please evaluate this deal, missing some exact costs still

3 Replies

Midwest park, 50 spaces, 40 TOH, lot rent 245, two wells and package sewer plant. no room for expansion. asphalt streets park owned, mostly outdated-older homes. taxes around 6k/year. built around 1970. still working on DD. seller willing to finance at 6%. advertised at 1.1 million. 30 miles to major metro area. apartment rent is 2br $700. a lot of government assisted rent in this area. I can take the pain.....give me your thoughts. and Thanks in advance! Only read to "day 4" of Frank 30 DD, but finishing it soon.

OK here are some questions:

1)  when you go to www.BestPlaces.net and put in the park's zip code, what does it show as the metro population (top of page, in the center)?

2)  Are you saying no park-owned homes and 40 lots occupied?

3)  What is the median home price? What is the 3-bedroom apartment rent?

4)  What's the market lot rent?

If you're saying that there are 40 lots occupied, then I know there's a problem with the economics because 40 x $245 x 12 x 10 = $1,176,000 -- so the price is around a 10% cap rate of the gross revenue and not the net income (which would be more like $70,000 of EBITDA best case). 

The other huge problem is the private water and sewer. A packaging plant would cost as much to replace as the entire price of the park.

A while back we bought a park in Topeka, Kansas at auction for $500,000, after the bank had paid $750,000 to replace the packaging plant. If the plant is the original one, then it has exceeded its life expectancy (around 40 years normally) and you are looking at getting killed when it goes out.

thanks for the questions, here is more information from best places:

St Louis Metro, 35 minute commute

town pop. is 9,905, up 42%

median homes are 148k

rents are 2/1 apartment 550, 3/2 house is 1,250, 3/2 apt not listed

yes, 40 TOH, no POH

i uploaded a picture of the sewer system, not sure i am calling it the correct name, it drains to a creek after processing.

market rents are close to this but do not include water. on this park with the well, he is not charging for water/sewer/trash, just 245 all in.

Based on your formula the park is overpriced, ballpark should be $700k correct?

so the big task is to get from 1.1 to 700k, park has been for sale for years. being on a main highway, many of you may know this park/owner, PM me if you have tried to buy this one.

any comments are welcome and thanks.

@Carl Crain there are two good podcast episodes about private sewer Episode #23 and 24. I highly recommend for you to listen them. The Mobile Home Park Investing Podcast

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