I’ve been negotiating on an estate sale in my area for a 22 space community with city water and sewer. Since the owner died, it’s been difficult to get solid information, however I wouldn’t consider closing on this property unless all my questions were satisfied during the due diligence period. I’ve had to make some assumptions.
This much I can share:
Lot rents are $265 but lot rents at a park a few miles away are $416. This is a desirable area and heavily populated. Residents can be in a major metro city in 10 minutes or less.
The park is older and not very attractive at present and has older ugly homes. Half the lots are empty as the estate has had some of them destroyed/removed. More need to be removed and are vacant. Unsavory residents (druggies and the like) have been evicted. Those that are left, which are about 10 are good tenants I’m told. There are some POHs. The road is in good shape.
Water is being billed to the tenants but it appears it has been at a loss and the bills were large. There were some leaks that were recently repaired and the bills are coming down and I’m told the leaks should be fixed now. Sewer is included but the sewer bills were also very high due to leaks but should be repaired and down now to around $1000 a QTR.
There is also a single family home that brings in $1000 per month. It’s land locked within the community but appears to be a good sized brick home.
So things look like this:
Annual potential lot rents at full vacancy- 22 x $265=$5830x12= $69,960
Rent on house $1,000 x 12=$12,000
$81,960 Total income best case scenario, and yes I know that’s not going to happen!
This park will never be as nice as the one a few miles away that gets $416, but I’m thinking it should bring $300-$325 due to it’s great location. I would have to bring in homes and rent them or sell them as well. If I use a rental model and rent them for $650 including the lot rent the gross income goes to $183,600 in this “perfect” scenario.
My estimates on expenses would be 45-50% just on the lot rent only scenario.
Appreciate any an all thoughts!