Property Investors: An Alternative Asset Class - Intro to MHCs

An Alternative Asset Class - Intro to MHC

I’d like to share with you a property investment strategy that has returns of 10% to 12% positive cash flow and requires as little as USD 50,000 to start (in some cases as low as $30,000).

Let me explain.

Those who know me know I’m always on the lookout for high yield cash flow investment opportunities. Unlike Australia, rental properties in the USA are cash flow positive.

This is nothing new, as I wrote about this back in 2017 when I shared my plans and moved to the USA.

It was only recently that I came across an alternative asset class with low entry costs and high returns. To be honest, I came across this over a year ago but I never bothered to research it because I was still thinking like an “Aussie Property Investor.”

Once I got over my prejudices and took a good look at the numbers, I uttered that oh so common regretful phrase— “Wish I knew about this earlier!”

The asset class I discovered is Manufactured Housing Communities or MHCs. An MHC is often a gated community, with spaces for 100 or more homes. Residents of the community can either buy or rent a home in the community. MHCs generally fall in one of two categories, family MHCs with no age restrictions, and communities specifically for those 55 and over. 

Now here’s the key—
even if they buy the home, they do NOT own the land.

And that was my stumbling block and why I initially rejected this concept. As any Aussie property investor will tell you, the value is in the land! Heck, I’ve even written books about this stuff!

But … the land is not important. Not for this strategy. Now, in case you think I’ve suddenly recanted all the wisdom espoused in my books, I haven’t. Hear me out. 

This is a passive income strategy, not a capital gains strategy.

You see, when investing in Australian property the rent rarely covers the costs. We call this negative gearing, which simply put, means you lose money and get a tax break on the loss. How do you make money with negative gearing? You wait for the property (or more correctly the land) to appreciate. Eventually, the property value increases and you’ve “made a profit.”

But an MHC investment generates immediate cash flow. The speed of the process is staggering. Usually, the deal is done in a month and the property rented. Within 4 to 6 weeks you start receiving your monthly income. Simple.

You might wonder, “how can it be so fast?”

Several reasons:

Efficient home construction all under one roof.

1. The properties are built in a factory to specified standards (ironically, a much better standard than typically built homes). Factory construction has all materials and workers in one location and is never hindered by the weather = faster construction.

2. Tenants are easy to come by due to the high quality of the home and the lower cost of rents (leases on MHC properties are usually cheaper than a condo, and MHC are standalone homes with gardens and parking.)

3. A limited supply of affordable housing in the USA. 

What about the value of the property, does it ever go up?

Yes, the home value does increase but that’s not included in the ROI, if it happens it’s a bonus. The question that should be asked is, “Can the home be easily sold?” And the answer is also “yes.”

It can be sold on the public market like any property. The firms I deal with have a buy-back option to repurchase the homes for the same price you paid for it. So, in short, you can get your capital out fairly easily and due to the low cost, it’s more liquid than a typical property for the simple reason that there are more people with $50k to invest than there are with $500k.

Ease the Burden 

Why am I sharing this now? I know that some of my readers are suffering in the current social and economic turmoil in the world today. MHCs provide a recession-proof investment for the simple reason that in times of difficulty people downsize. I believe that adding some MHC cash flow properties to a portfolio is a great way to diversify risk and ease the burden of lost income from other asset classes.  

So that’s my brief introduction to MHCs. If you want to find out more about this opportunity, I have a team here in the USA with a turnkey solution for investors. Everything is taken care of, all maintenance, tenanting, insurance—everything.

For more information, visit our site passivebanc.com and the FAQs and How it Works.

Comment below or reach out via the Contact Us page and I’ll be happy to answer any questions you have. 

In the meantime, stay well and stay safe.

Cheers

Blockchain and Cryptocurrency Made Simple

I first heard about Bitcoin many years ago, way before it took off. Unfortunately, I was busy with other projects and didn’t have the time to fully research the subject and thus missed the boat. Given how money works in this society, it’s no surprise that Bitcoin and other crypto coins took off, as they bypass the central banking system.

But I don’t regret it missing the boat. For those who remember the dot.com boom at the turn of the century, the frenzy that rocketed share prices sky high was followed by a massive dive. Well, that event marked the beginning of the internet revolution. Once the frenzy was over, only companies that offered true value where the ones that flourished—companies like Google, Amazon and Apple. Life changing technologies such as the iPhone and Facebook came after the frenzy.

That’s why I have no regrets about “missing the boat” on Bitcoin because in my opinion (based on history) we’ve only just begun.

What is Blockchain?

Let’s keep this very simple.

Blockchain is like a spreadsheet. It’s a place to record a transaction.

Imagine each row in the spreadsheet is a single transaction between two people, such as Bob gave $10 to Alex.

Blockchain is like a spreadsheet

What makes Blockchain special is that each transaction is verified many times, by different members of the community.

A spreadsheet can be used for many things. And so too can Blockchain. Bitcoin is just one application of blockchain, just like Angry Birds is just one app available in Apple’s iTune Store.

In that sense, think of blockchain as a platform and the cryptocurrency as an app.

Yes, you read that right. Cryptocurrency is just an “app.”  And money is only one use of blockchain.

So while there is a lot of talk about Bitcoin, what’s far more exciting is blockchain—that’s what makes Bitcoin work.

The possibilities of blockchain are endless. Ten years from now we’ll be using blockchain technology in ways we never dreamed of. Just like we never dreamed we’d all be connected via Facebook sharing videos with our friends from our phones.

Further reading of Blockchain I recommend The Internet of Money by Andreas M. Antonopoulos.

If you have any questions, feedback or want more articles on this subject, comment below or contact me.

Did You Know Debt Is Negotiable?

“The Rich know everything is negotiable.”

— Tony Melvin

The above quote is one of the key Rich Habits is. It applies to debt too.

All debt is negotiable including credit cards, personal loans and mortgages.

You can put them on hold.

You can reduce rates.

You can eliminate fees.

You can, in certain circumstances, reduce the debt by 90% (so you pay $1,000 to eliminate a $10,000 credit card).

All of this can be achieved when you:

1. Realize that debt is negotiable.

2. Know how to negotiate with lenders.

Here’s an example, a text message I received from one of my clients who was initially stressed out about his debt, but then he did the Rich Habits coaching.

You don’t have to feel burdened or stressed about debt because debt is negotiable, and you have the ability to eliminate it faster than you think.

The only missing ingredient is the know-how to do it. And you can get that by reading Rich Habits.

Check it out now.

I look forward to hearing your wins.