Looking at a Park in a town of about 60k. Has 2 Walmarts within 5 miles so location seems good. 43 spaces with 30 filled, no POH. Park has a mix of 20 MHP and 23 RV spots. Lot rent on all 30 are currently $450. Maybe some room to go up to $475 on lot rent based on market. Park has a bit of reputation and needs some clean up. current owners have about a 65% expense ratio. Onsite management is bad and they aren’t billing back for most utilities. They want $1.3 million for the park. I’m thinking of offering $1 million with owner financing, $300k down 5% interest only carry for 2 years. Plan would be to clean up, stabilize tenants (all currently on a month to month lease by the way), fill the 13 spots with additional RVs, cut expenses to at least 40% right away (cut manager that gets $35k a year and bill back utilities). What are your thoughts?
You want to see 2 years go by fast? Sign a two year note. it is likely it will take more time than you think to stabilize the park and have it in acceptable condition (financially and otherwise) for a “standard” bank refinance. Try for a minimum of 5 years in return for a principal pay-down of $100K or so at month 36.
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