Hi,Well I’m looking at a park in a city that is in a good metro, has favorable median gross apt rents of $625 compared to the park lot rent plus home rent ($450) and is located in a good part of town. Overall the deal is solid (10.5 cap, very few POH’s, price includes vacant POH’s that can be rehabbed) however the median home sales price is about $60k and median household income is about $40k. Most of the stick built homes in the city that I’ve looked at on-line seem to be major fixer-uppers. Note that I’ll be calling realtors in the area tomorrow to get more market info. Should I consider the low home prices a huge red flag? Thanks!
You need to go to www.bestplaces.net and look up the percentage of vacant housing in the market, as well as the unemployment rate, to get a better handle on the market. Both median home price and apartment rent seem below average. What is the lot rent right now? How big is the metro? Is this deal in the southeast? How many lots are occupied and who pays the utilities, and how much are you paying to get a rough handle on economics.A test ad will give you much greater clarity on demand, as well.
Thanks Frank. To answer your questions, the unemployment rate is better than U.S. average, job growth is a bit better than U.S. average, percentage of vacant homes for sale is the same as the U.S. average, park is located in the Midwest, lot rent is $210 (a little below market/other parks in the area), Metro is over 200k, city utilities paid by tenants, trash paid by park. Note that I have calls in to the Chamber of Commerce and Realtors. Park info:Purchase price is $1Mlot rent is $21090 lots62 occupied (57 tenant owned, 5 POH rentals)15 vacant homes (owner is starting to rehab them. they are included in purchase price of the park)