Good Deal?: 12 CAP - 24 Space Park Purchase
Would love BP MHP Pro feedback.
After analyzing over 100 deals I found this one.
1. Do you believe this is a deal?
2. Is there anything I should look out for?
3. Should I add anything?
4. Are the terms OK?
Until I increase lot rent in January 2014, I have $900 per month for expenses to work with.
Story:
I am purchasing a 24 spc park in a small family oriented town. I met with seller and he's sharp and has owned 7 parks. Looking to retire.
Deal:
24 occupied spaces
Asking: $365,000
Seller accepted $275,000
- $50,000 down, $2995 per month
- CAP rate actual: 12.1%
- CAP rate: 19.4%
(12 months pro forma at $100 increase in space rent, $265/spc, 30% expense)
- Terms: $225,000 Seller carry note 12 yr $2995 per month, 7 year 18% pre-pay penalty
- Space rent: $165
- Market rent: $280
- Gross rent/month: $3960
- All tenant owned homes
- Road: park, gravel
- Water: city
- Trash: city
- Sewer: city
Market Research:
- Schools: A (great high schools and private schools)
- Population: 5000
- Metro area population (1 hr) from 6MM metro
- Test craigslist ad pulls 20-30 calls per week.