Potential Real estate deal - comments appreciated
 

I comment here quite a bit on RE investment ideas that other people are trying to put together. A lot of the time I talk about how you can buy great income properties that offer a 10%+ cap rate and a 25%+ cash on cash return (ROI). Well, I just found just such a property, and I figured that I’d post the details here for education and public comment. Right now I’m in the very initial stages of this deal, and I’d like continue the thread to the conclusion of the deal, and hopefully the first month or two of operations if I buy the property so you guys can tell if it was a deal or a bust.

This deal was brought to me by another investor that I know. My friend knows a guy that knew the seller. My friend, like me, buys mobile home parks, but he focuses on larger properties than I do, so the tossed this one my way. I likely wouldn’t have been interested in it except that its only like 20 minutes from my house.

The property is a mixed use property. It has a 6-unit motel, 6 RV hookups, a 5-plex, and a 20 unit mobile home park. I heard that the seller is dying to sell the place. That piqued my interest obviously. So I gave the seller a call and got the scoop. He bought the property 8 years ago with cash. He spent some time renovating mobile homes, etc, but overall he was not interested to continue to run the place. He decided to lease-option the property to some random lady from his church with no RE experience. You can imagine what happened. He ended up taking the property back and then lease optioned it to another guy with no RE experience. That guy ended up being a drug addict and allowed the place to get into disrepair. Eventually the place closed completely, and was recently reopened by the seller.

The property is distressed. The mobile home portion of the property is worth basically nothing considering that 15 of the 20 mobile homes need to be hauled off and trashed, then replaced by new homes. However, there is a huge upside potential from bringing in new homes. The motel and 5-plex are actually in great condition. The property is in a bad area and will likely bring in mostly transient tenants. However, there is a factory about one mile away that employs 300 workers. There is also an airport about a mile away that employs lots of people.

Another problem is the fact that I’ve never owned a motel before and I don’t really know how they are best run. This is not insurmountable, but it is a consideration. On the other hand, how hard could it be to manage 6 motel rooms?

The seller wants $300,000 for the property. The 5-plex is rented at $2900 per month, and the motel rooms are currently all rented at $550 per month. I’m not really sure how to guess at expenses for the motel. I spent some time online trying to get some ballparks, and I found a range of 45-55%. I assumed 70% expenses for the motel, and 45% on the apartments. On the expenses, I’m making an educated guess.

Hotel = $3,300 – 70% = $990 NOI
Apts = $2,900 – 45% = $1,595 NOIT
Total NOI = $2,585, or $31,020 annually

Now, starting at $2,585, we can easily figure out if the price of $300,000 is within the ballpark of reasonable. Here are some purchase prices at various cap rates:

10.34% CR = $300,000 ; (31,020 x 10 = 10% CR)
12% CR = $258,499 ; (31,020 x 8.33 = 12% CR)
15% CR = $206,903 ; (31,020 x 6.67 = 15% CR)
20% CR = $155,100 ; (31,020 x 5 = 20% CR)

Right now I’m thinking that I’ll make three different offers that reflect my risk in the deal. I have to wait to get some financials before I make the offers, but here is the skeleton of what they’ll likely look like:

Offer 1: $155,100 cash (20% cap rate)
Offer 2: $206,903 (15% cap rate), $20,000 down, seller carries $186,212 at 6.8%, $1213 per month, 10 year balloon
Offer 3: $280,000 lease option (11.07% cap rate on purchase price). $10,000 option price, $1500/month, with $1000 per month credited toward purchase price.

The income numbers above don’t even consider ANY of the current MH park income (which amounts to about $1400/month currently). So basically, the numbers above would allow me to buy the property at a great price, make money from word go, and create quite a lot of upside by improving the MHP side of the operation. The MHP side could bring in another $2,000-$3,000 gross per month just on lot rent.

I’ve requested the following information from the seller:
Tax returns - 3 years
Annual profit and loss statements for 5 years
Two years of monthly P & Ls
Balance sheet for 3 years
Rent roll including term, deposit, payment history
Payroll register - all employee names, position, wage, entitled benefits (including free rents)

Appreciate any comments, ideas, questions. I’ll try to keep you guys posted, but maybe nobody cares…

Re: Potential Real estate deal - comments appreciated
 

There isn't really much to add in terms of advice, but I have a few questions.

