Deal evaluation Help


#1

The numbers are as follows:
It is a 25 space mobile home park asking for 300,000.00. It is a small mom and pop park and the owners no longer want to run it because of health concerns. Of the 25 spaces, 23 are occupied with 18 owner occupied lots. Rent for the 5 POH averages $450 per home. City bills the tenants directly for water, sewer, and electric as well as maintains all lines/meteres. The only major operating expense is the roads. Park has good spacing and is able to fit double wides on every lot. For singlewide homes, they are charging $180.00 and for Doublewides they are charging $230.00. Five homes are doublewide, and the other 18 are singlewide. They have a manager who does all the work currently in place for $3000.00 a year. My major concerns are the population of the town; it is only 1700 people. That being said, the 50 mile radius population is over 600000. The other major concern is the owner is not sure if it is in a flood plain.
Estimating numbers I find the park value as follows:
Gross income= 23 lots @ $190 average=$52440.00
Less collections at 5%=$49,818.00
Total Expenses= 22,439.00
Net Income= $27,378.00
@ a 10 cap this puts the parks value for lot only income at around $270,000.00.
The rents are about 15 dollars shy of comps in the area and would be raised immediately.
Would you guys consider this a good value and continue? Any advice on pitfalls to be wary of is appreciated as well.
Adam


#2

@adr1 follow this link to see if the park is in a flood plain.
https://msc.fema.gov/portal


#3

Baker, thank you very much for that help. About half of the homes are in a 100 year flood plain. What would you say this would do to the value of the park?

Thanks


#4

@adr1 I don’t fully understand the ramifications myself but others on here certainly do. Sorry I can’t be more helpful!