How much this park worth

Please help me on this situation Trailer park located in north east. I am going back and fwd with owner since owner have someone interesting in park also.
23 sites NOI is 110k. Gross rent 145k. His main expense are tax , ins, water,and landscaping.
His park in market since last 2 years. His asking was 1.2 ml now down to 995k
Owner is not showing his tax return I assume he is not showing because there is no income on paper.
All he had showed me tenants rent checks. For all his 23 sites.
His other buyer willing to paying around 870k with contingency getting finance from bank
His other buyer came thru realtor so he need to pay 5% commission and I am dealing with owner who I know thru one of my friend who lives in that park.
My offer is buying with cash for 800k and he wants 825k.
Park is in not good location.
100% occupancy and owner is not own any home in park
What should be right price for this park?

What is the lot rent? Who pays the water and sewer bills?

Average rent on lot is $525. Water and Sewer bill paid by park owner 8 to10k a year. property tax is around 9k.
Property is in flood zone. But park is there more then 40 years.

Standard quick valuation formula for this park would be 23 x $525 x 12 x .6 x 10 = $869,400 at a 10% cap rate. Looks like the $870,000 price is reasonable (pending actual due diligence, of course). However, it may be very hard to get a loan on this park if the seller will not divulge financial data, if the location is in the bad part of town, and based on the small size of the park. Will the seller carry the financing? That may be the critical step to getting this deal done.

 I don’t like the flood zone.

Seller don’t want to do financing
Seller is willing to take my 825k cash offer. And NOI is 110k. That’s 13% cap rate
23 x 525 x 12 x .6 x 13 = . Is this right?

No. Cap rate is a fraction converted to a decimal. It’s the net income over the total cost of the project. So the correct calculation is $86,940 over $825,000 which works out to a 10.53% cap rate. 

Jayesh, the seller’s numbers work out to an NOI of 110k.  However, I seriously doubt the seller is including management expense and capital budgeting, etc.  His numbers work out to a 13 Cap, but Frank’s expense ratio is a much better indicator of what the park is actually going to return.More alarming though is that it seems you are intending to pay all cash and not use financing.  By not leveraging the property, your return is going to match the CAP rate.  You would actually see higher returns than 10% in most syndicated MHP funds and you could skip the headache of running the park.  I would recommend you find a park that you can obtain financing on (either through the seller or a bank).  Putting $800,000 at risk on a 23 space park seems a bit crazy to me.

I like to finance but base upon his tax return no bank will land any money. I was thinking running for year or so. Report right income and apply for loan and take money out.

I think you would be way better off doing a turn-around with that kind of capital.  You have enough capital to handle a rather large project.  A 23 space “stabilized” park with a difficult seller is so far below your actual buying power.  Refinancing that deal after the fact may be very difficult as well.

From personal experience; never buy a park in a flood plain. It will happen and when you look into the eyes of you residents and there loss words cannot express the hurt that you were part of. Remember once in the flood plains always in the flood plain WHY would the next buyer purchase trouble. I lost half of the homes and than had to place the homes 5 feet off the ground and many more GOVERNMENT DETAILS!!!

thanks so very much for all your information!