I found an interesting little dirt-pit. RVs and 5th wheels on a small property smack dab in the middle of an industrial/commercial area. Jobs galore, super Walmart nearby. 30 spaces filled year round, 42 spaces total. It’s a real dumpy setup with tarps and junky RVs but it’s not as bad as some (MHP and RV Parks) I have seen. Expenses are roughly 40k. NOI is 100k with 31 spaces filled with an RVer as a manager (free lot rent). The seller wants 900k.It’s a tiny property, 1.5 acres. No trees or landscaping to manage. It’s just concrete, a shower facility, and lots of junky RVs that make the owner a lot of money.Any thoughts on this? It’s better than any of the MHP deals I’ve seen in 2 years here in WA.
We see deals like that all the time in WA. The problem is that, although it may make money, it scares 99% of banks and buyers to death. No infrastructure, super high density, RVs that could move out at any time, probably 1,000 ordinances being broken at all times.If you want to buy a park like that, the first issue is financing. The seller will have to carry it.The second is cap rate. I’d demand a 20% CAP personally to even mess with such a thing.I can tell you that the expense ratio on a dump like that is going to be at least 50%, as the park pays all utilities. If you’re saying the gross is $140K and the net is $100K, I know that’s wrong. If the gross is $140K, the net is more like $70K. At a 20% CAP rate, that would value the park at around $350,000, which the seller would have to carry with probably 20% down.You obviously know this area and like it, or you would not be interested in it. I’ve never seen it. But it doesn’t sound that great to me. If that’s the best deal you’ve seen in WA in two years, I’d look outside of WA, as you can get a park deal a thousand times better in other states.
Thanks Frank
Curious if you ever purchased this park? have a similar deal in Washington and wondering if you had any insight?