Posted by Ray - TX on March 13, 2002 at 20:41:53:
Looks kind of funny to me. Seems like a cap rate of over 25%. Have I missed something? Operating expenses look way too low to me. Check out the books.
ray
What would you offer?mhp? - Posted by ct
Posted by ct on March 13, 2002 at 19:47:09:
This park 11 homes rented with 3 empty spaces on 4 acres rents 1085 a week,water 140per month,garbage 81 per month,taxes 100 per month,insurance 50 per month.This man is in bad health but does not have to sell his family would take over,he’s asking 179,000 is that a deal or not?If not what would be a deal?thanks ct
Re: What would you offer?mhp? - Posted by GregVa
Posted by GregVa on March 14, 2002 at 08:45:10:
If these are the real numbers it doesn’t sound bad. I don’t see any maintainance expenses for the mobiles in your figures. If these are rented park owned units the maintainance cost will be considerable,probably 45 to 50% of the income. I also notice you said 1085 per week on the rents. If these are weekly rentals the vacancy rate could be high also the collection of rent may be costly due to late rents and nopays.(something else to check into)
Good luck
Greg
Re: What would you offer?mhp? - Posted by Dave(WNC)
Posted by Dave(WNC) on March 14, 2002 at 01:15:30:
Ask to see his Schedule E tax forms from previous years. Most people will OVER report expenses on Sch E but UNDER report them to you as the buyer. If he balks, he may be hiding something from you I would treat him as hostile at that point.
This will also give you a clearer picture of his actual rents received throughout the years taking into account true vacancy rates. The figures he will give you for rents are most likely potential or current but not necessarily consistent throughout the year. They could then be cross-referenced with the rosy figures he gives. If there is a tremendous discrepency between the figures politely but firmly ask why.
It’s your job as a buyer to convince him with his own numbers what his park is worth, not the other way around. Most likely he is picking a number out of thin air. Do your diligence and get him to give you the REAL scoop but in a nice and respectful manner.
Remember he is the motivated seller. Don’t make the mistake of being a motivated buyer.
Cheers
Dave