Possibly buying first park, need guidance please

Sorry if this post may be long, just want to give you as much detail as possible. My business partner and I have been rehabbing for 4 years and have always talked about getting into buy and hold. We both have condo and hoa management backgrounds, his more extensive and larger than mine. We just purchased the MH course last night.

We have been approached by an investor friend of ours that owns a 55 unit park in Dade City, Florida. There are 16 RV’s (not just slots, but actual RV’s) owned by the park. There are 9 slots that are owned by unit owners that pay a monthly fee and 30 homes owned by the park. The average rent is $500, could possibly be a little more. The average occupancy rate is 90%. The occupancy is down to around 80% right now because the park owner needs to do maintenance on some vacant homes first before renting them out again. The owner says the age of the homes are “old and older.” He says about 3-4 may need replacing.

The park has city water and sewer, no septic. Each unit is sub-metered and the owner reads the meters monthly. He has created a separate “utility company.” Each tenant pays their own water and sewer based on meter readings plus a $10 monthly charge that goes to the owner. Each tenant pays their own separate electric. There is on-site laundry. A company supplies and maintains the machines and the park owner gets about $50 per month from the laundry company.

I believe the park owner has not been doing maintenance and now wants to sell instead of putting money into the park. The county came out and cited many of the homes. (I think some tenants got fed up and called the county). We looked at the citations and most are for things like not having a window screen, not having a crank for the jalousie window, some homes missing smoke alarms, one home had a stove that did not work, lots of little things. We saw nothing major in the reports. Of course these repairs really don’t bother us because we are rehabbers. The park owner estimates about $30K to fix everything.

The park owner showed us his spreadsheet and he averages about $22K in rent and about $15K in expenses. Of course, we are calling in our financial controller to look at all the books and go over all the receipts. But I know the guy well, have known him for many years and know his numbers would be around what he says. He is a straight shooter. He wants to sell the park to buy another one. His asking price is $1.4M.

We are going to visit the park tomorrow and will continue to go over it with a fine tooth comb. But on the surface, how do the numbers look? What else should I be looking at with this park? What questions do I need to ask?

Thanks, in advance, for your guidance.

Sounds way too high to me based on that little bit of info.

What is the lot rent only, not including home rent?

What is the park density, meaning how many acres?

Does the 55 units include the 19 RVs?

The sales price includes the land, which is 4 acres (3.73). The sales price also includes 30 homes and the 16 RV’s. Those 46 units average $500 per month. The 9 houses that are not park owned lease space at $375 per month. There is a maintenance person who gets $150 a week plus free rent and a manager that gets $350 a month plus free rent.

I looked at the tax records and see the land alone is assessed at $655K. And between the units and the one out building for storage and clubhouse, there is another $200K of assessed value. So roughly $855K in assessed value being paid on taxes. I know that county assessors are low.

I also saw a bank appraisal of the land at $1M. I shouldn’t say this, but part of my intrigue is not only to get experience with mobile home parks and buy and hold. But development is also going that way. I have been in the real estate game one way or another for almost 22 years. I study development patterns, especially now. I believe in about 3 years the land will be worth about $2M-$3M or more if we decide to sell.

Still not enough info. spend several hours or a day on here and learn what you need to know to estimate value. Even based on quick thumbnail math it seems over priced.

Who cares what it might be worth in a few years, you buy based on what it’s worth now.