How do you evaluate what a park is worth when it’s losing money? This deal I’m looking at is 58 spaces with 45 park owned homes renting at about $500 a month and lost about $40,000 last year. Looking at the P & L, they spent about 100k on home repairs and maintenance. I haven’t seen a rent roll, but their income has been plummeting so I’m figuring they have bad collection issues. Another issue I see is tenants are using about $65 of water and sewer a month. Also the manager is paid 30k.
The market seems decent, but not special. I’m not sure about demand. I’m thinking this has to be bought for less than if it was valued for stabilized expenses. I’m not sure how much of a premium to discount for an offer on this mess though.