Posted by Jim Davis on October 06, 1999 at 24:47:28:
Thank you both Ray and Bill for making me see the light (rather quickly I might add) I guess i just got caught up in the heat of the moment and wanted to get another deal done.
I knew now what i have to tell the owner which is : Go get 2 candle and do something religous at the price he wants.
Thanks
Jim Davis
Mobile Home Park for Sale(Need help Owner Wants 50%Dwn) - Posted by Jim Davis
Posted by Jim Davis on October 05, 1999 at 18:53:39:
I called a sign that said Mobile Home Park for Sale(has been for about 18mths)and the owner wants 850K for the Mobile Home Park with 50% dwn and he will carry the rest at no interest. When i asked about the large dwn he said that he wants to make sure that the buyer has something in the deal.
The property includes:
25 spaces rented for $250(which can be raised easily to $10 per month)=$6250
1 House(actually there are 2 but the seller will live in one for a while.Houses in that area go for about 70K.
Expenses:
Area Lights- $1000 yr(all expenses are yearly)
Water- $5000
Garbage- $1800
Owner will carry for 10 years.
My question is how would I put this deal togather to get what the owner needs and put a little cash in my pocket as well.
Re: Mobile Home Park for Sale(Need help Owner Wants 50%Dwn) - Posted by ray@lcorn
Posted by ray@lcorn on October 05, 1999 at 22:11:42:
Jim:
There is always a reason for properties that stay on the market without selling. Usually the owner is out of line on price. On this one, the owner isn’t only out of line, he’s in the ozone, which is why he’s still an owner. There’s a big difference between an owner and a seller.
First, I think you better double check the expenses. You’re missing a whole boatload of stuff that has to be paid. Property taxes, insurance, sewer expense, and maintenance just to name the biggies. If the landlord is supplying the water and sewer, then the expenses should come in around 35% of gross rents. Using the income you gave us, and sparing you the lecture I give about never using pro forma numbers for valuation, here’s how I do a quick and dirty valuation:
$75,000 Gross Potential Income
$-5,250 Vacancy and collection loss (7%)
$69,750 Total rents
-24,238 Expenses
$45,512 NOI
12% cap rate (generous on a small deal)
$379,267 Value
$140,000 Plus houses (2)@your numbers
$519,267 Total Value
No wonder its been for sale for 18 months.
If the owner were to get realistic about values, then there would be a play using the houses for the down, but I suspect you won’t be telling the owner anything he hasn’t already heard. My advice is to go find a real seller.
Sorry to shoot it down. If there is other info that would change something above, let us know and we’ll take another look.
ray
Re: Mobile Home Park for Sale(Need help Owner Wants 50%Dwn) - Posted by BillT
Posted by BillT on October 05, 1999 at 20:06:56:
Maybe I’m speaking out of line here but I have some swamp land in Forida that could be made into a very nice amusement park. No income, no potential, but a lot less money only $300000 and I will carry 50% of it. Seems funny but how could you make money on this deal without sticking your neck out so far that you could get it chopped off?