This 80 year old man has told me to offer a price and hell do land contract…What price should I offer…Any advice is greatly appreciated. hes owned it 57 years… any advice or price would greatly be appreciated!!!
Location: MIchigan (not flint not detroit great thriving medium size city with tons of new developement.)
Spaces: 54
Occupied: 28 (all tenant owned homes)
lot rent: $280 ( will be raised to 300 upon purchase)
total of 15 vacant homes that are in desperate need of remodel, I figure out of the 15 homes 7 are going to the junk yard for $2500 a piece and the other 8 will be remodeled for$ 5000 a piece that cost will total $57,000 just to get the park to decent standard. All the homes occupied and not are the older style (20- 30 years old) with a couple to be the exception.
utilities (water, sewer, electric) : PAID BY TENANTS
all bills total monthly to around :$3000 with manager pay
Expense reserve monthly;$1500
total monthly income:$7840
Cash Flow:$3340 monthly$40,080 yearly
demand is great, 24 calls in one week one
I know there are several things i probably missed but im sure someone can give me a good round about figure to offer this guy, i dont want to offend him but i also of course dont want to overpay!
What did you end up offering? The manager expense seems really high for 28 lots. 18k/ year?
28 x 280 x 70 = 470k - estimated trailer removal and maybe the other mobiles are a wash because you have to put into them what you will sell them for. This offer is a 12 cap offer.
If you offered him a 10 cap on current financials, you would be about 400k
It still appears that Michigan parks are selling less than other states, anyone can correct me if I’m wrong. I would be more concerned about covering your butt, in the purchase price, than insulting him. I don’t mean any disrespect but you don’t want to lose 100k if you have to sell it.
Terms, proximity and non recourse can fix most of this too.
Side note
I’m still looking for my first park so take all this with a grain of salt.
From being a former resident of the rust belt state most buyers are missing the problems in some parts of MI. Just thinking you are not next to Flint or Detroit no problem–wonder why so many parks for sale, so many empty spaces, so many run down POH’s. Mi. is a high tax state long with Iowa and a few other states. Michigan is blessed with many natural resources but working at GM and needing to be in a union member their is lots of political money going to people’s pockets. Flint is just a little pimple of what is happening in some of the larger cities.
Michigan is not on our radar to buy parks as mentioned above. The strongest area is around Grand Rapids but notice the number of parks for sale, occupancy, number of POH and we believe Mi. is not the best area to be buyingt(just only our opinion).
