I’ve recently started sending direct mailers to select counties in Upstate New York. To my surprise, I received a good response rate from my first mailing (6%) and have been talks with one of the more motivated owners about his park. I’ve gotten a video drive through of the park and spoken with the owner of an excavating companies that did repairs on the park.
My question is the park too far gone? The price is very low but this may be too large of a turnaround project for my first park and it’s not cash flow positive as it sits. I’d love some input from experienced members as I’m weighing the best option going forward (buy, wholesale, or pass).
About the park
- 3+ acres, gravel roads
- 20 lots
- 8 are occupied, all tenant owned homes
- Two vacant trailers in poor condition
- City Water/ Sewer (landlord pays)
- Newer (90’s) natural gas lines ran to 3 lots
- Lot rent is between $280 and $300
- Property taxes are ~$8k per year
Now here come the problems…
- Long term tenants however only 3 of the 8 regularly pay - all others are spotty or don’t pay
- All tenants have Oil heat with older tanks (seems like a big liability)
- There was one tank leak previously but it was correctly remediated
- The steel water lines are at the end of life and need to be replaced
- Average monthly water bill is ~$750, a recent leak on the main line led to a $7k bill over 4 months
- The owner has severed the laterals for most/ all the vacant lots
- No issues with the sewer or electric but the unknown condition
- NY state has strict regulations about new pads - aside from the standard items they have to be 6" of gravel + a vapor barrier (estimate of $1-2k per vacant pad including laterals)
About the area:
- Market lot rent of $350 (incl. water)
- County population of 200k+
- Good demand: rent-to-own test adds have pulled well (5-10 responses per day)
This doesn’t seem like something a bank would touch and there’s a lot of CapEx in the water lines and filling the park in. Should I run or could this be a deal worth saving with upside?