How would you approach this deal?


#1

Trying to decide how to make an offer on park. Park is in perfect condition, 8 POH and two empty spaces with utilities in place. 24 by 38 metal; shop building on slab. all utilities paid by tenants. Haven’t seen actual finances yet, but here is what owner claims:
3.8 acres
average rent $650
Gross income 64,000
operating expenses $7,000 (owner lives in park and does all work)
NOI $57,000
Expense ratio 10.9% (yes, this is a bogus number)
Cap rate 10.9 (also bad number because he is including rent from mobiles)
The guy is hung up on a sales price of $537,000 which is nowhere near reality
He will finance with 20% down, which is great.

Not much information, but how would you proceed? Just curious how others would approach this.


#2

Give the Seller your card and ask him to call you when he is ready to sell. Don’t waste your time trying to convince sellers they have an unrealistic price. If you really must make an offer then put together a very high level LOI. You will never hear back, but at least you didn’t spend more than 10 minutes on it.


#3

He just wants to take your downpayment and resell when it doesn’t perform well and youo give it back to him…me thinks.


#4

Are you planning to owner manage? Because if not, you will make almost no money because manager’s aren’t free. However, you are right, the price point is six ways of too high.
I realize this may be climbing down the rabbit hole too much but I always ask where the seller gets their number from - what their need is for that number. If he can’t give one, you have to break down why its too high, and lay it out on the table the facts of it for what you see for the money and sell him on the right price point.