A little background, I attended a bootcamp, looked a lots of deals, and now starting to make offers.
I’m hoping for some thoughts on the deal below. Is there anything I’m missing in my valuation calculation? And more specifically, which one should I present in an offer? It seems like $210k would be really low for a smaller park but I may not have enough experience to know any better.
Thank you in advance for your thoughts!
-Asking price is $300k
-14 occupied (all tenant owned)
-5 empty lots with no homes
-City water and city sewer
-Lot rent is $250
-Has a storage unit (large enough to fit another 2 pads) which is currently empty but not permitted for a mobile home lot, owner seems to think it should not be a big deal to get it permitted from the city.
-Smaller midwest town with a metro population of 250k
-Walmart Supercenter is 20 miles away
-Local 2 bedroom apartments rent for ~$700
-This would be managed out of state (a plane flight away).
-Upside would be fill in the empty lots and raise rents.
- 14 lots*$250 lot rent*70=$245k (quick calculation)
- 14 lots*$250 lot rent120.7*10=$294k (alternative calculation)
- 14 lots*$250 lot rent120.5*10=$210k (higher expense ratio for smaller parks)