MHP #834: The Risks Associated with Using an Owners Understated Expenses When Running Your Proforma

Real Estate Investing for Cash Flow with Kevin Bupp

Kevin Bupp

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4.9 • 675 Ratings

🗓️ 18 December 2024

⏱️ 13 minutes

🔗️ Recording | iTunes | RSS

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Summary

Today's episode is from Mobile Home Park #60.

Charles and I will discuss mistake #15 from our popular eBook, “The 21 Biggest Mistakes Investors Make When purchasing their First Mobile Home Park…and how to avoid them.”

There are times when using the owner’s expenses can work in your favor and there are times where it can work against you. As with any business venture, there are certain expenses you have to take into account. Virtually every property we have pursued has had some of their expenses under reported or completely left off of the profit and loss statements. So how do you determine what you are buying and what the appropriate operating expenses should be?

Typically, we will start out assuming that any park the pays for water/sewer or has private utilities will have an expense load close to 45-55%. If the park is on city water/sewer and the residents are billed for the usage, we typically assume an expense load closer to 30-35%. This is usually a good rule of thumb on the “eye ball” test but each deal will require you to put a microscope on each expense in order to get a truly realistic budget.

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Transcript

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0:00.0	Hey guys, Kevin Bup here. Just wanted to make a quick announcement about our Wednesday Mobile Home Park show that you're about to listen to.
0:06.4	These Wednesday episodes are in collaboration with my other podcast, the Mobile Home Park Investing Podcast, many of which were recorded a few years ago.
0:14.1	I've carefully hand-selected only material that I feel is still relevant today, but there's a chance you might find references that could be outdated
0:20.8	at present, such as website URLs. Thanks for tuning in, and now on to the show. Welcome to this
0:28.1	week's Mobile Home Park Investing Podcast that will teach you how to successfully invest in and build
0:33.6	steady streams of passive income from the highly lucrative niche of mobile home parks.
0:38.3	With decades of experience, Kevin Bup will personally share with you the valuable lessons he's learned along his journey
0:44.3	so that you too can learn how to generate cash flow and build legacy wealth for you and your family.
0:51.3	Now, without further ado, let's welcome your host for today's show, Kevin
0:56.0	Bob. I'm your host, Kevin Bob, and just in case you're tuning in for the very first time,
1:01.2	I want to let you know that today's episode is a little different from our normal weekly show,
1:05.7	but don't you worry. I'm still 100% positive that you'll find a ton of value if mobile home park investing
1:12.2	is what you came here to learn about. You see, many, many, many, many, many, many,
1:17.2	months ago, actually a little bit more than a year and a half ago, to be exact, Charles and I,
1:21.5	we created 21 special release episodes showcasing the 21 biggest mistakes that we see new investors make when
1:28.9	entering into the mobile home park business. And our original intent was to release one episode per
1:33.9	week in addition to our normal weekly segment. But sadly, we got sidetracked and we only ever
1:39.5	released the first seven shows. In fact, you can actually go back and listen to these first seven mistakes
1:44.7	by going and listening to episodes number two, four, six, eight, ten, twelve, and fourteen, on our podcast.
1:51.5	And I would actually suggest that you do that if you haven't done so already. And so as a special
1:55.8	treat, we're actually going to be posting two to three episodes each and every week until we get
2:00.1	all 21 of them out.
	...

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