Can someone Here Help me run some basic Numbers on a deal here in Houston Texas? Not sure if I am running my numbers like I should.
Post them here (without address) and you’ll get a lot of responses. Or, feel free to send me a DM and I’ll do my 5 minute look at it (I don’t buy outside New England so I won’t be poaching it)
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Deal Breakdown
Asking Price: $1,750,000
2023 Income:
21 Lots x $485 P/M x 12 = $122,220
4 SFHs x $5,000 P/M x 12 = $60,000
2023 Expenses
Repairs and Maintenance: $8,440.00
Utilities: $18,000.00
Taxes 2023: $29,500.00
What Due diligence is a must for a deal like this?
Major Upsides of the deal
- Park has 3 empty pads not leased
- Market rent in the area is $500-600 per pad
- SFHs are old (1950s) and there is opportunity for BRRR since the houses are on their own lots and individual addresses or for new development as there is major gentrification in the area right now. (Hot Market)
- Lots are all on city of Houston water and sewage
- All lots have their own Electric meter
- Park pays water utility
- Not in flood zone
- Direct to owner deal
Major Downsides
- He is willing to owner finance with 35% down which is $612,500
- According to the seller in just raw land value all 3 Acres are worth $17 p/ sq ft. so price has little room for negotiation.
- seller wants monthly payments of about 10k a month of just (P+I) for 12 years which after expenses + PITI I would make like 2-3k a month.
My Offer:
- Purchase Price: 1,600,000
- Twelve (12) Year Owner Financing Total Term
- 144 Months (5 yrs) of Interest Only @ 5%
- Down Payment at closing will be $400,000.00 (25%)
- Interest Only Payments will be made on a $1,200,000 Principal @ 5% Interest.
- $5,000.00 Monthly Payments for 144 Months
- Balloon Payment of $500,000.00, due on or Before Month 144
- Remaining Eighty-Four (84) Months of Payments will be amortized @ 5% on Principal Balance Left
- No Prepayment Penalties
… I am 26 years old with what I think is a very strong work ethic, I have built a portfolio of about 15 single families so far and this year my goal is to jump into the Mobile home park space. Thanks in advance for any advice or guidance, I aspire to be like a lot of you guys owning multiple parks.
Congrats, this is a better looking deal at first glance than a lot I’ve seen. You’re in a good market which is a big part of the battle. I’d value this as a sum of the parts: park + homes = purchase price.
Park: 21 occupied lots x $485 x 12 = $122k gross annually. You need to dig into expenses more: you don’t show management fee, insurance, water/sewer/electric. Split off the park only portion of taxes and utilities. You’ll likely wind up in the 30-40% expense range. Put a cap rate (maybe 8% in this case?) on the resulting NOI and there’s your park value.
Homes: you said you own SFRs in the area, so just value those how you would, as-is. Personally I’d value you them at open market price minus selling fees minus a factory of safety and would be selling them off. That’s just my model though, you may want to keep them.
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