I have zero experience with mobile home parks and motels. What kind of a motel is this? A month long motel rental? I don't really see any of these in my area.

How would you proceed to run the mobile home park area? Trash the homes, and then advertise to lease the land to people who own mobile homes?


What's the population of the area? Low income housing?


Your 3 offers are absolute steals. Overall this is a killer deal, the 5plex / motel income is already worth the price you're paying for the property and what you do with the mobile home is just icing on the cake. Awesome work.

Re: Potential Real estate deal - comments appreciated
 

Did you tie up this property yet?

I'd get over to the owner ASAP and work up some sort of purchase and sales subject to all the documents being furnished to your satisfaction.

I don't know why you are waiting for more documents to make your offers. I wouldn't.

Last question, is the motel self-managed?

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]

I have zero experience with mobile home parks and motels. What kind of a motel is this? A month long motel rental? I don't really see any of these in my area.

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Its basically an older mom & pop type of operation. Basically just a little roadside motel. The seller has been renting it out for $155 per week or $550 per month. The rooms are all kitchenettes. The road its on is high traffic, but like I said, in a bad area of town. It was probably originally intended to cater more to nightly guests, but the deterioration of the area likely forced it into a more extended stay situation. Not really sure though.

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How would you proceed to run the mobile home park area? Trash the homes, and then advertise to lease the land to people who own mobile homes?

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I would salvage what homes I could and sell them. Whatever homes I trash will have to be replaced, and I'll have to foot the bill for bringing in new homes. These days nobody that is willing to live in a mobile home has the cash to buy one and have it hauled in. I'd buy, haul in, and resell them on a note.

[ QUOTE ]


What's the population of the area? Low income housing?

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Its in a city of about 300,000. There is the possibility to replace homes and rent them out rather than selling them on notes. But frankly, that is too much management hastle, IMO, and the cash flow isn't that much better. However, I could get Section 8 approval on the homes and rent them that way. They'd stay full, thats for sure. Its a possiblity.

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
Did you tie up this property yet?

I'd get over to the owner ASAP and work up some sort of purchase and sales subject to all the documents being furnished to your satisfaction.

I don't know why you are waiting for more documents to make your offers. I wouldn't.

[/ QUOTE ]

Yeah, I know, but something is making me hesitate. The deal seems a bit too good to be true which is why I want to see everything up front before making any kind of committment. The thing that I keep coming back to in my mind is that the property has been lease/optioned twice and neither person made it work. Somehow I just can't figure how that would be possible unless the payments on the least agreement were ridiculously high or something. I dunno, I just wanted something a bit more. I should probably just get it under contract. I know you're right.

Edit: Part of it is that I want to verify the motel income. All the rooms are full now, but I want to be sure that they're STAYING full all the time, or at least have a reasonable vacancy rate. Seller claims that the rooms are always full, but sellers tend to ....well....lets say exagerate. Since the motel income makes up so much of my gross, I wanna be sure that the income is correct.


[ QUOTE ]
Last question, is the motel self-managed?

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There is a manager in place that oversees the entire property. She gets a free apartment and $600 per month. I don't know what kind of job she is doing, but the place seems like its kept up very well. The manager has a decent situation for herself, and I'm sure that she'll want to stay on. I haven't asked her yet though.

Re: Potential Real estate deal - comments appreciated
 

Well, I would probably be sitting with the seller either tomorrow or at the latest Saturday morning and pound out all the details.

Dying to sell is a good word and enough of a good word to proceed.

I'd iron out an agreement and make it subject to whatever the hell you want.


Have you spoken with the manager yet? I think this is the KEY person you need to speak to ASAP to find out whats going on. Also knocking on tenant's doors and talking to them directly is something I often do. You will be bound to find one honest tenant in there that will sing the entire story of the property.


Another thing. What's your exit strategy?

If he accepts cash, do you flip or keep?


I like the owner finance approach but why are you voluntarily giving him 6.9% interest? Since when does a motivated seller get to have 6.8% interest?

Re: Potential Real estate deal - comments appreciated
 

Normally when I make them take back a mortgage, I just assume not payments and no interest.

When they ask for payments I say "How much do you need a month?"

Then I'll negotiate that part down.

If they ask for interest, I'll say:

"Interest? Why do you need interest for? Are you a bank?"

"Do you want to sell or do you want to be a bank?"

