Mobile Home Park Deal - looking for advice
Good Afternoon BP Community!
I have a deal on a Mobile Home Park that I'm looking at, and wanted to get some more experienced eyes on the deal. I'm not looking for anything sugar coated, and welcome all the feedback that you can provide. The deal is as follows:
16 pads, 100% occupancy, all tenant owned homes.
Advertised Cap rate is 12.5%, although that will change as I'll have to add management costs into the deal (estimating 8% of total annual rent for this, please let me know if it should be higher than this).
Right now I'm looking at a 30 year commercial loan from a boutique lender at roughly 5.5% with 25% down. Total cost for the MHP is $600k, negotiated down from $650k. This changes the listed cap rate from before as well, but it is 12.2 now that I've added in management costs, as noted before.
Gross income from the rent roll that I have is $101,200 annually, with a total NOI of $28,000, once I've accounted for all the existing costs plus management.
Park has well and septic (which I'm not a super big fan of).
There are no immediate CAPEX that I need to worry about at this time (that I'm aware of).
All tenants have been in the park for 5+ years.
In regards to future upside opportunity, the park currently pays water (from the well) and trash for the park. Some of these could potentially be billed back to the tenants. Some pad rents are also below market rent, these could potentially be raised moving forward. Additionally, there is a pad that is utilized for storage that is not listed in the rent rolls that could have a MH added for one more pad's worth of monthly income.
Is there anything that I'm missing, should be looking for, or is a red flag for anyone overall?
Thanks for the feedback!
-Ryan