Running numbers on a new park

I have had discussions with an older owner of a MHP who is ready to sell his park in south Louisiana. This would be my first park owned by myself so I am a bit cautious. He did not give me a specific “listing price” but he did say he has an offer which is “a bit over $550,000.” I just wanted to run numbers with you all to see if it makes sense and to know what you all would offer.
Using the formula of (occupied lots x rent x 70) i get a bit over $500k. Would anyone offer more than what the formula gives you? (i.e possibly $600k?)

38 total lots.
36 are occupied (all TOH)
$200 Average lot rent
City water
Oxidation ponds for sewer
Repairs needed: add gravel to road, clear up excess brush on perimeter of oxidation pond, new mailboxes.

What’s market rent? Can pay more if rents can go up.

I also know nothing about oxidation ponds / lagoons or the economics on smaller parks if they need to be replaced…. Definitely speak to someone who knows their stuff there.

Market rents are roughly around $250-$300. I have a call in with the city government about the ponds. Waiting on a call back.

The ponds are wildcard and I can’t help you there. If it were city water (tenants paying) and septic systems I would toss maybe a 40% expense ratio on it so 12x225x36 x.6 for expenses /.10 (10 CAP)=$583k. If you’re making the place nice and feel good doing a $50 raise year 1 you could go higher.

How did you develop that formula? It does not seem to consider the varying cost structures of different types of operations. I would run a full financial analysis and calculate the cap rate and other financial metrics. Take your revenues and subtract your operating expenses to get net operating income, then divide by the price.

Generally though, seems like your pricing is in the ballpark especially if market rents are higher than current.

Give me an example of how you would run the numbers on this park

What insurance costs and coverage are you running in South Louisiana?
Sooner or later, hurricane will hit, let’s hope it’s only a Cat2.

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But insurance won’t help him if his park gets wiped out by a hurricane