Real Estate Investment Thread

OU Ariakas · Sep 14, 2023

The previous owner of our property management company is a guy who also owns more then 60 properties around OKC; he has been my mentor when it comes to evaluating properties and also assists with finding contractors when they need renovation. About 6 months ago he approached us with a few private bundled house offers from relatively large (20+) property owners. There was a particular lot of 4 houses that we were interested in but didn't know if we wanted to dive into 4 at once. They wanted $337,000 for all 4 and we knew that we would have to put down 25% because they are all investment properties plus whatever on each renovation. Fast forward to last month. We asked our guy if they had been sold and he said "no, but with the market how it is they might be looking to deal." We offered $301,000 for the lot, they countered at $311,000 so we had our guy go and look at the properties inside and out. He said that 3 are very well kept and would need $0 in reno but that the last one had clutter outside and was never around to let him inside. He said that if the outside is dirty than the inside will be as well and told us that he would tell them to drop it back down by $25,000. We did that and they countered again at a total price of $299,500 for the lot. We are going to accept conditional on a walkthrough of the final property to make sure it isn't too bad, but before inspections we are in a good spot to pick them up. Here is my quick chart on the expected P&L for the deal.

The funny part is that we are walking into a ton of equity on these houses based on the market value; we are just catching a great deal because it is a private sale that hasn't hit Zillow. Here is the day 1 equity outlook.

Not a bad deal.

OU Ariakas · Oct 31, 2023

OU Ariakas said:
The previous owner of our property management company is a guy who also owns more then 60 properties around OKC; he has been my mentor when it comes to evaluating properties and also assists with finding contractors when they need renovation. About 6 months ago he approached us with a few private bundled house offers from relatively large (20+) property owners. There was a particular lot of 4 houses that we were interested in but didn't know if we wanted to dive into 4 at once. They wanted $337,000 for all 4 and we knew that we would have to put down 25% because they are all investment properties plus whatever on each renovation. Fast forward to last month. We asked our guy if they had been sold and he said "no, but with the market how it is they might be looking to deal." We offered $301,000 for the lot, they countered at $311,000 so we had our guy go and look at the properties inside and out. He said that 3 are very well kept and would need $0 in reno but that the last one had clutter outside and was never around to let him inside. He said that if the outside is dirty than the inside will be as well and told us that he would tell them to drop it back down by $25,000. We did that and they countered again at a total price of $299,500 for the lot. We are going to accept conditional on a walkthrough of the final property to make sure it isn't too bad, but before inspections we are in a good spot to pick them up. Here is my quick chart on the expected P&L for the deal.

View attachment 490590

The funny part is that we are walking into a ton of equity on these houses based on the market value; we are just catching a great deal because it is a private sale that hasn't hit Zillow. Here is the day 1 equity outlook.

View attachment 490592

Not a bad deal.

We closed on the 4 houses from the post above yesterday morning. The seller was pleased with how smoothly the process went with us. Here is the kicker, the seller has another bundle of 8 properties that they are looking to offload and, just like the above, do not want to split them up. We were thinking of making an offer on them so I went digging onto Redfin and Zillow to try and find out how much they paid for each of those properties so that I could find out if we were equipped to make a reasonable middle ground offer. I could not find much info so I went straight to the county assessor's site and found that they purchased all 8 in bulk in 2016 for $610,000. I really, really want to just offer them something like $620,000 for the lot which would put us at less than $80k per property and right around 1% of rent on each one (all are rented right now). Their alternative is to try and sell each one individually with tenants which makes the process longer and harder because you cannot reliably sell to someone looking to be an owner/occupant. My reasoning is that they have benefitted for almost 8 years of rental income so maybe they would rather sell them painlessly to us at a wash to be done with them instead of trying to make a larger profit on each one and have it take years to accomplish.

OU Ariakas · Nov 1, 2023

Daidraco , your family owns mobile home parks, right? This one looks crazy profitable.

EASTSIDE MH/APT/RV PARK - mobile home park for sale in Tulsa, OK 2195364

NEW $795,000 LISTING BY KEITH WILSON CO. MARCH 20, 2023. The Eastside is a 25 site combo of 1) 13 park owned mobile home rentals, 12 -2bed and 1 3bed, $650-795/mo., avg age of 1982. 2) 6 RV sites @$450 mo. 3) 6 1 bed 1 bath apt units, 1 quadplex and 1 duplex, built, 1966, comp pitched roofs...

www.mobilehomeparkstore.com

Freaking $750k for this:

What am I missing?

