Mobile home park in CA

[Wang Xiong]

I found a park owner that wants to sell his park in CA. Owner is asking 2.6m and i'm trying to figure out whether or not i should make him a fair offer or pass on the deal. The park is located outside of the city. What would be some concerns and benefits to purchasing such a park? The follow criteria is what the park is consisted of:

Rent control all age park with pool

33 space filled - rents range from $321-$700

2 POH renting at $850, 

electricity sub metered 

1 empty lot (might not be permitted for extra 3) 

On Septic (2x a year) and Well (370 ft deep send sample out once a yr) 

sitting on 4 acres

can only raise rents 2% every Dec

20-21k gross per month/ 25% cost of utilities -- 900k left on note

NOI might roughly be around 170-180k

[Seth Parmelee]

@Wang Xiong when figuring out value of parks only use lot rentals to determine NOI. Lots x let rental x 12 x (expense ratio). If you figure the expense ratio is 40% then multiply by inverse .6. Once you get calc NOI divide by the cap rate you want to buy at to determine purchase price.