Community management is easy because we rent only the land. The tenant owns and maintains the living unit. Community operators don't have to worry about tenant damage or furniture and appliance replacements like apartment and motel owners do. A husband and wife team can manage up to 125 spaces without extra help, and fewer employees mean fewer problems. Project timing is seldom critical. Many maintenance and improvement projects will wait for golf and fishing, provided of course you don't fish full time! But there is time for the good life. Communities with established and mature income streams are safe and secure investments. You can invest your last dollar and depend on income as scheduled. Florida communities, particularly South Florida communities, cater to snowbirds and retirees; statistically the wealthiest group in the country, and notoriously on time with rents.
Professional management companies and individual investors buy communities to realize a greater return on investment than currently available in savings or bonds, with little risk. Primarily, investors invest to receive the property's income. A secondary reason is to hedge against inflation. Income property buyers expect the value of their purchase to increase with inflation, with returns on equity multiplied by mortgage leverage. Federal tax deferment through depreciation write offs is a third benefit, and communities may be written off faster than most other forms of property. On the state level, Florida has no income tax, and Florida earnings are not taxable in other states.
Community ownership is an excellent vehicle for retirement and estate planning. Here's a couple of sample plans. Buy a community at age 60 something, keep it until age 70 something, when you start to wind down, then sell, reclaiming cash invested plus receive a mortgage that brings income until age 90 something or 100 something. Work ten years for the community and let it work twenty or thirty years for you. Some folks start earlier. Buy a community while working and let rents pay off the mortgage, producing a tremendous cash flow by retirement time. Whatever your financial plan, our job is to match your investment goals with a proper property to achieve them. A chat in person or by telephone will help us understand your goals...and recommend a proper investment. We promise to be honest and frank.
Caveat. The foregoing is generally descriptive of Mobile Home Communities and RV Communities, however, some of our offerings are operated more like apartments when the community owns and rents the living units. These generally offer greater risk, more intense management and greater reward.
Our property offerings describe return as "capitalization rate", "cash on cash rate" and "yield". The cap rate is the properties net income divided by purchase price; your "interest rate return" if you paid cash for the property. Cash flow is the property income less operating expenses and mortgage payments. Cash on cash return is cash flow divided by down payment or interest rate on cash invested. Profit is cash flow plus principal paid off the mortgage in the first year. Yield is profit divided by down payment. All three numbers are useful in evaluating any investment and making sure that income comparisons from different sources use the same criteria. Return rates tell only the story of the past or present, not the future and may reflect current managements ability rather than property potential. Generally the market pays more (reduces return) for higher quality properties and those with high potential and pays less (enhances return) for lower quality or reduced future potential. Return rates can help evaluate financing structure. Cash on cash rates substantially higher than cap rate indicates some combination of low down payment, low interest rate or extended mortgage term. Usually the "yield" return will be very close to cash on cash. Cash on cash rates near cap rates indicate shorter term or higher rate mortgages and when accompanied by a fat yield rate indicate investment structure suited to investors interested in rapid wealth (estate) building at the expense of cash flow.
A fortune is money kept rather than money made. Fortunes accumulate as productivity exceeds lifestyle. Fortunes earn on their own, with little personal effort. These earnings are the time value of money, expressed as interest rate. Relative risk of a capital sum dictates interest rate. In money transactions no one repays more capital than they borrow, and capital is said to be fixed or static.
Fortunes are eroded by government’s practice of printing currency without backing. This practice dilutes the purchasing power of capital over time. In an inflationary economy money buys less when it is repaid, than it did when it was lent. True interest is the interest rate less the inflation rate. True interest is further diminished by taxation on interest earnings.
At Fortune Real Estate, we plant fortunes by converting your static fortune into a dynamic property investment. As income rises with inflation it promotes an increase in property value, and helps grow your fortune. There always comes a time when you want to do something different with your fortune. Then we help harvest your fortune by converting your enhanced fortune back to money, the universal exchange medium.
Our logo symbolizes the motto. Your fortune follows the growth rainbow into the pot of gold at the end. The pot symbolizes capital growth, while the coins around the base of the pot symoblize the spendable income produces while your fortune grows.
We specialize in Manufactured Housing Communities and Recreational Vehicle Parks because south Florida parks exhibit excellent income stability. Parks also exhibit ease of management and an outstanding lack of risk when compared to other types of rental property. If you lease a house or apartment and the tenant trashes it, who fixes it? If the air conditioner, appliances, or plumbing breaks, who fixes it? Who puts on new roofs? When renting mobile home lots or RV lots, your tenant fixes all these things, not you! And what can he do to destroy the land?
Fortunes are fragile with inflation at work. A half-million dollar nest egg at 10% interest will produce $50,000 of income. 28% taxation reduces this to $36,000 spendable. Maintaining a $36,000 lifestyle will exhaust capital (means you are dead broke) in just 21 years at 3% inflation or in 16 years at 6%.
Ten percent has been an average return on mobile home parks for the past twenty years, but it’s a much different 10%. In 1970 we could buy 183 average mobile home spaces for $500,000 cash. Rents then were about $35, expenses about 35%. Net income was $50,000 or 10%. From 1970 to 1990 published inflation averaged 6% while park rents and expenses grew at an average 8% rate. In 1990 lots in this park rented for $163, producing a net income of $232,600 and a value of $2.32 million. For the last decade published inflation has averaged 3% and park rents and expenses about 4%.. This puts today’s rents at $231 and our example nets $330,000 and is valued at $3.3 million. Where would you rather have invested your fortune?
Let us help plant, grow, and harvest your fortune.