Posted by RK on April 16, 2003 at 17:59:50:
Thank you, Tony. I’ll see the seller tomorrow. He let me have the plans to the park to look at for a few days and I have to return them. I’ll do as you suggest and see if he is open to price flexibility.
Please advise on possible MH Park purchase - Posted by RK
Posted by RK on April 15, 2003 at 19:43:35:
Can someone please advise if this is a good deal or not? If not, could someone please suggest a fair deal for me and what to look for? Thanks.
Owner - mobile home owner
Tenant - mobile home renter in park
- Owner asking $175,000 (if I pay cash up front)
- Owner owns 10 trailers and the 10 spots they’re on
- Mobile home park located in small town in South Carolina
- Last year net before-tax income after expenses: $16,000
- At present, all 10 mobile homes occupied
- Total land area: 6.9 acres (about 1/3 of it wooded) with spaces allocated for up to 42 spots but some wooded land would have to be cleared
- Owner presently charges $325/month to tenant for mobile home and land it’s on
- Owner pays utilties
- Road leading to park not yet paved and a bit rough but has been flagged by road crews for paving soon
- Owner willing to self-finance but asking price increases with this and must put down a little more than 50% of asking price
Re: Please advise on possible MH Park purchase - Posted by Chris Reuman (ME)
Posted by Chris Reuman (ME) on April 15, 2003 at 21:43:50:
Where is the upside?? The $16,000 NOI gives you a capitalization rate of 9%, which is pretty low. All the lots are filled and filled with rental units. This seller is ridiculous. If in a perfect world you could get 100% financing at 8% for 20 years, which you can’t. Your mortgage payment for the year would be $17,559, so you would lose $1,559 a year. That isn’t including all your time and effort, the many expenses that he didn’t include, and reserve money to fix the mh when they break, etc… So you lose thousands of dollars a year, that you can spend more money trying to develop the other 42 lots. This seller is so far from reality, don’t waste your time. If I had to guess at what you should buy it for, it would be in the $100k-$120k range, but I don’t have enough information. Keep Looking, Chris
Re: Please advise on possible MH Park purchase - Posted by RK
Posted by RK on April 15, 2003 at 22:44:42:
Thank you, Chris. Your type of input was what I was hoping to get. I thought $175,000 sounded a bit high. What I may do is offer him half (assuming there is nothing seriously astray) and hope he doesn’t get too offended. The town is small, economically-depressed town close to the border of SC & GA so I’d completely disregard any notions of property appreciation. Its only selling point, in my eyes, is the positive cash flow it would be able to generate if a fair price could be agreed upon.
Re: Please advise on possible MH Park purchase - Posted by Tony-VA/NC
Posted by Tony-VA/NC on April 16, 2003 at 09:15:31:
Rk,
I would begin the negotiations with the exact thoughts of the bottom of your post:
“The town is small, economically-depressed town close to the border of SC & GA so I’d completely disregard any notions of property appreciation. Its only selling point, in my eyes, is the positive cash flow it would be able to generate if a fair price could be agreed upon.”
You need the hard and true figures that will prove to you that you will be buying a cashflow that offsets the job (rentals are work) and investment. I find it favorable to tell the seller that you are willing to pay a fair price that accomplishes that.
If the seller is reasonable, then the negotiations will move forward. If not, move on.
Tony
Re: Please advise on possible MH Park purchase - Posted by RK
Posted by RK on April 16, 2003 at 18:04:00:
Thank you, Tony. I’ll see the seller tomorrow. He let me have the plans to the park to look at for a few days and I have to return them. I’ll do as you suggest and see if he is open to price flexibility.