Chapter 7

Chapter 7

1. Check in:
It has been a very busy week as a whole. I have been communicating with two realtors that I believe will be good fits within my team. I am pretty interested in four (4) mobile home parks. They are in the range of 40 to 100 lots or units, and have an asking price that ranges from $600,000 to $1,200,000. I am currently trying the get the actual income/expense statements for the last two (2) years from the owners which is turning out to be somewhat of a problem. They want proof of financing, and a sign a confidentiality statement. The confidentiality statement is not a problem, but I would like to view the financials before I go through the trouble of finding financing so that I do not waste my time if the numbers are not good. There has been no progress on the rehab house since New York got nailed with snow. I have made great progress on meeting people. I recently started communicating with 4CInvestor (Josh), along with some others. They all seem like great people, and I will actually be meeting 4CInvestor in AZ at a get together. This get together should be fun. I have also been working on a small speech that I have been asked to give at our new Cash Flow group. I am getting really excited about this group. We have some very notable people from our area coming. I can not wait to network with them.

Things that went wrong: I was unable to get as far as I wanted on my previous goals due to a few road blocks that I had to work around. There also has been a halt on the construction/rehab of my SFR due to the extremely bad whether.

Things that went right: I believe I finally found two (2) realtors that will add value to my mobile home park team. They are both hard working, knowledgeable, and get things accomplished in a timely manner. I also had the privilege to talk to 4CInvestor for the first time. He is an interesting individual and I can not wait to meat him in person. My Cash Flow group is coming together very nicely for it being my first one. There seems to be a great interest from both beginners, and more advance individuals within the community.

2. Main Points:
1. Know your numbers or partner with someone who does

3. Questions:
1. Is it worth it to try to get a “proof of funds” before you are able to see the numbers? I am not used to dealing with properties of this size, so I do not know what is normal.
2. What would you consider average ratios in your area?
3. Why is there so little dedicated to the financial analysis of a place? I would think that this would be a major part of any type of investing.
4. As anybody read “The Complete Guide to Real Estate Finance?” Would you say that it is worth a read? Or no.

4. Requests:
1. Get the financials for the places that I am interested in.
2. Analyze the financials to determine whether they are opportunities or not
3. If they are opportunities make an offer.

Chapter 5 - 6

Chapters 5 – 6

1. Check in:
These past few days I learned a tremendous amount about my particular investment that I am looking to get into. I know a good amount about investing in apartments and SFRs. I am looking to branch into mobile homes, and mobile home parks. So I am trying to apply what I have previously learned from investing in the other areas of real estate, along with this particular book to purchase and turn around a mobile home park. My goals for the past few days were as follows.

(1) To find out one interesting thing from at least to people from this forum.
I am still working on this. My first approach did not work as well as I thought it would, so I am off to a new approach.

(2) Begin the process of evaluating a potential deal.
Found many potential deals. Talked to at least five (5) realtors, and am in the process of evaluating the investment as a whole. I received the financial numbers for the park, but have yet to evaluate the physical aspect of the park. I will hopefully have this completed shortly.

(3) Come up with a written plan for investing in a mobile home park.
Almost completed the rough copy of this. Needs final editing, and a little more thought.

(4) Direct one other individual to this forum page to participate.
I sparked the interest of one individual with this website and book. But only time will tell whether he actual moves towards it. I am in the process of starting a cash flow / investment group and will definitely be advising them to complete this book assignment. So I believe that will bring a few more people to the site, and book review.

Things that went wrong: since I am looking at investing into a new niche, I am looking for a realtor that knows this particular niche. The realtors that I was using to look for apartment buildings and SFRs do not know much about mobile home parks. So I called about ten (10) realtors, and out of those ten (10) three (3) responded. So I spent a lot of time trying to form this part of my team. Then in one of the rehabs I am currently doing the foundation cracked badly due to the extreme cold we are having at the moment. Not good, but fixable.

