Re: should I buy this park? - Posted by Tony-VA/NC
Posted by Tony-VA/NC on January 07, 2004 at 18:18:25:
The $135k for the home provides you NO income. Yes, it reduces your current housing expenses. The house, unrented, is not a cashflow investment. Be careful not to value it as such.
One way to value the home is to ask yourself if you would buy it and live in it in the park if you were not buying the park? If you answered yes, what would you pay for it from that point of view?
Chuck is right, the allure of the “No interest” is a bit of a fallacy. Father in law is getting what he wants regardless if it is called principle or interest. He is doing exactly what you should do, protect your interest in the deal.
If there is sufficient money on the table from the park, then look into it. Take out the home and view that park from that standard. Again, I know you are thinking, well…I am saving my housing costs. But don’t remember a small park like this will require you to either be hands on or pay for someone else to be. Chances are you will fall into the need to due many things yourself. Housing cost alone certainly is not likely to reasonable compensation for this effort.
Mix use properties such as small parks that include a stick built home are a bit messy to value. The house is often viewed by the seller as it were a stand alone home valued at ($135k in your example) but as stated, it does not provide an income stream that I think you would pay $135k for.
Personally I would seriously look into renting the home and living elsewhere. But may be just me.
Best wishes to you,