"The most I can give you with interest is what a bank would give you, or else it isn't fair"


The fact that he leased this property out to a bunch of idiots TWICE makes me think this guy is not really savy and you can get a really good deal out of him.

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]


Another thing. What's your exit strategy?

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Yes, this is the biggest problem with the deal that I can see. I would buy this with the intention to hold it long term since it would be such a good money maker each month. The problem that I can see is that the area is such that any future investor that is serious will recognize the inherent tenancy issues with the property. I've got two sex shops accross the street and a strip club about 2 blocks down. Not really conducive to a family environment. Tenancy is likely to remain highly transient. Most of the time I like to buy mobile home parks that can be made into communities. Thats not an option for this property. Any serious investor will immediately see this problem.

Another problem is that I think that its going to be kinda tough to find a bank that is interested in financing the property given its mixed use. Plus, most serious investors will probably not like the mixed use anyway. These issues highly limit the pool of future buyers that will be interested in the property. This is a very difficult issue, and I'm still not really sure of the answer.

In sum, I know that I'll keep the property long term. I just don't know how I'm going to be able to sell it later on.

[ QUOTE ]

If he accepts cash, do you flip or keep?

[/ QUOTE ]

I'd keep it for income. See above.

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I like the owner finance approach but why are you voluntarily giving him 6.9% interest? Since when does a motivated seller get to have 6.8% interest?

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mmm...good point, and normally I would agree. Actually, I considered this issue and decided to offer the interest in order to better differentiate the lease/option offer from the seller finance offer. All the offers are good, but the offer I want him to take is the lease option. I can make the most money with the least risk with the l/o deal. Would you disagree with my thinking?

Re: Potential Real estate deal - comments appreciated
 

Looks like you will be a slum lord. Always good deals in slum areas.....


What are the neighborhood problems? And shootings? Violence? Crime?


Considering the fact that he has been burned TWICE before by lease option buyers, it may or may not be a hard sell. The 2nd option is the owner finance option which I like the most since it would give me absolute control over the fate of this property and what happens down the line.

I normally don't like to have any strings attached to the previous property owner.

Re: Potential Real estate deal - comments appreciated
 

Either way, with the price you are buying these things at, meaning IF you get your price, it's a steal regardless of any offer / option you pick. It almost doesn't even matter.

Re: Potential Real estate deal - comments appreciated
 

interesting thread. Keep us updated spex. Also, does your friend expect a finders fee or was he just doing you a solid?

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
interesting thread. Keep us updated spex. Also, does your friend expect a finders fee or was he just doing you a solid?

[/ QUOTE ]

It was a solid. We look for each other like that. This is one of those situations where being involved in the local community of investors paid off.

Re: Potential Real estate deal - comments appreciated
 

Spex,

Interesting read...deal sure looks solid on cash flow. Management issues might be the problem given the clientele. Are you adverse to Sect 8, seems they'd be the lesser of two evils vs transients, no?

Follow up to the "exit strategy" question.

Any chance of, or value in, subdividing? Thinking along the lines that the parts might be worth more than the whole, and a piece rather than the whole might possibly be more attractive to future buyers.

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
Spex,

Interesting read...deal sure looks solid on cash flow. Management issues might be the problem given the clientele. Are you adverse to Sect 8, seems they'd be the lesser of two evils vs transients, no?

Follow up to the "exit strategy" question.

Any chance of, or value in, subdividing? Thinking along the lines that the parts might be worth more than the whole, and a piece rather than the whole might possibly be more attractive to future buyers.

[/ QUOTE ]

the numbers look good on paper. But the management might be an issue. You have to remember the kind of clients your likely to be dealing with here.
how are the eviction laws where you live?

How do they apply to "motel"/moble homes compared to standard apartment/house rentals?

What are the local laws on abandonment? this might be more of an issue with mobile homes as they can be considered personal property.

I don't think any of these will be a big issue but I brought them up for discussion sake.

Looks like you have a good deal on your hands if you can get a reliable system for management. This could be one giant headache or a smooth + cash flow. Most likely somewhere inbetween.

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
Looks like you will be a slum lord. Always good deals in slum areas.....

