What would you offer? 1st park

Hello all. Would like your thoughts/comments on an offer I’ll be making on my first park. First I’ll start out that I own a small construction company(3 employees) and have been in business for 15 years. I have a mortgage on my house with $85k equity and have no other personal debts/liens as well as no debts/liens for my business. I own my vehicles and have no other bills besides the basics. I have 6 months expenses saved for a just in case, a 6 month emergency fund as well plus my savings checking for my personal. The same goes for the business.
The park I’m interested has 100% occupancy, all age, well water, sand mound septic, 7.5 acres, 32 lots total. 19 poh@$600, 13 lot rent@300. $15,300 a month, $183,600 a year. no pool, no playgrounds. rent could go up a little but competitive with surrounding area. Asking $1.8mil. I have one investor that would like to be a silent partner and has offered$100k. The owner of the park passed away. I’ve asked for all the financials but told there will be a three week wait until the family can sort through all the documents so I’m not sure of the taxes, insurance, what improvements and when then were done, its a mom and pop run park. I’ve read through many threads on here and buying a park just makes more sense then buying a single or duplex. I haven’t bought Dave and Franks material yet(which I should)!! I have some time to do due diligence but any advice good/bad would be Greatly Appreciated. Thanks!! Dave.

One thing you will hear is to compare physical occupancy with economic occupancy via the records/deposit. It is very common to find some of that 100% isn’t actually paying.

183K revenue with a 30% expense ratio is under 130K net. 1.8M is not a good deal given the well, septic (above ground no less), plus occupancy issues as mentioned.

$60k per lot!!! This is a terrible deal. You could build a park for less.

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32 lots for $1.8 million should be gold plated. Your revenues are too low to support this price.

In addition to the park being over priced you yourself hit on a very important point regarding investing in a land lease community. They are a wiser investment in our opinion over investing in brick and mortar rentals. This property you are considering has 19 rental homes which completely undoes the advantages of owning a park.
As a investment income property it is a bad investment.

Thanks for the feed back everyone. I understand that 100% occupancy doesn’t mean 100% paying, will look into that in the future. From the response I can see it is a bad deal and I agree. From the limited info that I gave I was looking for advice on what would be a good offer, I know there are many variables and hard to give a good ball park number. From talking to the attorney today the family had said 1.8 because they were “envisioning” what the park could be worth if the whole 7.5 acres were developed. That is not the case, what is there is there, the rest is unusable due to a stream from what I’ve been told so far, but could be sold to the neighbors or keep. I understand the response of the 19 poh, not sure if they need repairs/improvements etc…was considering on selling them to the tenants so I wouldn’t be nickled and dimed. From a realtor I was told a good offer would be $800k. Back to you guys if the $800k is more reasonable, or from the limited info what you would recommend. I would like to get a deal together before this park goes to estate auction or listed to sell. Thanks again!!

Just wanted to add I will not be able to see actual info on profit/loss, rent roll until a few more weeks.

To your question, “what would you offer?” I would not make any offer. You are too far apart. I used to low ball unrealistic sellers + brokers like this all the time and came to realize it’s a huge waste of my time.

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Really not even worth making an offer. Regardless of the market, ROI is ROI and the ROI on this is bad. For a park like this, assuming nothing has to be done and everything is working as it should, we’d offer 20k per lot.

800k offer with an NOI of 130k would make this a 16% cap rate. Assuming you aren’t afraid of private utilities and this is in a solid MSA, I don’t see the issue here.

I’ve had people on this site give me advice and I did the exact opposite and made a killing. I’m not sure the motivations of some of the folks on here, but it’s not necessarily the same as yours.

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Anywhere from $750,000 to $900,000 to me is a real offer only counting lot rent. I see NOI at $75,000 only including lot rent which is all the bank is going to see. I wouldn’t worry about well and septic if you are comfortable with them.