Daidraco · Nov 1, 2023

OU Ariakas said:
Daidraco , your family owns mobile home parks, right? This one looks crazy profitable.

EASTSIDE MH/APT/RV PARK - mobile home park for sale in Tulsa, OK 2195364

NEW $795,000 LISTING BY KEITH WILSON CO. MARCH 20, 2023. The Eastside is a 25 site combo of 1) 13 park owned mobile home rentals, 12 -2bed and 1 3bed, $650-795/mo., avg age of 1982. 2) 6 RV sites @$450 mo. 3) 6 1 bed 1 bath apt units, 1 quadplex and 1 duplex, built, 1966, comp pitched roofs...

www.mobilehomeparkstore.com

Freaking $750k for this:

View attachment 498283

What am I missing?

Lot of weird shit in that little post and that realtor blows ass for not giving any kind of useful information. Are the taxes lumped in with the Operating Expenses? What interest rate you end up getting, if you can even get the thing financed in the first place since its a mixed use property with all kinds of shit going on, kind of stuff? If that address is right, and whatever property Im looking at that was sold in 2021 for 82.5k -... is it located within Tulsa city limits? Is Tulsa being a fucking dick about water, sewage and electrical? <---- big deal that no one wants to talk about when selling. Then, relating back to the bank loan - is the trailer park in an area that would allow it outside of being grandfathered in? Are they actively trying to get rid of it in other words. What kind of repairs are needed, or will be needed in the near future? Lastly, Tulsa is a crime ridden shit hole from the looks of it. 3rd highest in the state? Are you going to run the property? If not, how much are you going to pay some dick to do it? Will it still be worth it after a full time property manager?

Just really not enough information to go off of. But the key to this most of the time is just to find out if your preferred bank will even give you a loan on something like that. Trailer parks are a pain in the dick.

OU Ariakas · Jun 21, 2024

Well gentlemen, the same Mother/Son pair that sold us the 4 houses a couple posts up just decided to sell the remaining 9 houses. We were contacted first (before they went on the market) because of how smooth and easy the last transaction went. I will do some digging and then post the same sort of ghetto analysis I did on the 4 further up, if anyone is interested.

OU Ariakas · Sep 9, 2024

We are almost done with buying the 9 houses mentioned above; and whoooo boy it has been a journey. To show you that I am not lying when I say it is worth it to figure this shit out, here is a preview of one of the official bank appraisals of one property. Even going at the lowest price/sq ft we are at 23k (or 21%) equity on day 1.

Cad · Sep 10, 2024

OU Ariakas said:
We are almost done with buying the 9 houses mentioned above; and whoooo boy it has been a journey. To show you that I am not lying when I say it is worth it to figure this shit out, here is a preview of one of the official bank appraisals of one property. Even going at the lowest price/sq ft we are at 23k (or 21%) equity on day 1.

View attachment 545185

Wow man, its the start of an empire. Are these already leased/have tenants?

Furry · Sep 10, 2024

Cad said:
Wow man, its the start of an empire. Are these already leased/have tenants?

My assumption if its that far below comps is that he bought a dump and has to fix it first.

OU Ariakas · Sep 10, 2024

Cad said:
Wow man, its the start of an empire. Are these already leased/have tenants?

Yes, all 9 already have tenets. We actually already own 9 so this is likely the last we will purchase until all of these are paid off.

Furry They are not the nicest houses in the world, but the price is because they will all need at least a little maintenance/upkeep in the next 5 years and the seller is highly motivated to get the money. Once they are closed I'll go into more detail, but there are a few posts about the situation above.

OU Ariakas · Sep 27, 2024

Hey everyone! Did you know that you can only have your name on 10 mortgages at the same time if you want a mortgage backed by Fannie Mae/Freddie Mac? Well, there is a way around it if you are a couple; simply put the mortgage in one of your names and then the deed/ownership of the property in both of your names! Problem solved! Except if you forget that the house your living in since your only counting your rental properties, or the fact that even though 2 of your other properties are commercial loans (a type of loan specifically excluded from the FM limit) that they still *actually* count towards the 10 limit if the underlying asset is a residential property. So those fun realizations made the closing of the 9 new houses much longer and more stressful than anticipated. One huge plus was that, to get under the limit, we fully paid off two of the other rental properties using money from an account that has only ever had rental income as a revenue stream. Very satisfying to see real estate start to snowball into bigger things.

