Frank provided some thoughts in regard to my deal and I was hoping to get input from some others.
I’m doing due diligence on a park that is selling at a 10 cap for $1million. The selling price includes 6 park owned homes in livable condition and 8 that need to be rehabbed. All poh’s are 70’s, 80’s and 90’s Seller wants to break up the sale as follows:
$600k for the park
$300k for personal property (the park owned homes)
$100k for goodwill
The seller may not be doing a 1031 exchange and wants to minimize the potential tax hit so his accountant wants him to place a lot of value on the park owned homes - comps show that the homes needing rehab are probably only worth $2k to $6k each (wholesale) and the ones that are livable are worth about $4k to $8k each (wholesale).
My concern is that I’ll be stuck with over valued homes. Any input is appreciated.