Is there any benefit to saying you have more lots than you really do?

I am looking at a mobile home park listed as having 110 lots.
When I asked for info I found out that 8 lots were not built yet
5 lots were under water
in one corner of the park the had installed two double wides
blocking in three utility hook ups
and there was a row of about 12 lots  that had been used at one time
but had been vacant so long that the cement pads had big cracks in them that you could see from a satellite picture.
On  their income tax statement they show  the income from 110 lots
and then show income from a large number of lots as a loss.
What are they up to?
Isn’t that tax fraud?

Can’t give you any insights as to what their particular concept was, but the reason most sellers overstate the lots is that they think that buyers will give them money for vacant lots. You should assign vacant lots zero value. We actually prefer having fewer vacant lots to having more, as it makes our occupancy percent higher, and banks and buyers prefer that. Back in the late 1990’s, dealers were selling 400,000 homes per year and would rent vacant lots in parks all the time. With current sales at 60,000 units, you will get no new homes giving you a fall looking for lots. People who think that vacant lots are valuable are as out of touch as people who think that Graceland’s interior decorations are tasteful.

Thank you Frank
I have never been to Graceland but I am going to take your word for it…

I have decided against going any further on this park because it was built in three stages with stage one above water, stage two definitely floods and stage 3 is just above water. This park is on the city limits at the back of the park. You can see a row of trees at park level. The farm behind the park is built up 25 feet with no retaining wall.
I really wanted this park bad but I keep getting images of the Titanic sitting at the bottom of the ocean!
Two questions:
How much would it cost to fill 5 to 7 acres 15 feet deep?
If by some miracle you could do that would the existing underground utilities still be usable?
This is the only mobile home park in a small town so the town may want to cooperate they are losing a lot too if it closes.

I think you’re making the wise choice in passing on that deal, given the facts. The engineering and cost to fill 5 to 7 acres would, I"m sure, scrap the deal, and the deal would have to be unbelievably compelling to make that worthwhile.(like a 16% cap rate in downtown Los Angeles).A good rule of thumb on a park like this is what General Montgomery said during World  War II (he had one of the best win/loss records of any General): “I only get involved in battles that I will win”. This deal sounds like more of a deal in which you might get killed.

Thanks Frank and Happy Easter to you.

Happy Easter to you, too.