Things that went Right: In the final stages of forming a Cash Flow/Investment group. Things are progressing rapidly with this. Actually found two (2) realtors who can add great value to my mobile home park team. Found six (6) potential deals that may turn into opportunities. I purchased amazing hardwood floors for $1.25 SQFT that normally sells for two to three times that amount. I purchased 12” x 12” Flooring tile for $0.60 SQFT that normally sells for $2.38 SQFT. And finally I purchased interior doors for an average of $50 each that normally sell for $100-$160 each.

2. Main Points:
1. Set guidelines for the type of properties you are looking for. Find a niche that you are interested in, and try to stick to it. This will help keep you focused on properties that will lead you to completing ones goals.
2. There are thousands of ways to locate properties. Do not stick to just one. Use as many resources as you can find. This will help speed up ones purchasing process.

3. Questions:
1. Is it real to expect to turn over a large apartment complex in 12 months? For my particular investment I am looking at a three (3) year turn around. Do you believe I am being to cautious with this, or not cautious enough.

4. Requests:
1. Narrow my potential properties down to three (3) that I am willing to make an offer on.
2. Begin to talk to managers about managing a mobile home park. Figure out costs compared to what they actually do.
3. Try to get people interested into their financial education through playing Cash Flow with them.

Chapters 1 - 4

Chapters 1 - 4

1. Check In:
I learned a lot through reading this first section (Chapters 1-4). Some things that really stood out were the NAI website. This site should be of great value. I “re-learned” what to look for when determining what areas to invest in. I also had a “re-introduction” to various ways at increasing the value of a property through such things as rehabbing, cutting expenses, etc. Good things to never forget.

2. Main Points:
1. He puts a lot of focus on the “How” but even more focus on the “Why.”
2. Have a solid Plan. (Entry, Middle, Exit)
3. Have Goals, know your Motivation. (great story of the child and his dream of a ranch)
4. Win over your Fears.
5. Reasons why investing in large apartment buildings are beneficial to single-family units.

3. Questions:
1. Is there a specific number of units one should focus on in the value play strategy or can this same strategy be applied to all types of units?
2. What is the difference between the different types of apartment classes (A, B, C)?
3. What format or type of presentation would one show a bank?
4. How can one implement this section of the book into their plans, or into their current system? (Good question for every one to think about)

4. Request:
1. To find out one interesting thing from at least to people from this forum (dealing with real estate, or just life in general)
2. Begin the process of evaluating a potential deal.
3. Come up with a written plan for the above deal.
4. Direct one other individual to this forum page to participate.

The Complete Guide to Buying and Selling Apartment Buildings

I am recommenting that everyone reads, and studies The Complete Guide to Buying and Selling Apartment Buildings, by Steve Berges. It is a great book loaded with useful information. I have been participating in a book study group for the past few weeks, and would like to offer the opportunity for you to do the same. The book is broken up into sections and once you complete a section you answer a few questions regarding that section. I would highly recommend that everyone do this that is interested in any kind of real estate investing. The link below will take you to the site where I am currently participating.
yesinvestor.com

You may have to register to participate, but it is free and well worth it.

I will be posting my responses to the book here as well.

Expected Budget / Actual Budget

Purchase (Deed)-------------------$360---------------$360

Demolition-------------------------$2,000 --------------$0

Trash Removal--------------------$3,000 --------------$350

Tools------------------------------$3,000

Exterior Walls (load bearing)

• Lumber---------------------- $911.87
• Wrap-------------------------$113.00
• Siding------------------------$1,797.60
• Insulation--------------------$990.08
• Tax--------------------------$305.00 (8%)
• Contingency------------------$823.51 (20%)
• Estimated Total --------------$4,941.06
• We Said-----------------------$5,000.00

Flooring

• Lumber----------------------$3,065.61
• Tax--------------------------$245.25 (8%)
• Contingency------------------$662.17 (20%)
• Estimated Total--------------$3,973.03
• We Said----------------------$4,000.00

