Posted by JCnord on November 01, 2006 at 12:10:00:
Update:
We have the park under contract for $902,000. If the sellers numbers hold this is a great price, it not and we rely on the Mobiles only for income it is breakeven.
In our due diligence the question of RV income has come up. What if any discount ratio do you apply to the variable nature of RV traffic? I don’t want to be in a situation where we are counting on tourism (or Oil patch contractors in this case) and the Cashflow disappears. On the other hand the seller has done a good job of increasing visibility, and has kept better track of the receivables and should be rewarded for this. Perhaps withhold part of the ourchase price for a year or so until we have a more concise picture?
Thanks again, Have I mentioned how much I love this board?.. Where else can you bounce ideas around and learn from such a wealth of high caliber expertise?
All the best,
Jaime
?A rock pile ceases to be a rock pile the moment a single man contemplates it, bearing within him the image of a cathedral.?
? Saint Exupery
I have a trailer park in negotiation right now: asking $1.1M biding $832k. 88 pads 65 RV spots, The property nets around 167,000 and has a good expense ratio. So far so good…
We actually wanted to purchase this park three months ago, however the current owner found it the day before we did. He paid $650k, that was low-but-fair at the time and situation. Most of the increase in income (hence value) is due to better accounting (no more pocketing cash) and a large number of a-typically over wintering RVs at $600 per month. Strictly by the numbers this is a good deal, however the sustainability of the RV winter income is debatable.
My concern is how the bank is going to view the substantial change in valuation of the park over a few months. and what my options are to convince them or creatively purchase the park so that everyone is happy. Any experience with this?