Hi! Total newbie here…I’m looking at buying a park and need help determining what a fair price would be. Current owner says his average revenue is about $80k, average annual profit about $20k. The park is run down and definitely needs maintenance, but the land (5 acres) is desirable and the area is growing and needs affordable housing. Owner is currently asking $750k, which seems extremely high. What math should I be doing to determine a fair price?
$20k divided by a reasonable cap rate, say 8% is $250k.