Have a park under contract and would like the forum participants to evaluate and help me understand its value:
60 lots total, all on city water and paved roads.
2 vacant lots without homes.
58 homes, all occupied (7 park owned, 51 tenant owned).
Lot rents are $350 per month (includes water and sewer and trash).
Park owned homes pay $475 per month.
Park has a septic system that has 4 pumps to get the flow up to the leach field.
Metro area: Florida (Population: city of 15,000 with metro area of 500,000).
Homes are older & small, and the lots are small.
Total park including leach area is only 5 acres.
Park amenities are limited to a small recreation building with a laundry facility.
Seller's P&L shows 45% expenses (including $2.5k per month for water).
The plan is to install water meters immediately and start billing for the water expenses that currently run about $30,000 yearly. Seller has agreed to a 2nd for $200,000 (6%, 25 year amortization, 10 year term), and the local bank is interested and has quoted 4.5%, 20 year amortization, 10 year term, with a loan fee of 0.5 points. The bank is okay with the seller 2nd behind their 1st and will provide an extra $50,000 at closing to allow renovation of the park roads (patch potholes and resurface) and installation of the water meters. Again, please note that the lots are small and the homes older and small.