I currently have a MH park under contract and I’d appreciate any feedback on deal:
This is a 16 unit MH park in a small bedroom community 15 minutes away from a large destination ski resort. The park has 16 spaces, all occupied by resident-owned homes. 10 of the spaces have been rented to the same tenants for 6+ years, and the rest to the same tenants for 2+ years. There are no amenities (pool, laundry, etc) on site so the only ongoing maintenance is snow removal and landscaping. The park includes undeveloped land sufficient for adding 6-8 more spaces, and the city has agreed to the expansion plans, but I’m not including this vacant land in my valuation.
The purchase price is $455,000
income is $320/site or $61,440 per year
expenses are $12,548 (includes tax, insurance, utilities, snow removal, landscaping and misc) based on 2012 tax return.
I’m estimating $5000/year towards capital reserves, and I’m planning to manage the park myself.
Assuming a 25% downpayment and a loan at 5.25% the loan payment will be app. $30,000 per year.
Based on this I come up with a cap rate of 9.6% and a cash-on-cash return of 10.8%
What do you all think?