I need help on a deal.
Recently I signed a contract to buy a 21 space MHP. All units are rented out and the part of the town is growing. All city utilities. During due diligence, we found that the county only give 18 space permit. So 3 spaces have been added by current owner.
My question is two folds:
1. The current owner operated in 21 spaces without a problem for 2 years. Will I be able to operate the same way? How likely the county will come out and ask us to stop operating the 3 illegal spaces?
2. Obviously, I will try to talk to current owner to lower the contract price but if the current owner insists on the same price, and we remove 3 spaces(willingly or forced by the county), the real cap rate is 9.7. Is this still a good deal?
Thank you very much!