Any thoughts please on this potential purchase; bear in mind this will be our first park (previously SFH’s, small multi-family and storage units/facility) and located about 8-10 hours away from us
-23 space park, 17 occupied (including 1 POH), 6 vacant pads
-Lot rent $200 incl WST (nearby parks are $215-$230 with same utilities included)
-Public sewer, well water
-Includes a stick built SFH
-Sellers are firm at $202K (all bank financed, they have declined seller financing in any capacity) after initial listing @ $230,000, then to $218K, then to $202K after our initial offer
-Located in city of about 60,000 with a positive population trend, median home prices average around $85K for a SFH, median household income around $35-37K
-Would plan to subdivide and sell SFH (our estimate is around $50K for the house)
A tentative plan would be to purchase used trailers, bring them in and sell to new owners (in the process of testing to gauge interest in purchasing used homes).
We see some positives & some negatives in this park, but welcome insights from more experienced park owners.
Looks pretty good to me. To come up with a rough value I’d use 50% expense ratio. Take $200 X 17 X 12 X 0.5 = $20,400 NOI. At a 10 cap that comes to $204,000 purchase price (essentially the exact asking price). Looks even better if you’re able to sell off that SFH. Plus you’ve got a little upside in rents and fill some lots.
For the drawbacks, 1. well water obviously isn’t ideal. Also, 2. the average home price in the market is a bit lower than I’d like to see but not terrible. And finally, 3. a deal of this size could be a little tricky to finance.
That said, I don’t think any of these are deal breakers. 1. Is what it is. Lost of people have well water and don’t lose any sleep (but would be sweet if you could tap into city water on the cheap). 2. Test ads during diligence will tell you a lot re: demand for mobile homes in the area. 3. Call lots of banks and I’d bet you’ll find one or two to do this deal.
In summary, I like this deal overall. I’ll be curious what others have to say. Best of luck to you!
Other thought…can you rent out the SF home? Or have the onsite manager live in the home as compensation? Overall the numbers look good. Local bank financing is likely the only option. Good luck!