I feel real smart now that I read Franks latest article in The Journal.
Thanks Frank great article.
Rick
Thanks, Rick. I’m glad somebody likes my articles.
Frank
I read all about the Sam Zell deal somewhere else. I was just hoping someone like you would explain the surrounding reasons why he would buy at this time and correlate it to us small time operators. These are the best of times for those that have a plan and will act upon it as you and Dave well know.
Rick
Is there a way to access this article?
Rolf
Wheat Hill
I will email it to you
Sam Dell is as smart as they come. I watched him get in and out of Gafia , the major home builder in Brazil. He is as shrewd as they come and has great timing. If he likes MHP’s … pile in.
IMO , there are only two choices right now. One is hope there is no depression and just throw everything you can into either MHP’s or find apartments that are priced right. How can you beat 10 caps at distressed prices . Maybe the better deal is the 6% financing that’s avaiable. Choice two is put everything you have into gold silver and cash and go hide in a hole when the depression hits.
Steve, your either-or suggestion in respond to Frank
Well said Bernd,
However, I don’t thing we need to wait for a depression to start hunting season. I think we are already in the midst of a great hunting season, especially for those with cash and a little vision.
Steve,
One other idea is for those with great holes to hide, you can make them into high end condo holes and sell as a niche resort. Think of those ice hotels. Or that one guy selling bunker hole residents for rich people believing the world will end next Dec.
Lol. What I meant by living in a hole is this. Maybe the worse thing you could have in a depression woud be gold and silver. Do you all think that this population has enough courage to fight through it ? Or do you think anyone who had something would be in danger of being pillaged by angerey country men.
As far as investing now or waiting for bigger bargains. I look at it like this. When the Fed says no interest rate hikes for two years , that forced everyone into equities. If the economy worsens the stock market goes to hell. I think more and more people will put there money into income producing properties. If that happens , won’t they go up ? What could be a greater investment than cheap housing if things stay the same or get worse. The only way you can lose is a deflationary depression. It is very posible it could happen but I’ll gamble.
Everything is a gamble. Steve Case loves self storage as it doesnt have all the pitfalls of MHP’s. But what happens if someone puts a bigger and fancier one next to his ? Much more of a concern than someone building a new MHP…no ? Bottom line is no one has all the answers in this terribly screwed up economy. My goal is to generate income whie I can stil eat a lobster.howardhuang33 wrote:
Well said Bernd,
However, I don’t thing we need to wait for a depression to
start hunting season. I think we are already in the midst of a
great hunting season, especially for those with cash and a
little vision.
Steve,
One other idea is for those with great holes to hide, you can
make them into high end condo holes and sell as a niche resort.
Think of those ice hotels. Or that one guy selling bunker hole
residents for rich people believing the world will end next
Dec.
Steve,
I agree investing in any type of commercial real estate is a gamble, but the trick is to sway the odds in your favor from the very beginning. My recent self storage acquisitions have been those where I can buy for far less than replacement cost. Therefore, if someone was crazy enough to build one next door or even down the street, they would be hard pressed to make a profit because their investment would be much higher per square feet than mine. I would kill them in a price war.
I know this forum is not about storage, but the same principles apply with MHPs. My competition right now is the apartment complexes and even in this slow economy investors are building more units. If your homes are not priced lower than the apartments by at least $50 per month for the same square footage, a manufactured home becomes a tough sell.
Are we in an oppurtunity laden environment right now? I believe we are in certain areas of the country. Just make sure proper due diligence is followed to tilt the odds in your favor.
BTW, I’m all about making sure the lobster still stays on the table, it’s one of my favorite foods.
Steve
Steve , i agree that self storage has far less headaches than apartments or MHP’s. Also agree that you can really only "tilt the odds " in your favor and yes demographics are crucial.
Furthermore after meeting you at a 2008 bootcamp , my opinion is that you will succeed in about anything you take on.
Steve,
You are very kind. I’m sure I won’t succeed in everything I do, but it won’t be because of a lack of effort.
BTW, I like your suggestion about gold and silver. I’ve been buying a little silver myself lately. Hopefully, those coins will pay off down the road but if not, they sure are pretty to look at. I’m still trying to find a reputable dealer to buy some gold krugerands…any suggestions?
Thanks,
Steve
I haven’t looked at the prices of gold coins in ages. Just checked out Northwest Territorial Mint (google) and the upcharge for a krugerand is about $90 with a minimum buy of 5. They quote about $100 more for a purchase of 1. That might apply to less than 5 … they aren’t very clear on that. This was always a competive place to buy metals , but I would check a few more out. I would also check Investment Rarities. 800 328 1860. I bought gold coins from them as far back as 30 years ago. They are probably as reputable as you can get. I know if you buy n amount more than 10K it gets reported. Not sure if this just applies to cash purchases…
Hope that helps
Steve Case said:
“My competition right now is the apartment complexes and even in this slow economy investors are building more units. If your homes are not priced lower than the apartments by at least $50 per month for the same square footage, a manufactured home becomes a tough sell.”
I have found that apartment dwellers are reluctant, especially in the last two years or so, to take on the responsibility of manufactured home ownership even at a slight discount when all other things are equal (number of bedrooms, and square footage).
The thought of being tied into a longer term agreement (like a 4-7 year note) and maintenance costs of MH’s has been a more difficult sell, as-of-late, when people don’t have an optimistic view of the future. The above comments pertain mostly to single-wide mobile homes, in my market.
Doublewide homes face a different set of obstacles in some cases, but overall are much easier to fill if they are in nice shape. There simply aren’t many 1600+sf apartments out there and SFH rentals in good areas are priced considerably higher than the total payment of lot rent + note.
For this reason I no longer invest in singlewide homes, unless it is to flip/move it to another park. My singlewide LD days are behind me, as it’s going to take many more years, and many more sales to unwind the note portfolio of these I already have. These homes have been very good to me over the years, but I have begun the process of exiting… just a rational decision I’ve had to make as I look at the trends in my own business.
These comments reflect my observations on my own market of course, and might be contrary to what others are seeing in their neck of the woods! I only even mention this because I have recently become aware of how different areas can be so very different, yet similar, if that makes any sense at all?