Hi MHU community:
I recently had a conversation with a small park owner on a possible purchase, and would like to hear your inputs about this possible deal. Here are some basic facts:
Metro area economics: 1M+, median income $49+k, and median home $150+k. The park is about 10 minutes walking to a major road w/ high traffic and many retails, less than 10 minutes driving to Walmart/Kroger. Media household income is about $53k for the zip code where the park belongs.
The park: 33 pads, 100% TOHs and all occupied (all paying rent except one), lot rent is $330. Homes are all single wide, mostly 2-3 bedrooms from 70s and 80s (flat/round/pitched roof). The road condition looks decent, and the sewage line is made of clay and some sections were replaced by PVC in the past. The current owner pays water/sewer ($1800/mo), security light ($150/mo), and trash ($480/mo). The real estate tax plus insurance is about $4000/yr.
So, if I run # correctly, the park would worth 330x33x12x0.7x10=$914,760. The seller seems willing to sell for $750k. A couple of questions:
Any flaw in the numbers I run? E.g., things I failed to include into consideration? Two things on top of my head: (a) sewage line may need repair/replacement down the road considering the prior repair work; (b) I am an out-of-state investor, so there will be additional costs associated with on-site manager and travels.
Seller is not willing to do seller financing. Typically, is this type of small park financeable by the bank, assuming seller has good records on P&L, etc.?
Is this small park a good deal or not? Any comments on this type of small park deal will be appreciated.