First the good:52 spaces45 occupied1 POH (rented)$175 lot rent (already at market for this area)State maintained roads in roughly 80% of the parkCity Water/City Sewer - Park PaysDumpster at the front of the parkWell maintained on a well traveled road in the area$360,000 seller financed, 10% down, 6% for 30 due in 7Now the bad:5 large employers (3 are not doing well)Population growth of 1% over the last 10 yearsClosest major metro area is 80 miles awayOne of the lowest per capita incomes in the state2 parks in more desirable locations within the city (same rent rate) with move in specials that cover the entire move and both have plenty of vacancy7 calls in 10 days on the test adI found this park about 6 months ago through a real estate agent I know. She took it upon herself to make contact with them to see if they wanted to sell and passed along the information to me. I negotiated the price and financing and was able to look over the financials, but I never tied it up. I grew up in this town and I know it well. The bad parts about this town really scare me, but the good things about this park continue to keep me intrigued. This would be my first park and I have limited my searches to only metro areas that are in the 500,000 and up range (and strong population growth), but this deal is less than typical. Any second opinions on this would be greatly appreciated.
What is the current population and metro population? What are the market rent? How much does a normal single family house cost in hat market? Where did you place your test ad?
The current population is 7,000 and it is not considered a part of any metro area. The two closest metro areas have 380,000 and 470,000 but they are both about 80 miles away. There is a city about 20 miles away where a lot of people work. That city has 11,000 people, -3% pop. growth and housing is $92,000. The median housing is $138,000 for the city the park is in. The ad was placed on craigs list.
I would say the market rent is right at $175. This park and three others represent the only parks within about 20 miles. All four parks are at $175 and pay for water.
First of all, your test ad was flawed, You cannot do just a Craigslist ad, You must put the ad in the local and metro papers to be realistic. I would put the ad in both cities 80 miles away, as well as the one 20 miles away. Be very specific on the location of the park, with the city it’s in in ALL CAPS.The rough value is 45 x $175 x 12 x .6 x 10 = $567,000. The asking price is extremely reasonable. I would offer $315,000 and try to tie it up.On a deal in a population like that, your diligence will revolve around you believing 100% in the future of that town, because that’s what you’re essentially investing in. I like the occupancy and the SF home prices. But you have to be the EXPERT on that market to make a sensible investment there. You need to know every employer and what their future is.
Thank you Mr. Rolfe. I really appreciate the guidence on this one. Looking back on this, the local paper should have a been a no-brainer. I’m not even sure why I didn’t come up with that on my own. Again, I really appreciate it.