Hey all, new guy here. I have a deal pending on a small park in east Tennessee. 9 acres with only 2 acres being used, 9 current spots, 5 septic tanks (which I just had inspected and are in good working order), city water, all water and electric are on metered spots. The park is grandfathered in from zoning changes in 2000. I ran the numbers through a business proposal website that helps project your balance sheet, cash flow, and profit and loss and calculated the park will have a cap rate of 14.9% as it sits. The park comes with 3 owner owned units 2 of which are doublewide units. I spoke with zoning about adding more and I would have to bring the park up to code before I could add more units. The code states I need paved roads, site plan, drainage, planned dumpster site, and parking for guests.
With that said, my question for the guys who have been doing this for awhile. Should I focus on keeping earnings retained to expand or focus on stacking cash for another down payment on another park? Loan is a commercial loan 84K 5 year ARM with a call on 15 year amortization. The payment is only $660 a month. Net profit is a little over 15K a year. In 5 years I should have about 78-80K in retained earnings.
Any and all input is appreciated.