Hi Everyone! We’re close to making an offer on our first park and just wanted to get the experts’ opinions- would you do this deal? Thanks in advance!
1 vacancy- old, park owned home on lot, currently for sale
8 rent credit park owned homes
Avg. Lot rent $240
Avg. poh rent $340
City water and sewer directly billed to tenants
Electricity supplied by power co. and billed to tenants
1 street thru park owned and maintained by park, the other roads surrounding park owned/maintained by city.
On site manager who owns in the park. Maintains grounds, some repairs/maintenance, resident relations. Paid $200/month + free lot rent.
Good metro area, jobs, housing prices and city data
Asking price $900,000, seller’s claiming ~10% expense ratio…
Here’s our Park Value calculations:
33 x $240 x 70 = $554,400 initial park valuation
33 x $240 x 12 x .7 x 10 = $665,280 at 10 CAP
We’d want to offer at a 12 CAP which would be $554,400…and maybe settle at 10 CAP but man we seem to be very far away…
The notes on the rent credit poh’s are included in the sale price. Should we also purchase the rent credit poh’s or leave those out of the offer? What is the advantage of that and is that common?
Thanks for any help, suggestions or advice!