After waiting a while, the seller agreed to a significant reduction in price and we went under-contract at 250k.
The problem: Based on new information, I think that I would be over-paying even at this reduced price as some major red-flags have sprung up. Here is what I think are the red-flags and I'll close with the potential upside.
Red Flag 1: After receiving the leases, it appears that 7 or the 10 mobile homes were rented with one year leases in the two months before the mobile home park was put on the market. This was quite surprising and concerning.
Red Flag 2: Many of the "income" lines in the leases are blank, and the two of the forms that that are filled out have rent to income ratios of up to 50%
Red Flag 3: The rented mobile homes are meet the minimum habitability standard, but just barely. Even the currently rented mobile homes will require ~3-5k of work to bring in better tenants.
Red Flag 4: While several of the homes are repairable, every single home will need extensive exterior work and 3 homes will need to be replaced and are not worth saving. The exterior of the mobile home park does not look attractive and will continue to bring in bad tenants until repaired.
Red Flag 5: The kicker. The owner doesn't want me to talk to the current manager or the tenants or the person who owner financed sold the park previously.
-The gross-income is currently ~6k per month (including mobile home rent and income from the triplex)
-3-5 of the mobile homes would only cost ~5k to renovate
-The park is in reasonably nice residential area next to a new school
-It could make a great turn-around project; triplex + 15 units (valuation would be 320k ignoring the units that can't be rented, just based on lot rent)
-I have the support of the local city to continue to operate as a mobile home park; there are no zoning issues
-Immensely strong teaser add response.
-Median house price: 146k, population is small but rising and close to small metropolitan center
-City water and sewer. The city picks up the trash as part of the taxes.
-Sewer and water in good condition
Assuming that 250k is too high, what price (if any) would make this an interesting deal or should I let it drop completely?