Evan,
I’m sorry to rain on the seller’s parade, but here’s how this deal would be evaluated: 14 (number of occupied lots) x $300 (I’m assuming that’s the lot rent amount) x .6 (I’m assuming 40% expenses – that’s what they’ll really be, regardless of what the seller tells you) x 12 (a year) x 10 (10% cap rate) = $302,400. On top of that, the deal has many serious problems such as private sewer, deferred maintenance on the house, etc., so a 10% cap is probably not appropriate, more like 12%+ which drops the price to $252,000.
Sure, the seller will argue about all the upside. But there really isn’t much. The rent already sounds pretty high, and you’ll have to buy homes to fill vacant lots, requiring capital that you say you don’t immediately have. And then there’s the 800 pound gorilla in the room – financing. No bank is going to make a loan on this deal. It’s too small a loan for many banks, and it sounds too rough in quality for the rest.
The seller, if he really wants to sell, is going to have to price it at $250,000 to $300,000 and carry the paper with 20% down.
If the seller wants to stick with his current pricing structure, he will be sitting on this park for the rest of his life (and then his heirs will sell it for $150,000 cash).
Find a deal with city water/sewer, no master metered electric or gas, a solid market with good growth potential, and seller carry.