The 10 / 20 process is a great concept- but it really takes the right property to pull this off. You are looking for a property that will basically double the net operating income, through some fairly simple means. It could be the space rent is very low, and you will raise it, or there might be expenses you can pass through. Most likely, there will be a combo of income and expense issues that get you to that increased net income.
So can it be done- you bet. Think about a few things first though. If space rent is 350 / month- and your in a 450 / month market- that bump is only like 30%. Now if your space rent is 125, and it could be 225- now your almost there. Smaller space rent parks have a higher % gain- than the larger ones. Also- expenses are about the same no mater what the space rent charge is- so sub-metering in that 125 per month park- an average w/s/t bill that is costing the park $30 per home- is like 25%. The same in the 350 park, is less than 10%.
last point- the 10 / 20 is referring to a CAP rate. Not all parks sell for 10 CAPs, some sell on 6 CAPs, and others on 15 CAPs. You must know the market gong in very well- because you ALWAYS make your money on the buy side- you realize the gain on the sell side. So know the market, watch the trends, look down the road to see what might impact the market.
Last note- If you can buy a park for $400,000 and do something so it is worth 600,000- it is not a +10 on the CAP- but it is still a great gain. That gain will pay you every month, and you get to sell the park for more than you bought it for. Watch the capital gains tax laws- both parties are pushing for changes in that tax code- and both will have an effect on your sale. You might be holding the property longer to keep a bit more of your gain…