Adjacent property How would you evaluate?

There is a property adjacent to my RV Mobile home park that was originally part of this parcel. Seller partitioned off and kept this parcel of less than one acre (tax rolls show it as .66 acres and valued for tax purposes at about 75K) I have a first right of refusal on any sale of the property

parcel consists of one small 2 bedroom home 768 sq foot block home built in 1964 in good condition and 7 mobile home lots, two of which are park owned

I think the owner gets about 450 a month for the house rent, occupies one mobile home and get around $250 per month lot rent for the other lots

don’t know what she gets in rent for the rental MH

Here’s where it gets squirrely

The owner let the license for the MHP expire many years ago for unknown reasons. Ohio only permits you to have 2 or 3 MH’s on private property without a license, so basically this park has been operating illegally for years if not decades (although it shows up on tax rolls as MHP use in our unzoned township, it is NOT licensed) I think it’s flown under the radar for so long because it was seen erroneously as part of my park.

new licensing in Ohio is now under the new State Manufactured Home Commission and I do not believe it will qualify for a license under the current laws because of it’s small size and sewer problems, Currrent owner thinks she is “grandfathered in” but my experience is that there is no such thing as 'grandfathered in" when it comes to expired business licenses

and worse…Property has NO waste water treatment plant but uses old aeration plant located on my property as part of the orginal purchase contract and deed restriction, but EPA notified us in 2000 that once a sewer line was available the plant (as well as the plant that serves my MHP) will have to be abandoned.

That time has come and the owner does not know how to afford the tap in fees, grinder pumps and new lines. She thinks that the deed restriction would force me to hook her into our new lines etc but I explained to her that the contract allowed for her to use the “sewage plant” on my property and that:

1 that plant was going to be torn down and replaced with a wet well, pumps and new lines not foreseen in the contract

2 she is hooked into a separate plant that serves only her property and is under orders from the EPA to be abandoned within one year

3 the EPA has already sent us both a letter informing us that we will NOT be permitted to combine the sewer systems for these two separately owned properties under Ohio PUCO regulations

She has told me that I should just buy her out, but how would you approach a valuation on a property that is unlicensed, will require a sewer line connection that could cost $75,000 or more to connect separately or $40,000 to connect to my property if I buy and annex in the parcel?

How do I find out if I can even license this property…I think if I annex the parcel in, there would be no question…I just get the commission to inspect and change my number of lots…

My issues are that should I purchase this property, I need it make financial sense…the property might be nice to have as an addition to my own property, but frankly, despite having this “first right of refusal” I’ve given no thought over the last 40 years to owning this property…it’s and OK property but really doesn;t add much to my business plan

.and I’m thinking that with the issues the property has, a land contract is the only way to go until the problems can be resolved and an bank will agree to a mortgage to pay off the contract. but it still has to make the contract payments. I think I could get financing for the improvements as part of the financing package for the sewer tap in that I have to do for my own park,

this property represents the older owners only real income, she needs it to support her but I’m thinking the property is worth about $158,000 max based upon the rental income, but this property has big issues and with the capital improvements that need to be done nearly immediately and licensing problems…yikes

there HAS to be some upside for me for this…particularly since I am currently in a position where I am turning my park from totally MH to RV’s and in that process, my income has gone down, but with these new sewer lines, my expenses for my own property are about to rise considerably

so I’m looking for your creative ideas on this acquisition or whether it’s even worth the effort

If I were you I would begin now to find out if the park can simply be attached to your existing park if you were to take ownership of it. This would be the best case scenario for you to move forward. If in fact this is the case I would then simply sit tight and wait for the government bureaucracy to drop there shoe on your neighbour. Once she is faced with the insurmountable costs of keeping her park open I would offer her $1 to take the problem off of her hand’s.