RV Park - Buy / Don‘t Buy: I need the $250K down payment

[Dale Snider]

I’m eager to here your recommendation / advise. Thank you.

I have negotiated a deal. Have not presented a contract to seller, but we agree on terms and price and a 60 days to close for me to get financing. Ultimately, I believe this comes down to, I need 250K for the down payment at a 5ish % to make this work, but I‘m so new the unknowns are holding me back. I have flipped one house, 1 LP on an appartment syndication, and have 3 BRRRRs - all have gone very well. I have a W2 for now, almost retired. REI has happily become more than a hobby the past two years.

The deal: 34 lot RV park, 20 are rented. New build. There are 3 older houses that come with the property and one 40x40 metal warehouse. All are rented a little below market. All with new roofs in past 3 yrs.  

The area is growing at a rate of 5-8% depending on class of investment. There are 5 other RV parks in 10 miles and 12 in a 30 mile radius. Most look to be mom and pop when you drive by and call them.

$1,250,000 PP

He will carry 250K at 5% for 10 years on a 30yr amortization. Making the loan a $1M.

Current income is $11,250 with 20 pads rented at $400. The 11K includes the 3 houses and storage metal Bld income. Owner pays utilities. Pads not metered.

Expenses are: $2,550

I can get a manager for 5%

Using 5% for CAPEX and Maintenance

With the above it has a negative cash flow of $540. With 5 more pads rented it cash flows $1460 (74% occupancy). 

Property isn‘t well marketed. 

I will hold reserves, but how much is needed for an RV park. 2% of value?