Check my Numbers, Please, (LONG) - Posted by Lee Ramey
Posted by Lee Ramey on July 28, 2001 at 16:43:49:
I 'm just about to make an offer,
30 year old park in bad condition
10 Acre total about 5 being used, the rest won’t perc out, I’ve been told.
Not much chance of connection to sewer ant time soon, (but only a half mile away)(I do have a brother -in -law whose business that lays pipe for municipalitys, possible business partner)
23 pads on the ground now, most two to a septic system.
I’ve talked with the county enviromental department, the existing sites are grand fathered, but all new park sites have to be at least 15,000 square feet if on a septic system(Not a Typo)
I ve been told that at least 3 systems need to be repaired or only one trailer per. In a county that is not that strict toward mobile homes .
Site that are rented go for $95, and the one DW space fetches 135. Each has seperate gas and water meters, all that is provided at the moment is a dumpster at the end of the street. there is a fenced in pool with out the liner at the top of the hill would take approx 3 thousand to get going again. Parks in this area bring $75 for the low end to 125 for the only 3 star park (under priced in my opinion)
His current gross is about 1200.00 dollars, his expenses are about 400, he didn’t know for sure when I talked to him. (I don’t how much he is paying his son to come in and bush-hog the lots and field, I would guess at least 200 )
His middle son who run the park a few years ago gave me a 2 hour tour.
15 trailers come with it two are rented one for 300 and one for 200 (MH’s total worth 4 thousand) 7 other lots are rented. 7 of the trailers are in such bad shape that I am figuring costs to get them removed, they are too bad to stay in the park. The other 6 mobile homes are worth a total of about 8 thousand dollars. There are also 5 burned down frames also taking up lots a definite safety hazard.
The land itself is pretty with shade trees and gentle slope, the location is good, 2 miles from major hyw and wal-mart, and 22 miles from Birmingham, decent school system and since the county that we are adjacent to, has just about shut down all new mobile homes from coming in, I feel this can be a good alternative in the future.
The roads in the park belong to the county, they say they are going to be redone next year (don’t hold your breath) I’ve been stealthly looking at this (disaster/opportunity) for a few months.
Been talking to several tenants, most are happier now than when the druggies where there. Coincidentally where the burned hulls are!
The owner should be motivaed but not as much as I would like, He works out of town 27 days a month, he bought it 7 years ago for his grown boys to live in and run , but now they have lost interest, he has health problems.
Since he doesn’t owe any on it and doesn’t have to see it, he isn’t that motivated, (plus he makes alot of money)
I’ve have three couples lined up as posible prospects to run the park in exchange for rent and utilities. I may put Mini storage units on the land that I couldn’t perc out or at least a fenced and/or covered RV and boat storage, there is a need for that in this area. A coin op laundry would probally work, but I havent done much research on that yet
Ok here are the numbers;
He is asking 140 thousand, He verbally stated that he would finance with 50 thousand down, no other details were discussed.
From cap rate veiwpoint you can only say his 600 dollar profit would translate it to being worth 60 thousand dollars (am I right?)
From a more practical veiwpoint;
Land is worth (10@3500)= 35,000
23 installed pads at 2000 apiece = 46,000
mobile homes = 12,000
Cost of removing hulls and worthless trailers - 4000
What I am going to offer him 87,000
I will rehab and lonnie deal the Homes that can stay, should I lonnie deal any trailers that I don’t need to stay? I’m not telling him that.
Thank you for bearing with me and this long post, but you need as many facts to give an educated opinion. What would you feel would be the maximum you would pay? Mr Tew has counseled me to get the lowest price first before I explain a Net lease option to him.
Ok Fella’s and ladies let me have it!! You can’t hurt my feeling , tell me what you think.