I am new to park investing, and I am looking at my first one. I am looking for negotiation advice.
The current owner is several states away distant. He doesn't seem to have a good grasp of the local area. Believing it is much better than reality. I know that some of the claims made in the ad about the area are exaggerated, outdated, and even false.
Current asking price is $750K with a 12% Cap, for a 2 small parks and a larger one = 90 space park. All in the same city and within a mile radius.
After running my numbers with a 10 Cap,
I estimate it to be worth $720K on paper
This is where things get tricky/interesting. The park is 55-60% occupied and the sale includes mobile homes that need repaired and/or pulled out.
It also includes 2 stick built homes that need extensive rehabs. I have driven buy the homes, but have not seen the insides.
Not really sure what to do with these homes. If you bought this park, would you fix the stick built homes or get them out and put in additional spaces for mobile homes?
I am looking for in general advice here.
Once I see the insides that will be a huge deciding factor.
I don't have any experience negotiating something this unique. Any and all advice is appreciated.
John, I would question the use of a 10 cap for a property with 55-60% occupancy. It sounds like a riskier investment given the potential for rehabbing/replacing rental units and correcting other deferred maintenance. If the stick-builts can be rehabbed and rented for the same monthly amount as a mobile home, why not do so rather than absorbing the expense of demolishing/removing/replacing them?
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