[/ QUOTE ]

haha, I already AM a slum lord. I've always focused on low income housing because, as you mentioned, there are always good deals in low income areas. I makes for more tenant headaches, but I screen tenants extensively and only chose the best of the bad options. I also limit my tenancy issues by accepting Section 8, and that creates a lever with which to control tenancy much better. I rent to low income people, but I'm proud to offer the BEST low income housing in the area. My places are kept emmaculate, and this property will be no exception. My places also attract the best tenants in the market segment I'm after. this property wil just further build my slum empire. [img]/images/graemlins/smile.gif[/img]

[ QUOTE ]

What are the neighborhood problems? And shootings? Violence? Crime?

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Well, there aren't really NEIGHBORHOOD problems. This property isn't really in a neighborhood at all. The property is on a 45 mph split highway with commerical buildings on both sides of the road. This property is the only residential anything for some distance. So the property is pretty isolated. Crime and such are low in the general area. The only real problem is that lots of the commerical buildings that are there are boarded up (maybe 15-20% of them), and the presence of the sex shops. The other businesses that are right there are mostly used car lots, RV sales lots, and that kind of thing.

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Considering the fact that he has been burned TWICE before by lease option buyers, it may or may not be a hard sell.

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yes definitely. This seller doesn't seem too bright though and I think he could be convinced. I'm pretty experienced as a landlord to low income tenants, and I've done projects like this one before. I've got a long-term employee that has agreed to live in the MHP and start renovations immediately. His property is in capable hands, and I think I can convince him.

[ QUOTE ]
The 2nd option is the owner finance option which I like the most since it would give me absolute control over the fate of this property and what happens down the line.I normally don't like to have any strings attached to the previous property owner.

[/ QUOTE ]

yeah, agree. The only reason why I prefer the l/o deal is that it limits my risk so much more. This property seems like an enourmous risk to me, and I want to limit my downside as much as possible. The l/o deal gives me the ability to get away from the property with minimum fuss for both me and the seller.

Re: Potential Real estate deal - comments appreciated
 

I have a bunch of dumb questions. If you don't want to waste time responding, I understand.

When you model this up, do you anticipate future rental income increases are offset by expenses increasing by the same amount?

Do your expense estimates include insurance and property taxes? Do they include an estimate for depreciation to cover periodic big ticket items like replacing roofs, siding, appliances, etc?

At what point in the process do you conduct a lien search?

After you purchase the property, how much time will you spend "managing" it?

Just out of curiosity, how big is the parcel of land all this sits on?

Re: Potential Real estate deal - comments appreciated
 

I am invloved with commercial real estate, not this type of mixed use residential property, but I would want to know:

How much land?
What are land values in the area?
How is the property zoned?
What are expenses / revenues last 3 years.
How much would new mobile homes cost?
Could the property be sub divided and individual pieces sold?
Could individual mobile home pads be sold?
Why did past two operators fail? What were their revenues / expenses?
Why does the owner want to sell?
What are the anticipated annual reserve requirements for future capital expenses.

In my experience it is very easy to play games with revenues and expenses to make a property appear more profitable than it is. Why would an owner give up 10% to 20% cash flow in exchange for a much lower paying note from seller financing?

Re: Potential Real estate deal - comments appreciated
 

I have a fairly substantial R/E rental portfolio(buildings and legal multi-family homes)...but have never even considered or been approached about investing in the mobile home investment arena.

It sounds VERY interesting as I am reading this thread,and I would also like to hear your progress!

GL,
~Stephen Feraca [img]/images/graemlins/cool.gif[/img]

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
[ QUOTE ]
Did you tie up this property yet?

I'd get over to the owner ASAP and work up some sort of purchase and sales subject to all the documents being furnished to your satisfaction.

I don't know why you are waiting for more documents to make your offers. I wouldn't.

[/ QUOTE ]

Yeah, I know, but something is making me hesitate. The deal seems a bit too good to be true which is why I want to see everything up front before making any kind of committment. The thing that I keep coming back to in my mind is that the property has been lease/optioned twice and neither person made it work. Somehow I just can't figure how that would be possible unless the payments on the least agreement were ridiculously high or something. I dunno, I just wanted something a bit more. I should probably just get it under contract. I know you're right.

[/ QUOTE ]

spex,

get it under contract. you aren't tied to the deal unless everything checks out. include contingencies in the contract and tie it up.

Re: Potential Real estate deal - comments appreciated
 

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I have a bunch of dumb questions. If you don't want to waste time responding, I understand.

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I never mind answering questions.

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When you model this up, do you anticipate future rental income increases are offset by expenses increasing by the same amount?