Interior Walls

• Lumber----------------------$287.80
• Drywall----------------------$990.00
• Tax--------------------------$102.22 (8%)
• Contingency------------------$276.00 (20%)
• Estimated Total--------------$1656.02
• We Said----------------------$2,000.00

Doors/Windows

• Windows---------------------$2,000.00
• Storm Door-------------------$400.00
• Exterior----------------------$800.00
• Interior----------------------$600.00
• Tax--------------------------$304.00 (8%)
• Contingency------------------$820.80 (20%)
• Estimated Total--------------$4,924.80
• We Said----------------------$5,000.00

Roof

• Trusses----------------------$1,500.00-------------$1,500
• Sheathing--------------------$797.50
• Felt--------------------------$353.00
• Shingles----------------------$960.00
• Taxes------------------------$288.76 (8%)
• Contingency------------------$779.65 (20%)
• Estimated Total--------------$4677.91
• We Said----------------------$5,000.00

Ceiling

• Drywall----------------------$468.00
• Insulation--------------------$1,121.12
• Tax--------------------------$127.13 (8%)
• Contingency-----------------$342.25 (20%)
• Estimated Total-------------$2,059.50
• We Said---------------------$2,000.00

Flooring

• Material---------------------$3,696.00 ($3/SqFt)
• Tax--------------------------$295.68 (8%)
• Contingency-----------------$798.33 (20%)
• Estimated Total-------------$4790.01
• We Said---------------------$5,000.00

Electric

• Estimated-------------------$2,950.00
• Tax-------------------------$236.00 (8%)
• Contingency-----------------$637.20 (20%)
• Estimated Total-------------$3,823.30
• We Said---------------------$4,000.00

Plumbing Estimate---------------$2,000

Bathroom Estimate---------------$3,000

Kitchen Estimate-----------------$5,000

Rough Total-------------$50,000 -------------$2,210.00

Change of Plans For House #1

As you can probably tell from the many pictures of the house, our plans for it have changed. Instead of renovating it, or remodeling it, we are completely "demoing" it down to the foundation. We were planning on just doing a little renovation until we found numerous problems that needed to be fix.

1. Roof structure was unsafe, and need to be totally replaced
2. Walls were no where's near strait or square
3. Walls were framed incorrectly
4. Sub-floor was horrendous
5. Carpenter Ants created saw dust out of a good part of the floor joists
6. The floor joists themselves were 2 x 4's spaces 2 foot O.C.
7. The majority of the floor joists were unsupported
8. And general poor construction

So do to this the renovation became a new construction. As of this moment we have demolished the entire house down to its foundation. In the next week or so we will have the foundation repaired. Once that is complete we will begin the building processes.

Pictures of House Rehab

Here is a link to the pictures of the house. Enjoy!
Yahoo Picture Album

Renovation Begins

House #1 Renovation (Personal Residence)

December 9th was the first day of renovation for house #1. The First phase is demolition. I will be posting before pictures as well as progress pictures, all the way to the completion of the house.

Attached is a floor plan of how the house is at the moment, along with a floor plan of how the house will look once complete.

Inspecting a Roof

Things to look for when inspecting a roof...

While looking at a house, I came upon these problems.

In this picture you will notice three things.
1. It looks like someone stepped on the roof and split the sheathing. Which is not a huge problem. Simply replacing the sheathing when redoing the roof would fix the problem.
- might want to look at the rest of the sheathing, this
failure is an indication that all the sheathing might need
to be replaced; which could get costly if not thought of
a head of time.
2. The sistering of the main beam is not only poorly done, but is also not straight.
- could mean that the whole roof structre is poorly
constructed, and needs to be replaced.
- be aware of other similiar spots
3. The virtical supports in the bottom left are not supporting anything.
- could mean the roof has shifted, indicating other issues
such as poor foundation, or settling.
- roof is not support properly

This is another picture taken of the vertical supports.

