Have an owner I've been talking to with a park that is very close to my home. It's 100 spaces with about 75 occupied lots. Was built in 1992 so fairly newer park with all good concrete streets and off street parking. Water and sewer lines should also should not be a problem since built with newer materials.
Rents are at $240-250 and are $30 under market. Asking price is $1.8mm which is a bit rich but I'm meeting with him to go over financials.
I've tried to avoid WWTP like the plague but this deal seems to have some merit as the plant was constructed in 1992 and may have many years of life left if it has a 50 year life expectancy. I will know soon if it's concrete or metal.
I'm confident I can fill remaining spaces over 3 years so there is some decent upside to the deal.
Would like some feedback from experienced investors on 3 specific items:
1. What is typical expense ratio for a newer park on WWTP?
2. What cap rate is fair? Should cap rates be higher for parks on WWTP?
3. What valuation would you offer?
I know Frank says use 30 and 40% as an expense ratio but my other park only runs about 10% to operate(all city direct billed utilities). If I had used a 30% expense ratio I would have never got that deal, and I'm happy to have it.