Deal or no deal


#1

One rule, in my personal investing that I’ve tried to follow, but which isn’t always that easy to follow is this,

Never mind the price, see if the numbers work.

As I said, this is very difficult to follow, I think we are all hard wired to look for a “deal.”

I’m now looking at a park that I may be interested in buying. The park has 57 pads.

38 filled and paying 300/month

19 vacant. (9 of these vacant lots have completely destroyed old homes sitting on them)

In addition, the park is in rough shape. Needs a lot of fix up.

Six months ago, I received a proposal pricing the park at 450,000.00, and was told that the owners were not willing to carry back financing.

Since that time, they have listed with a broker and the broker has raised the price to 660,000.00?!? In asking again about the owner financing, I was told that the answer was still “No” but it might be a slight possibility.

I know the 60/30 rule means nothing essentially. It is just a quickie ball park type estimate thing, but if I run the 60/30 rule, it gives the value of the park around 855,000.00.

The question I have is that, gritting my teeth and ignoring the fact that the price has gone up nearly a quarter of a million dollars:

Is this something I should look into further or run for the hills…


#2

Obviously, further due diligence is needed on your part.

If you’re serious about doing a deal, get busy and start the due diligence. For instance, what about this location made them willing to sell it so cheaply?

You could do DD on 10 or 20 parks before you find one you end up buying. It’s a lot of work, but each time you’ll learn a great deal. Get Ray Alcorn’s book or any of the other books out there that give you info on the process.

Anne