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Not really. Utility costs, taxes, etc. will increase. But rents tend to outpace these expenses. Normally I increase rents by about 3% per year. Expenses don't go up nearly as much year to year.

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Do your expense estimates include insurance and property taxes?

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Yes.

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Do they include an estimate for depreciation to cover periodic big ticket items like replacing roofs, siding, appliances, etc?

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Yes. We don't call roof and appliance replacement depreciation though, we call them capital improvements. A percent of the income goes into savings: Like if I know I'll need to replace a roof in 10 years, and I figure it'll cost $10k, I'd save $83 per month. That is all included in my expenses. Carpet, appliances, etc, I save for all of that. Sellers love to argue these expenses because usually they'll try to tell you that expenses only run 30%. I tell them that their numbers are realistic but not sustainable - eventually roofs, etc. must be replace. I price all of that into my offers.

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At what point in the process do you conduct a lien search?

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That is normally done by the title company or closing attorney (depending on what state you're in). It happens after you've got the property under contract and have had it inspected, etc but before the closing date.

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After you purchase the property, how much time will you spend "managing" it?

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mmm...hard to say. I expect to spend 20+ hours per week on this property until its up and running the way I need it. That means that all my workers are lined up and working, etc. That should take 3 to 4 weeks to get running. During the rehab of the MHP, probably 10 hours per week including daily drive throughs, etc (I trust my guys, but always check up on them). After the completion of the renovations period, I'd guess 3-5 hours or less, including book keeping time, etc.

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Just out of curiosity, how big is the parcel of land all this sits on?

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3 acres.

Re: Potential Real estate deal - comments appreciated
 

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the numbers look good on paper. But the management might be an issue. You have to remember the kind of clients your likely to be dealing with here.
how are the eviction laws where you live?

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I mostly work with these tenants already, so i'm pretty sure I know what to expect. The only thing with this property is the transience, which I dont' have at my other properties.

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How do they apply to "motel"/moble homes compared to standard apartment/house rentals?

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We're fortunate to have evictions laws and judges that tend to favor landlords. the eviction laws are the same for mobile homes as any other rental. the only problem is that evicted tenants tend to abandon the mobile home on your lot, so you've got to apply for a new title, etc. That takes about 3 months before you can haul the junker off and replace it. The mobile homes on this property are all park-owned and the seller has all the titles.

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What are the local laws on abandonment? this might be more of an issue with mobile homes as they can be considered personal property.

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30 days before I can declare it abandoned, 30 days advertising for anyone with equitable interest to claim it, 30 days to get a new title. All that before I can haul it off and trash it! Yikes.


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Looks like you have a good deal on your hands if you can get a reliable system for management. This could be one giant headache or a smooth + cash flow. Most likely somewhere inbetween.

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Yeah, I agree. I think that this property will take more management than most of my other properties. The key to this is finding a reliable person to manage the place for me. That is easier said than done, as you can imagine. But those people are out there.

Re: Potential Real estate deal - comments appreciated
 

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but have never even considered or been approached about investing in the mobile home investment arena.



[/ QUOTE ]

Stephen, I have a few mobile home parks. They are an investors dream. You're renting LAND. Nothing for tenants to steal or break. Storms can't damage it. Long-term tenancy with low turnover. Expenses are low (30-35% or so). The list goes on and on. They're great. So good that I'm trying to get rid of most of my other stuff and ONLY buy MHPs. Of course, I live in an area where there are lots of MHPs, but the ease of management lends itself to out of area investment very well.

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
[ QUOTE ]
but have never even considered or been approached about investing in the mobile home investment arena.



[/ QUOTE ]

Stephen, I have a few mobile home parks. They are an investors dream. You're renting LAND. Nothing for tenants to steal or break. Storms can't damage it. Long-term tenancy with low turnover. Expenses are low (30-35% or so). The list goes on and on. They're great. So good that I'm trying to get rid of most of my other stuff and ONLY buy MHPs. Of course, I live in an area where there are lots of MHPs, but the ease of management lends itself to out of area investment very well.

[/ QUOTE ]


Thanks for replying spex!

My first question is going to be WHERE are most of your properties located in general?

With my primary portfolio in the NYC/Long Island area,I am not even aware of many around this neck of the woods?

Where is your primary local in finding thses opp's...or do you go out of the area where you reside,to locate around the country where a deal may arise as well?

