Im wanting to pay all cash for my 1st MHP no debt what so ever.
and then be frugal with my money and save the income to buy a 2nd park.
Im thinking this is the way to go rather then owing money on a loan is there any downsides to paying all
cash for a MHP?My goal is to own 2 mobile home parks with a monthly net of 10,000 or a little more but no less. on a sidenote I wanna get frank or dave to appraise a park for me so if anyone could let me know all the info I need to give frank when I pay for his thoughts on how much the park is worth.
Do I need to know the type of septic pipes and everything like that and any other info I may need to give him.
All cash is not a logical approach to investing in a business. You maximise your returns by using OPM not your own money. Minimum DP on multiple properties will produce a far greater return while your tenants pay your mortgage rather than allowing your cash to die a slow death as dead equity.
Your cash will produce higher returns with no effort invested in a income fund than parking it in real estate based on the effect of compounded interest. Take the time to educate yourself on investing and the use of cash before you proceed. Cash is far to valuable to allow it to sit as dead equity in property.
Cash is King. I think paying all cash in your scenario could be wise. You can obtain a CRELOC paying 0% on your debt structure until you actually need that debt to finance your second purchase or eventualities and the peace of mind earning (say) 4% return while getting your feet wet rather than (say) 8% return leveraged at 5% debt. That is such a thin margin. CapEx is a real expense and deferred maintenance is a real game of WhackAMole.
It’s easy to forget about volatility and a lender can be a hassle to partner with. There are all sorts of reasons not to leverage. You can always leverage later.
Funds have their own risks. So do partnerships. Nothing is sure, only the risk/reward profile can be assessed and compared to alternatives and with the market right now Purchasing Price CapRates are Priced Precariously COMPARED to Percentage Paid to Bank.
The size of the numbers provide some context too. Are you debt free otherwise? What’s your cost of capital to borrow? What’s the purchase price in relation to your personal home value? Do you have family to support? What’s your risk tolerance? These questions are meant to provide context, I don’t mean for you to answer them.
Compare : purchase mortgage of 2X sized park with 2X variances to : purchase for cash and then later mortgage for “cash back” for “project in mind”. Second one is much less risky and the lender has a track record. Also it’s easier to manage. First one is 2X EV and a lot more hassle.
Im a single guy who saves his money I live in a modest paid for home.
And I have no car payments.I was thinking about paying cash for 1 park and building the money up
and then maybe buy a big park later on with a huge down payment is that such a bad idea?
Im debt free and have no wife and kids.I recently inherited 500,000 of life insurance from my grandma.
I would be willing to pay cash for up to a 400,000 dollar park.That money i make monthly from the park would build quickly as im a cheap person LOL,I buy only what I need Ive been looking into what to invest for years and MHP seems to be the best bet for roi IMO.I would be happy with 2 small parks making 10,000 monthly NOI total between the both of them.
OPM is an excellent way to create a high ROI. Personally I would aim for One larger park than two or more smaller parks to achieve efficiency of size and have a larger pool of future buyers. As mentioned paying all cash for the first park allows you to easily secure a new loan for a second park PLUS you will have experience that lenders desire.
My assumptions are that any property backed loan is likely the cheapest money you can borrow (4% - 6%). Well under the returns of just about any market play.
That said, you’re leaving gains on the table by not putting that money to work in something that’s higher yield, even if it’s not another park.
You are in an enviable position. You might also consider CAREFULLY partnering on a park with an experienced operator for 50-100k of the cash and then go bigger next round?
Sounds like you are at ground zero for a knowledge base. There is much you can learn for free or with small money. If this is your first real estate, give yourself 3-6 months for some learning before putting cash on the barrelhead for something with as many parts as multifamily.
Ive got a small park under contract.
Im looking for a partner with 145k. The return is very good.
Tom Morrison tjm9988@gmail.com
With your amount of money you could probably bring in 30 to 40 Grand a month