First park I am trying to fully evaluate prior to offering.
Asking price of $679,000, NOI for 2013 was stated to be $52,077 with expense percentage of 38%. 52k / 679k = 7.7 CAP rate correct?
Not sure if it matters but expenses were high in 2013 for one time upgrades. Per Broker, “Upgrades were for trailer park sold and won’t be incurred again”. Which isn’t true because we should always budget for vacancies.
17 Lots on 1.5 Acres in California with 100% occupancy
Average Lot Rent = $262 ($4,454/month)
3 of 17 are POH, Avg = $296 ($888/Month)
5 of 17 are R2O, Avg = $226 ($1128/Month)
Valuation on Lot rent is $4,454 * 12 * .60 Exp Ratio * 12 CAP = $267,240
How do I valuate the POH & R2O income? I know that POH get an expense ratio of 50% but I’m lost on the Rent to Own homes.
If I work backwards from the NOI of 52K and want a 15 CAP - the price would be a bit under $350k?
Broker told me electrical is sub-metered and billed directly to tenants. Yes it is connected to city sewer and water. Each unit is charged $36 Flat per month to cover these 2 expenses. Chance to improve here? Get American Leak Detector out and install water meters to bill for usage?
Appreciate the help all. Hope the boot camp in Los Angeles went well for those that attended.