Advice on buying this Mobile Park - Posted by Tom
Posted by Tom on April 22, 2002 at 15:39:29:
I would like any advice on how to purchase this Mobile Home Park, and your advice on well and septic situation.
Asking price: $435,000
11 spaces @ $140/mo=$1540/mo…$18,480/yr
20 spaces @ $150/mo=$3000/mo…$36,000/yr
1 trailer @ $300/mo=$ 300/mo…$ 3,600/yr
5 trailers@ $350/mo=$1750/mo…$21,000/yr
There is room for 30 additional spaces in this Park. Owner believes that the present disposal plant and wells will be adequate for the additional 30 spaces.
Taxes, electric, garbage, insurance, chlorine and inspection of disposal plant = $12,778
Net Operating Income (per owner) = $66,302.
Rents are woefully underpriced. Rents could easily be raised by $45/mo, which is $16,740/yr, which would raise the gross to $95,820/yr…net $83,042/yr.
Looks like, according to owner’s numbers, a 15%-19% Cap Rate.
Owner will take “some owner financing”. I am just beginning negotiations on this property. I have read Lonnie’s books, and saw how his daughter structured her down payment, and full owner financing with no interest. I would love anyone’s input on how you would structure such a deal.
I have excellent credit, much equity in my own house and other properties I own. I have some cash also.
So my questions are:
- How would you approach this deal?
- What do you know about well and septic for mobile home parks? There are 2 wells that provide 11-M gallons, and the 3rd well could provide enough water for the addional 30 spaces. This is the part that concerns me, well water and septic.
Advice please, and thanks so much in advance.