Resale question

mobile home university
1

I’m looking at a stabilized 95% full park with at market rents with seller financing as a probability. It’s only a 40 lot park.
My main question is in figuring resale value for the park of this size.

Is it unrealistic to sell a park like this at a 10 cap or would a 12 cap be more realistic.

It does have 3 large septic tanks however with the addition of a pump, local sewer is available and water is already direct billed.

If I can’t expect a decent amount of instant equity than I may keep looking unless they will sell it with very little down.

2

It could be a good deal depending on a few items:

  1. How much does it cost to move to public sewer and decommission the old septic gear, and do you think that’s worth a point or two on your CAP rate for resale? I do.
  2. What terms can you get from the Seller and will your return meet your financial goals? Is the Seller financing because their books are bad, or because they want the residual income stream (or both?). If due to bad books you have some negotiating power and once you establish good books that could help with resale.
  3. Your only instant equity will be a low purchase price - do detailed diligence and negotiate accordingly.
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3

Thanks, jhutson.

It appears they have run a tight ship. Owner financing may be for the income.

So a 10 cap on city utilities wouldn’t be out of the question for resale?

4

If this is in a town of 4,000 with no metro I would say it’s overpriced. But if it’s in Austin, TX or some booming metropolis with rents raising across the board yearly I would say it’s a great deal. If it’s somewhere in between it’s probably an okay starting point.

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