OU Ariakas · Sep 27, 2024

Ok, so here is a look at the estimates of what the new purchases looked like. Just like last time, the appraised value is a good sign that we are purchasing below market rate; but all it is going to do is raise the property taxes since we plan on holding these for a long time. I have already built in a 30% increase in property taxes based on what happened with the last 4 we bought in October 2023. We also may have hit a break point at the property management company where all management fees go down 1%, so there's that.

Daidraco · Sep 28, 2024

OU Ariakas said:
Ok, so here is a look at the estimates of what the new purchases looked like. Just like last time, the appraised value is a good sign that we are purchasing below market rate; but all it is going to do is raise the property taxes since we plan on holding these for a long time. I have already built in a 30% increase in property taxes based on what happened with the last 4 we bought in October 2023. We also may have hit a break point at the property management company where all management fees go down 1%, so there's that.

View attachment 548722

(Before I comment, just know that I commend you on the purchase and congrats.)

What are those.. like old Miner Houses? The ones companies built to house employee's that have been turned into full time residences? A single level most likely, with what 4 individual rooms (kitchen, bedroom, etc.)? Or are those mobile homes on a half acre, to acre of land or similar?

Even then, I'm just trying to understand where the total rent numbers came from. Like it really looks like some of them are pulled straight out of someone's ass? I would charge rent based on the appraised value, anyways. If you're scared to raise someones rent up $280 all at once (like your House 1) - then give them an idea what the final rent will be and go up in increments every three months. With that said...

I "think" you're kidding about the 1% fee, because the 7% fee you're being charged currently is pretty fucking baller for managing shit holes. Shit holes and mobile homes are a good 10-12% for me, and thats pretty common. I, or an employee - we're going to have to visit a shit hole FAR more often than a nice home. Whether its repairs, evictions, court, picking up rent in person, etc. It doesnt matter - gas and time.

There are other options you have out there, but stretched out over long enough periods of time and they all cost pretty much the same amount.

Regardless, grats again on your purchase.

Blazin · Nov 22, 2024

Looking at an investment property now, it's an animal hospital. Great location , great tenant, financials. It's one of the best Ive looked at in a while. Yet I can't pull the trigger, I hate borrowing money but this would be well over a million and rates are just too damn high. Cap rates have adjusted to higher borrowing costs but it seems not sufficiently so to keep it attractive. I'm not sure how people are doing RE deals. When I think back to earlier in career definitely still made things work when we last had rates 7-8% but it just makes deal so less attractive. The payoff is just too far off. Maybe I'm getting old so I view time frames differently than I did 10, 15 or 20 years ago.

I think this one is going to haunt me, it's near my home so I'm going to have to drive by it always knowing "I should have bought that."

A third mental deterrent is equity returns have been so strong that it makes traditional RE returns less appealing even on a property like this that is top notch. So anyway, just ramble that I feel so much more distant from RE investment when I viewed it as such a core strategy 2000-2010 (Not surprisingly during a equity secular bear market)

Sanrith Descartes · Dec 5, 2024

Blazin said:
Looking at an investment property now, it's an animal hospital. Great location , great tenant, financials. It's one of the best Ive looked at in a while. Yet I can't pull the trigger, I hate borrowing money but this would be well over a million and rates are just too damn high. Cap rates have adjusted to higher borrowing costs but it seems not sufficiently so to keep it attractive. I'm not sure how people are doing RE deals. When I think back to earlier in career definitely still made things work when we last had rates 7-8% but it just makes deal so less attractive. The payoff is just too far off. Maybe I'm getting old so I view time frames differently than I did 10, 15 or 20 years ago.

I think this one is going to haunt me, it's near my home so I'm going to have to drive by it always knowing "I should have bought that."

A third mental deterrent is equity returns have been so strong that it makes traditional RE returns less appealing even on a property like this that is top notch. So anyway, just ramble that I feel so much more distant from RE investment when I viewed it as such a core strategy 2000-2010 (Not surprisingly during a equity secular bear market)

One of the reasons I am selling my investment condo. Market returns blow away the return on the reaidential rental without any of the headaches. I still own a commercial rental but I got an appealing interest rate on the note (7%) and at least one guaranteed tenant (me).

