What's a good deal on a park to you?


#1

More specifically, how do you determine your threshold for what you consider a good deal? Thanks as always!


#2

This can be determined by a lot of things. However one large influence will be your cost of capital. If your investor capital only demands a 6% preferred return than you might be willing to pay higher for an asset than someone who doesn’t have that access to low cost of capital.

One thing I keep in mind while buying deals is that real estate is an illiquid asset and mobile home parks are a niche aspect of the asset type. I want to make a return in excess of what the stock market makes over the long run. In other words, I want to be compensated for the additional risk of illiquid investments like real estate. Therefore, I want to be in larger markets and achieve low to mid teens unlevered cash on cash returns in a reasonable amount of time.


#3

Well said. It’s easy to think people are willing to take a loss for a decade at the prices sellers usually ask. It’s good to see not everyone falls into that.


#4

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