Wednesday, October 17, 2007

It's a monster!

I ran across this doublewide - it's huge! Problem is the sellers never had it hooked up to a septic tank - it would have cost them 10k just to put a septic tank on their land. Believe it or not, they lived in the home for awhile. They had electricity and since there was no plumbing due to no septic - had a "port o potty" outside! I'm not kidding...seriously. I'm always amazed at this business - it's like no other experience I've had in all my years of real estate investing. I'm having a lot of fun!

Since I can't test the plumbing, I'm going to pass on this one. It's a mess on the inside - some roof leaks. My niche is really homes that are pretty much ready to go. I try to stay away from homes that have been vacant for a long time - years. There could be so many issues with homes that have been vacant for so long. That is why one of the most important questions I ask when running into vacant houses is how recently they moved out. If it's a recent move (a few months), then I look into it.

In any case, I've been pretty tied up. I have a few deals in the works - pretty exciting stuff. If these deals go through, my cash flow will be pretty awesome. The cash flow in this business is amazing! One thing I've learned about business is that it doesen't matter how much you make but how much you keep that counts.

Compared to being a landlord, pretty much 50% of your gross income goes towards expenses. Then, you're left with 50%. Out of that 50% about 80% goes towards mortgage, which leaves you with 20%. About 10% goes towards taxes and if you're lucky - 10% left over. Though the gross may be high, what you net is very little...And what you net is what's important because that is what you keep.

On the other hand, in the mobile home biz the expenses are low. I couldn't believe it when the tax office told me that taxes on mobile homes actually go DOWN, not UP every year - awesome! I never see this in real estate. Plus, the insurance is so low. If I pay with cash, I eliminate the mortgage. So, I end up with 10% of my gross going towards expenses and the rest - 90% coming back to me! What an awesome business...

It's funny because I had breakfast with my mentor and told her what the heck was I thinking doing real estate transactions all this time...I should have been in the mobile home biz! She laughed and told me it's all a learning experience....

I guess...I'm learning a lot, having fun and in the end - that's what counts!