Seananigans · Dec 5, 2024

Blazin said:
Looking at an investment property now, it's an animal hospital. Great location , great tenant, financials. It's one of the best Ive looked at in a while. Yet I can't pull the trigger, I hate borrowing money but this would be well over a million and rates are just too damn high. Cap rates have adjusted to higher borrowing costs but it seems not sufficiently so to keep it attractive. I'm not sure how people are doing RE deals. When I think back to earlier in career definitely still made things work when we last had rates 7-8% but it just makes deal so less attractive. The payoff is just too far off. Maybe I'm getting old so I view time frames differently than I did 10, 15 or 20 years ago.

I think this one is going to haunt me, it's near my home so I'm going to have to drive by it always knowing "I should have bought that."

A third mental deterrent is equity returns have been so strong that it makes traditional RE returns less appealing even on a property like this that is top notch. So anyway, just ramble that I feel so much more distant from RE investment when I viewed it as such a core strategy 2000-2010 (Not surprisingly during a equity secular bear market)

This is the problem with viewing everything through a singular, monetary, lens.

Doing something productive with your money is the only point of it. I'm assuming you like animals? Buying a good animal hospital seems like a great way to use some of your money. Then you could be the one behind improving it further, growing/expanding it, etc.

Seems like a no-brainer to me, who gives a fuck if you could make X% more in equities. Money for money's sake is dumb.

Blazin · Dec 5, 2024

I don’t view everything through a monetary lense. This is an investment thread and I’m talking about an investment. I make investments so I can spend money on things I enjoy without concern for profit .

I have a farm full of animals and all costing me money. I enjoy them and want to keep on enjoying them so I have to make good use of capital decisions .

so yes I agree with your premise but not your point in this particular example .

Haus · Dec 13, 2024

Blazin said:
I don’t view everything through a monetary lense. This is an investment thread and I’m talking about an investment. I make investments so I can spend money on things I enjoy without concern for profit .

I have a farm full of animals and all costing me money. I enjoy them and want to keep on enjoying them so I have to make good use of capital decisions .

so yes I agree with your premise but not your point in this particular example .

We we execute "project peaches" here and buy/build our place in the country I honestly fear the menagerie that

Mrs. Haus will accumulate should I not find a way to deter her. Mostly because she'll start giving them all names, and then suddenly they can't be food anymore. Oddly one animal I see a lot of use in having around and allowing to breed some (chickens) she hates.

Blazin · Dec 14, 2024

Haus said:
We we execute "project peaches" here and buy/build our place in the country I honestly fear the menagerie that Mrs. Haus will accumulate should I not find a way to deter her. Mostly because she'll start giving them all names, and then suddenly they can't be food anymore. Oddly one animal I see a lot of use in having around and allowing to breed some (chickens) she hates.

Be sure to stop by Homesteading and Hobby Farm/Ranch as your animal money pit adventure gets going.

Search

Real Estate Investment Thread

OU Ariakas

Diet Dr. Pepper Enjoyer

OU Ariakas

Diet Dr. Pepper Enjoyer

OU Ariakas

Diet Dr. Pepper Enjoyer

EASTSIDE MH/APT/RV PARK - mobile home park for sale in Tulsa, OK 2195364

Daidraco

Avatar of War Slayer

EASTSIDE MH/APT/RV PARK - mobile home park for sale in Tulsa, OK 2195364

OU Ariakas

Diet Dr. Pepper Enjoyer

OU Ariakas

Diet Dr. Pepper Enjoyer

Cad

scientia potentia est

Furry

🌭🍔🇺🇦✌️SLAVA UKRAINI!✌️🇺🇦🍔🌭

OU Ariakas

Diet Dr. Pepper Enjoyer

OU Ariakas

Diet Dr. Pepper Enjoyer

OU Ariakas

Diet Dr. Pepper Enjoyer

Daidraco

Avatar of War Slayer

Blazin

Creative Title

Sanrith Descartes

You have insufficient privileges to reply here.

Seananigans

Honorary Shit-PhD

Blazin

Creative Title

Haus

Blazin

Creative Title