applied any of their marketing knowledge to make any money.

puke.

Hey Spex,

I just read through the entire thread and am currently in the process of re-reading it and compiling notes from it. It and your efforts are phenomenal!

A few questions though--I know you said you didn't want to delve into taxes at all, but I figure the following are pretty quick, rudimentary questions.

I'm loosely aware of the 1031 tax deferment, and that it's based on the idea of immediately re-investing the entirety of your liquidated asset into a higher-valued property, but what of investing it into two lesser properties? Would it still apply or do you have to pay the capital gains tax?

Also, I'm assuming that your monthly rent acquisitions get taxed, but are there any deferment options if you solely use the profits for investments later on? I understand that your tax situation is different than your average Joe's, but perhaps generally speaking?

spex,

I'm looking in the next year to stop renting and buy a place with multiple bedrooms and live there, while renting out the other bedrooms to friends. (randoms if necessary)

At some point I could see myself moving out but still wanting to hold on to the property and continue renting it out.

What percentage of the total cost of the house should one months rent be ?(sum of all tenants)

I know there are other important factors, but I think this number would give me a great ball park figure.

This way I can look at places, estimate the total monthy rent I could recieve and figure out around how much I should be willing to pay for the property, and if it would be a good deal for me or not.


I understand the concept that cheaper properties are better, but since I want to live there I will have to draw the line at some point (not live in the ghetto)... so even though this would not give me optimal EV financially, It will be better for my life

Oh! Also,

A buddy of mine raised an excellent (at least I thought so-) point: What of renting out the mobile homes while you still hold the deed to it?

I know of a couple MHP's nearby a local University. Rent those out by room to students, and voila. Renewable income on a yearly basis. If it's legal or plausible, it'd be of an extraordinary benefit to the student and the investor--the average apartment rent here turns out being something like 600/person. For a 2 bedroom MH, ~300 lot rent, 300 MH rent = $300 per person. If the MHP owner doesn't want to mess with constantly changing names on utility bills etc., the investor can just cover all utilities and bump up "rent" a couple more bucks.

GGrey,

there's a park near me with 200+ units that only rents the homes. They charge 220/home and have a long wait list and extensive screening process. So it's a popular park/idea.

The main drawback to renting is having to maintain the units, if pipe bursts, the roof leaks, etc. (just being a landlord in general). FWIW, in a different part of my state, MH rent is 600-800/mo

PartysOver sums it up pretty complete. If you rent them out you have a property that's going to cost you lot rent, upkeep, utilities, etc. If you sell it you have a cash flow for a few years + you don't have to pay any upkeep.

Also, Lonnie Deals are mostly done with cheap and old homes. This way you can maximize your return. I wouldn't want to be the landlord of a 20 year old mobile home tbh.

All good responses.

I actually just finished reading Deals on Wheels, and it really turns out that Lonnie does cover just about everything including rentals in the book. He does pose the idea of doing lease options on them and raising "rent" to compensate for tax and insurance--not too bad of an idea.

So, I think you guys are right--probably way too much of a headache to be responsible for older mobile homes--may as well wait until we have capital for a real apt complex.

I'd still like to hear about the tax question if anyone has an idea of it. Lonnie states that you have to pay taxes on the FULL profit amount the year you sign the note. Basically, if you buy a MH for $2000, resell for $5500 including interest, you have to pay taxes for the $3500 gain that year. That was one of the benefits of renting or l/o--you only have to pay interest on your accrued income for that year--not for the whole lease. He also mentioned that some states regard mobile home as land property, and others solely as vehicles. Can anyone elaborate?

you'll have to find out if mobile homes are sold via deed or title.

in virginia, they are sold on a deed only if they are attached to a permanent foundation. you should also find your state code and see if you need any special licenses to sell mobile homes (in virginia you need to spend ~1100 for all the licences)