Help to evaluate a deal

Hi,

I’m new to Mobile Home business and like to verify whether my first deal is a good one.
The park is north-western state in a small city ( < 500 ) with below characteristics

Number of of lots : 12
Number of tenant owned homes : 4
Number of rent-to-purchase home : 1
On City Sewer and Water
Potential to expand to 2 more lots
Monthly total rent : $5000
Monthly expense : $2000
Asking price : $285K

Manufactured Year of Park owned Trailers :
2 - 1981
1 each of 1973,1978, 1979,1982,1984,

Just need a first order analysis if its good to proceed for further due diligence.

We’d not touch it. We only buy in metros of 25,000+, and almost always in metros of 100,000+. Small 500-person towns have inadequate demand.

My 2 cents worth,

-Jefferson-


I don’t believe he mentioned the metro size.

http://www.bestplaces.net/city/illinois/indian_creek

Check that out as an example. A town of 526 in a metro of 9.4 Million. And if you look at how strong that market is, would be great to own a park there.

Im not sure if this is the case with posters example but I think excluding on town size by itself it bad advice.

@MKV , can you give us a break down of the lot rents versus home rents? Are all 12 lots currently occupied? In the monthly expenses, does that include water and sewer as one of your costs?

What’s the lot rent? Who pays for the water and sewer?

@Marvel_Equity All 12 units are currently occupied. Monthly expenses include water and sewer as one of my costs.
Rent per lot $240;

Total lot rent per month : $960
Total home rent per month : $4040

@frankrolfe
Total Lot rent :$960 per month
Total Home rent:$4040 per month
Park owner pays water and sewer

12 lots x $240 rent x 12 months x .5 (net of expenses) x 10 = $172,800. You then add in the value of 8 mobile homes (let’s assume $5,000 each but it’s totally based on the age, size and repair of each unit) so it’s maybe worth around $212,000.

The only way you can hit the seller’s price is if 1) the homes are worth more than $5,000 each (but I doubt that based on the age) 2) the lot rent is significantly below market and has a huge amount of room for increases or 3) the seller will carry the financing with a tiny amount down, non-recourse for a 10+ year term.

I think I would offer this seller $200,000 and see what happens. If you lose it, I don’t think it’s the end of the world, as it’s not the most compelling deal I’ve heard today.

@frankrolfe Wow ! You made it look very simple. Thanks for the quick reply.