Been to the bootcamp (highly recommended by the way) and I understand the risks with septic parks. During bootcamp, a 40% expense ratio was recommended for septic parks. I know there is a replacement risk (tanks were installed between 1978 and 1995) at some point.
Park is in a major metro. Here are park stats:
- 73 spaces, 71 occupied
- Lot rent $305, market is $350
- County water, individual septic for each pad (common for the area)
So NOI would be calculated as 71 x $305 x 0.6 x 12 = $156k.
Sellers are a private investment group and showing 2015 NOI of $216k. They have a price in mind, but are flexible because they want the deal to close.
I’m considering using a 35% expense ratio to determine my upper limit on price, rather than 40%, and would like to get some more season opinions.