Great Thread
and thanks again
`stephen feraca [img]/images/graemlins/cool.gif[/img]

Re: Potential Real estate deal - comments appreciated
 

I had no idea these properties could cash flow this well after one of the biggest real estate booms in history. This is going to be an interesting and educational thread to watch.

Thanks for responding and good luck with the venture.

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
Of course, I live in an area where there are lots of MHPs, but the ease of management lends itself to out of area investment very well.

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can you explain this a bit more? do you think its a good idea to invest in an MHP as an absentee landlord?

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
[ QUOTE ]
but have never even considered or been approached about investing in the mobile home investment arena.



[/ QUOTE ]

Stephen, I have a few mobile home parks. They are an investors dream. You're renting LAND. Nothing for tenants to steal or break. Storms can't damage it. Long-term tenancy with low turnover. Expenses are low (30-35% or so). The list goes on and on. They're great. So good that I'm trying to get rid of most of my other stuff and ONLY buy MHPs. Of course, I live in an area where there are lots of MHPs, but the ease of management lends itself to out of area investment very well.

[/ QUOTE ]


[ QUOTE ]
Thanks for replying spex!

My first question is going to be WHERE are most of your properties located in general?

With my primary portfolio in the NYC/Long Island area,I am not even aware of many around this neck of the woods?

[/ QUOTE ]

I'm in the midwest, and I don't like to own any property that I can't drive to in a day. I'm not sure about MHPs in your area, but I know that there are tons further south on the east coast. There are lots of older MHPs tucked back in the woods that we never see. One thing that I learned really fast is that we tend to overlook MHPs until you get tuned into them. I bet you could find some.


[ QUOTE ]

Where is your primary local in finding thses opp's...or do you go out of the area where you reside,to locate around the country where a deal may arise as well?

[/ QUOTE ]

No, like I said, I only invest locally. I've never owned an out of area property. MHPs can easily be managed from out of area though as long as you find a turn-key property. Obviously decent parks sell at lower cap rates, but you can still find good deals. There are a LOT of old, run down parks with old, smaller homes in them. Those are projects - stay away from them for out of area investment.

Re: Potential Real estate deal - comments appreciated
 

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I had no idea these properties could cash flow this well after one of the biggest real estate booms in history. This is going to be an interesting and educational thread to watch.

Thanks for responding and good luck with the venture.

[/ QUOTE ]

This is one of the reasons that I wanted to post here on this deal. I've seen lots of comments about how you shouldn't buy RE right now. I always disagree, pointing out that there are still great deals to be had. Hopefully this thread can further educate some of the others here interested in RE in how to find and structure deals for maximum profit - even in today's down market.

Re: Potential Real estate deal - comments appreciated
 

[ QUOTE ]
[ QUOTE ]
Of course, I live in an area where there are lots of MHPs, but the ease of management lends itself to out of area investment very well.

[/ QUOTE ]

can you explain this a bit more? do you think its a good idea to invest in an MHP as an absentee landlord?

[/ QUOTE ]

Yes, its fine to invest in MHP as an absentee landlord. Personally, I don't do it. But I know of others that do, and its working fine for them. If you want to invest absentee, you really need to watch out for turnaround projects. IMO, you can't turn around a MHP from a distance - you gotta be there working the project yourself. MHP turnarounds offer stellar returns though.

If you find yourself a nice turn-key park that can support a full time manager (i.e., 100+ spaces), and in good condition with wide street and newer homes, then you can easily be an absentee owner.

Re: Potential Real estate deal - comments appreciated
 

UPDATE: The biggest problem with this deal is that I can't see a decent exit to get my cash back out of the property. Any future sale will have to be heavily owner financed, and the future buyer will very likely be someone starting out in RE. There is no good exit that I can think of. The problem underlines the importance of creativity when it comes to RE investing. I'm apparently not creative enough to figure out a way to exit this investment.

In sum: The property shows excellent cash flow, I anticipate having a problem selling the place in the future should the need arise. So I've decided to passs.

Alas, I'm on to the next deal. I've got a line on an 8 plex that is owned by a couple in their seventies. The husband has alzheimer's and they need to get rid of the thing. Their asking price is about 5 times the NET operating income. No kidding. I'm supposed to be selling off my properties like this, but this is so cheap that I don't think I can afford not to check it out. I'm going to check it out this weekend and I'll try to remember to post about it soon.