Fighting Low Tenancy by Targeting the Army

Are you a commercial investor who is experiencing difficulty with high vacancy?

Sometimes it’s a matter of strapping on your combat boots, and pulling out the big guns to fight – and conquer.

It takes ingenuity to become a commercial investor, and we’re guessing that you possess this quality, since you’re already here. The finishing touches for low vacancy or high tenancy include successful marketing. As an investor, it isn’t wise to take the first-come-first-serve approach. If you have low tenancy, this shouldn’t mean that anything goes either.  Stop and think: at times you merely need a tunnel vision to succeed. Hone your interest into one market alone. If you’ve exhausted all options, here’s one more to consider: the military.

In this post we’ll share tips for tapping into this military market we speak of.

What’s so good about this type of tenant? From an objective view:

· This group of tenants has a guaranteed, steady and stable income

· At or near military bases, more recruits mean more housing needs for military folks and their families

· Despite the typical discounts given to this market, stable tenancy is created from steady paychecks

· This paycheck extends beyond retirement, which means a long-term market of military folks and their families

· Following the payoff of the mortgage at an estimated 15-30 years, all the income is yours to keep passively, minus the property’s yearly expenses

Jason Hartman advocates this type of target market, mainly because:

· The military market is under the radar. It’s an under-served market with less competition

· This is also the case with self storage, mobile home parks, and multifamily complexes – all of which are used by the military when families travel from place to place.

· It should also be noted that due to the lower rates for military tenants, it would be beneficial to utilize efficiency apartments.

What else can you look for:

Location Is Key – Most investors recommend multifamily homes, mobile home parks or multiplexes within a 30-60 mile radius of army bases. Convenience and close proximity are of most importance for trainees that endure a grueling daily schedule.

Size Matters – Efficiency apartments appeal to folks that are on a lean budget.

Amp Up Amenities – Small luxuries can make a world of difference after a long day of work. Small investments like cable or play parks will help when marketing the property.

For investors who purchase properties close by military bases, you win a seal of approval from Jason Hartman – who is also a veteran investor when it comes to commercial real estate. (Top image: Flickr |USACE Europe District)

The Commercial Investing Center Team


Buy a Mobile Home Park with Seller Financing

Lately, we’ve discussed various ways of obtaining financing to buy a mobile home park without using a bank for the loan. Nothing against banks, but the new down payment requirements, even if you can afford them, are not a good use of your cash. The real profit potential in the Jason Hartman style of investing requires that we put as little of our own money into the deal as possible. Today’s 20 to 25 percent demanded by the traditional financing industry is simply too much if you can avoid it.

One way to get around the ludicrously high money down requirement is to obtain seller financing. Here’s the scenario. A good rule of thumb tells us that around 30% of all mobile home parks are owned free and clear. Many are mom and pop businesses that have been run by the family for decades. This is the kind of opportunity you need. With this scenario, a seller knows that the park is a positive cash flow machine. It’s profitable and will continue to be as long as the buyer isn’t an idiot. By the way, to get the seller financing you so desperately crave, you’re going to have to convince the seller you are, in fact, NOT an idiot. Hopefully that won’t be too hard.

Why would a seller want to take on the perceived risk of financing the purchase? Let’s look at it his from his point of view. To sell the park outright incurs a huge capital gains tax, which most sane Americans prefer to avoid. Thanks to depreciation and other business deductions, the seller is used to paying very little in taxes. His primary goal is to let go of the responsibility of managing the property. Financing the purchase for you allows him or her to keep the monthly cash flow they’ve become accustomed to (your mortgage payment).

These are the points you need to make when approaching a seller about the possibility of financing the mobile home park for you. The bottom line is twofold:

1. You take the responsibility of the park off his or her shoulders.

2. They get a nice income stream at minimal tax risk and a fair interest rate.

The great thing about seller financing is the terms can be anything the two of you agree on. No pesky bank rules and regulations to worry about. You should be aware the seller can still ask for 25 percent down, but maybe he won’t. Maybe you could offer to pay a bit higher interest rate in return for a smaller down payment.

The ultimate task to make this strategy successful is for you to convince the owner you’ll make each and every payment AND continue to operate the park profitably. (Top image: Flickr | Tax Credits)

The Commercial Investing Center Team