MOBILE HOME PARK FINANCING

INVESTING FOR RETIREMENT

Other Investment Options & How They Compare

GOLD- A great hedge against inflation, gold will always have value, no matter what, even if paper currency fails. In fact, gold is even more valuable when it does! But, there is no leverage, no cash flow, and if you lose it, or forget where you hid it, or if it is found by someone else, it’s gone forever. 

CASH- Cash is the most liquid investment that there is. But, it gets beaten down by inflation, losing value constantly. No leverage, no cash flow. If you put it in a bank and that bank fails, you could lose your money. If you put it in your mattress and it burns in a fire, you’re done. And of course some people wonder about the long-term viability of the US Dollar as a fiat currency. 

PENSION- If you’ve been working at a career your whole life, and you’re one of the lucky few, you have a pension. Most don’t, these days. But it’s subject to inflation, and taxation, and the financial solvency of the pensioner. In fact, you may not know this, but in some cases the pensioner can recast the terms of your pension. And of course If they fail, your pension goes away. 

STOCKS- Think about it: You’re investing your hard-earned money in someone else’s company. You probably don’t know everything there is to know about that company, or the people who run it, or your stock broker, for that matter. Anything can go wrong, and often does. If the company tanks, your investment vaporizes. When Enron folded, all those billions just disappeared, including about $100,000 of my money! Meager cash flow at best, no tax benefits, little or no leverage, high risk, volatile, and no way to positively affect its value. It goes up or down, and there’s nothing you can do about it. Yet millions are investing for retirement this way. 

MUTUAL FUNDS- These are fancy stock market devices that package numerous stocks together to supposedly minimize your risk. But it’s still stock, and subject to all the weaknesses and vulnerabilities that come with them. No leverage, no tax benefits, little or no cash flow. 

BONDS- Generally low-yield (when compared to MHPs), and subject to all sorts of financial pressures, and the solvency of the bank who issued them. No leverage, no cash flow, no tax benefits. 

401K / IRA- All of these retirement plans simply defer that tax burden. They defer the tax on any income you put in to the account at the time you earn it. But they tax you when you take it out. They also put severe limitations on what you can do with your money, making it difficult (but not impossible) to invest it in real estate, or anything other than stocks. However, it is possible to invest in real estate, including MHPs with a Self-Directed IRA. Whenever we do it, we hire an expert who does nothing but Self-Directed IRAs to handle that part of it. Call me at (925) 323-2134, or email andrewtallone@gmail.com if you’d like to know more. 

DERIVATVES – These are the financial instruments that overheated the economy in 2008, and they come in every type. Finance-types package everything nowadays, including mortgages, commodities, gold and silver, you name it. Again they’re high risk, designed more to benefit the brokers who trade in them than the public who buys them. 

NOTES & MORTGAGES – If you know what you’re doing you can make decent returns by investing in Notes and Mortgages on various types of real estate. Returns can run 6% to 10% or higher, but risks can be high if they stop making the payments and you have to foreclose, especially if the collateral property is no longer worth enough to cover your note. 

RENTAL HOUSES 1-4 – This includes single family houses and condos, duplexes, triplexes and fourplexes. Five units and up is considered commercial real estate, but on 4 units or less you can still get a conventional residential loan, just like the mortgage on your house. This makes them more accessible and less intimidating to new or small investors. But the returns are low (other than on a profitable flip, which is always risky to count on), the cash flow is abysmal, and the risk is high. Think about it: with one tenant, what happens when he stops paying? In many states, it can take several months and lots of lawyer money to get back control of your property. Just one of these can eat up years of profits. 

APARTMENTS – Anything above 5 residential units is considered an apartment. But don’t consider anything smaller than about 25 units if you want to make money. The little ones are just as much trouble as the big ones, they just don’t make as much money. But, the cost of managing and maintaining a 25-unit or larger apartment complex can be quite high, eating into your cash flow. 

OTHER COMMERCIAL – There is an endless variety of types of commercial property. From small ‘strip malls’ to office buildings, to self storage to medical buildings, all can be good investment vehicles, and many are. Generally, you can expect fair returns, in the 5% to 9%-range, with little or no upside, and the risk of a bad economy causing yout tenants’ to close their businesses. 

MOBILE HOME PARKS – We have identified Mobile Home Parks as the single best investment on the market, because of their Low Risk, High Returns, Excellent Cash Flow, relative Ease of Management, and Upside potential. MHPs remained strong and consistent right through the Crash of ’08. They are Cash Flow Machines, and as such always remain attractive to investors.