We love these types of deals. We make offers on parks without looking at them in person; we base our P&S agreement based on the income the seller reports.
That being said, our purchase and sale agreement protects us very well. We could opt out of it anytime without consequence. Once we’re under contract, we scrutinize the reported income. In most cases, like you have noticed, the income disclosed by the seller can often be way off.
What we ask for is 3 years of tax returns, 3 years of P&L’s, and all copies of leases. If they can’t produce 3 years of verifiable income, 2 is usually acceptable.
Of course, our due diligence checklist is a lot longer than this but this is a good start. Once these have been verified, we usually have 2 choices.
1- Go ahead with the purchase because the income matches what the seller had originally disclosed (rare)
2- Renegotiate. That’s where it get’s really fun! We renegociate the pruchase price based on the actual NOI. At the end of the day… that’s what we are buying - income.
Also, as you have noticed, non professional park managers have a hard time, amongst other things, making clear P&L reports. Therefore, during dd, make sure to call at least 3 professional management companies to see if they’d be willing to take on your park’s management after closing. We always bring in professional management that assists the on-site manager. Professionals make your life a lot easier. Especially as you grow. Ask me how I know. Haha
Hope this helps. Best of luck with your future endeavors.