1. Notice that the beam running from the top left to the middle of the picture goes from a two board thickness to a one board thickness.
- in my opinion this is not correctly done, and is not
structurely safe.
2. One can also guess that the background of the picture is an add on because of the wall that is cut through, and the newer look of the wood

This is another view of where is looks like someone stepped on the roof, and broke the sheathing 1. Also looks like the roof has leaked and/or is
rotten in some areas

In this picture you will notice that the roof beam is not straight. You can also kind of see that the right beam has a crack running through it. It is there, kind of hard to see.

Nothing looks out of place here, just lots of spider webs and insolation.

Here is one of three cracks that I saw in the main beam. It runs about two feet from start to finish, and is completely through the whole beam top to bottom, and width wise.

Tile Basics

Recommended Reading: The Complete Guide to Ceramic and Stone Tile
Part of the Black and Decker Series

Types of Floor Tiles
Glazed Ceramic Tile
Porcelain Tile
Quarry Tile
Natural Stone Tile
Terra-cotta Tile
Cement Body Tile
Mosaic Tile
Decorative Tile
Baseboards and Thresholds


Tools for Removing Old Surface
End Cutting Nippers
Heat Gun
Hand Mauls
Flat Pry Bar
Chisels
Floor Scraper

Tools for Repairing and Installing Substrates
Straight-edges
Jig Saw
Portable Drills
Circular Saws
Drywall Squares
Utility Knife
Cement Board Knife
Trowels

Tools for Layout
Straight-edges
Levels
Carpenter's Squares
Chalk Lines
Tape Measures

Tools for Working With Tile
Coping Saws
Tile Nippers
Hand-held Tile Cutters
Tile Stones
Wet Saws
Diamond Blades
Tile Cutters
Grinders
Tile Spacers
Grout Sponges, Buff Rags, Foam Brushes and Grout Sealer Applicators
Rubber Mallets
Needlenose Pliers
Caulk Guns
Grout Floats
Trowels

Preparation Materials

Cork
Fiber/Cementboard
Cementboard
Greenboard (on walls)
Plywood
Trowel-Applied Membrane
Shower Pan Liner
Isolation Membrane

Materials for Setting and Grouting Tile
Thin-Set Mortar
Grout
Latex Fortifier
Grout Sealer
Wall Tile Mastic
Wall and Floor Tile Adhesive

Helpful Hints

1) Buy All Materials At Once
2) Mix Tile From Carton To Carton
3) Check For Warped Tiles
4) Make Sure The Subfloor is Flat
5) When Dealing With Porous Tile Seal It Before Installation
6) Dry-lay Polished Stone Tiles

Helpful Links
www.hometips.com
www.easy2diy.com
www.ceramic-tile-floor.info
www.super-tek.com
www.hgtv.com
howstuffworks.com
www.hometime.com

Permits

When does one need a permit?

- New Construction
- Additions
- Alterations
- Renovations
- Relocations
- Repairs or Rehabilitation of a building or structure
- Electrical Work
- Mechanical
- Plumbing
- Repairing and Underpinning Foundations
- Installing Pools
- Constructing Decks in excess of 8 inches above the ground
- Demolitions
- Building, Tearing Down, or Moving a Garage
- Cutting New Windows or Door Openings, or Widening existing openings
- Adding, Moving, or Taking Out Walls
- Building Retaining Walls
- Re-roofing when a complete tear off and re-sheathing is required
- Adding Stairways

When does one not need a permit?

- Replacing Stucco, Siding, or Shingles with the same material
- Replacing Doors when the opening is not altered
- Replacing an open landing and stairs
- Installing Cabinets and Shelves
- Laying in a new roof
- Putting in Hardwood Floors
- Installing Carpet
- Upgrading ones Countertops
- Minor Electrical work, such as replacing an electrical outlet

A phone call to your local permitting office is the best, and only, way to determine if you need a permit.

Useful Sites
homebase
www.demesne.info
homerenovations
www.hometips.com
countygovt