I am considering making an offer on a very small park. The asking price is $110,000. But the income and expense statement given to me for 2009 only shows 6,000 net income. So, the actual value is around 60,000, right? I know cap rates can vary depending on the market in a given area, but there are no other parks for sale in this area to compare it to that I can find. It’s in a very small town with only a few parks at all.
I would have never even considered making an offer because my down payment will be tiny (4,400) and I will need it owner financed and the P & I pmts to cash flow from the property (I could probably swing a hundred or two more a month), since my credit is poor and I’m pretty poor myself. LOL. But I’ve been noticing it in the paper for at least the past 6 months, and someone told me it has been for sale for at least 2 years. So I’m hoping the seller is motivated and flexible.
My question is how much should I offer? I’m thinking I should offer more than I otherwise would because of my small down payment and poor credit. Plus, all the down payment will go to the RE agent.
The park has potential, I believe. Rents are very, very low and I plan to raise them as soon as possible, plus I believe some of the expenses can be cut right away.
Thanks for any advice. This will be my first income property.