I recently made an offer through a broker for a 17 lot park that was lot rent only. Seller was asking $225,000. 9 spaces are occupied. All utilities/mowing passed on to tenants. Lot rent was 175 and the NOI turned out to be around 16k/year (I wanted something small with opportunity to expand). So I sign the LOI and make the offer of 170,000 and the broker tells me the next day that the seller thought the offer was too low.
When I made the offer I explained that this was a fair offer at 9.something cap and that the seller was basing his price on projections for an almost full park, which it is not. I said that I am not paying for the full potential of the park and I'm only willing to go to a 9 cap. So that was that.
Should I have made the offer at 225k, done due diligence and then made the offer at fair price once I collected all of my data? This is still a park that I'm interested in, but the seller is selling the park at around 7 cap and that's kind of silly for such a small park I think. Thoughts?