Is there any reason i shouldnt lock this down and send a contract.
2million+ Metro, 136k+ Median Home Prices in the town and the Metro is $142k Median
Neighborhood is decent with a farm on either side and a gas station on the main road.
27 Occupied Mobile Homes, 2 of which are POHs from 90s and 00s. Only one vacant lot.
City Water billed to tenants and Septic.
There are also 3 non-mobile home rentals:
Commercial building, house with 2 car garage, 2br apartment
Total Other Rental Income: 25,200 x .5 expense ratio = $12,600
Total MH Rental Income with 305 lot rent= $98,820 x .6 expense ratio= 59,292
Combined MH and Other Rental Net Income: 71,892
600,000/71892=.119 or 11.9 cap (note he is asking $600k)
He told me that he had someone else come by and look at it and given our overall conversation and demeanor i dont think he was lying. Should i send him an agreement for less than ask?
He is not willing to owner finance.
Notice that i put the house, apartment and commercial building at 50% expense ratio. is that reasonable or should i figure that another way?
Just to specify, on where you put .6 expense ratio, i think you meant .4 expense ratio and .6 net from that number ( as it appears you are doing the calculation right).
I use 50% as a quick rule on multi fam or sfh for expense ratio ( i think it works better when the rental rate is 800-900 minimum ) to absorb some of the fix costs. You will def want to get some insight into the commercial lease, terms , length etc.
I think on the surface everything looks good from what you have posted . You’ll obviously want to do your diligence.
What are the market lot rents?
Based on the lay out, is there a way to sell off the house/apartment units/ and commercial building ? That could make it more promising. Sometimes those structures may not get maximum value when sold as part of the package so you def want to evaluate that aspect if its possible.
We have been Mulling over it being septic as well as the fact that this is 5 hours away so I don’t know market lot rents yet or sectioning out the other property. More details to come…
I never envisioned buying private utilities so I need to bone up on it. Frank seems to say much of the risk of septic can be mitigated in due diligence.
My personal philosophy is that for your first park it is ideal to get on city utilities. But some people are comfortable with private utilities and additionally , you sometimes can get things to offset it. Say in your example we find out the market rents are closer to 400. So that changes the deal. Just something to consider but its going to be based on your goals and comfort level. And yes Due Diligence is key. !
Joel if you do not go forward private message me. It sounds interesting. We could work out a deal.
As for the septic. City sewer is best if the pipes are in decent shape. If they are old, orangburg, clay (which I have had in the past) it could become a nightmare and very annoying to keep getting phone calls that the pipe needs to be jetted out.
I have septic now and so far it has worked well. In my case much better than my experience with the city sewer (keep my fingers crossed), What I like about septic is that you can easily isolate the problem. Not so much with sewer as it could be any number of people in a line that is responsible for either pouring grease, baby wipes, even found clothes, toys etc…
I have replaced some drain lines, pumped tanks, so far have not replaced tanks.
Good luck and keep me in mind if you would like to pass on the deal.