I am looking at a small park in a small city under 2000 an hour from a metro of 1 million. There is hardly anything between here and the larger city.
The park is 40% occupied but has decent lot rents. There are park owned homes but i am assuming all that money goes to repairs and i can convert to rent to own with a 3 year term .City water and sewer that is submetered to tenants.
If I assume a 50% expense rate the park is still priced at a 17 cap. If I estimate a 40% expense ratio it jumps to a 20 cap. If I take the sellers numbers of a 34% expense ratio the cap rate is 22.5%.
Obviously no bank will finance this deal but the owner will carry with 20% down.
Are these numbers good enough for a park that will probably not fill up quickly and will probably not decline?
My thinking is that I would continue to own for a very long time unless I also carried the paper and sold at a high cap rate.
Would you buy this ugly deal at this good price?