I currently own a smaller (28 pads) all ages park in Northwest Ohio and have the opportunity to purchase a newer, 18-pad, 55 and older community from a relative of mine. This park was built about ten years ago, with municipal utilites and very little, if any, maintenance or collection issues. It is a really nice property, however, the Owner is a relative of mine, who has never raised rents and is firm on his price. They are currently at $155 per month in a market that easily supposts $220 - $250 per month. He is asking a premium for the property, knowing that a series rental increases can eventually support his value. I have a decent handle on park valuation and am not one to buy on potential, but I’m struggling with the decision to take this deal. It may take a few years to cash flow the asset and even longer to bring the rents to market.
Has anyone ever evaluated a deal like this or had a similar experience? Any insight or advice you can provide would be greatly appreciated. I’ve always wanted this property to contniue growing my portfolio, but don’t want to buy something simply to struggle to make my payments and operate the park.