Posted by Ernest Tew on May 17, 2000 at 05:36:38:
It sounds like a very good deal. However, I would verify the income and expenses. If it is currently being managed and/or maintained by the owner, don’t forget to include an expense allowance for those services. Obviously, the owner will not continue to manage the property without pay after the sale. And, if you manage and/or maintain the park you should be paid a reasonable fee for services while earning a reasonable return on the dollars you invest.
Also, since the income from the mobile homes has a limited life, the income they produce shouldn’t be considered in arriving at the cap rate or value of the park. The value of the homes should be estimated separately.
If you need further help, please call me at (352) 475-1800.