Mobile home park on septic and well, pros vs cons??

[Jordan Walker]

I am looking at  a MOP with ten park owned homes renting for 650$ and 4 rv hook ups. It’s gonna be around 400k. My question is that it is on a well and on septic. Does anyone have any Pros or cos on being on well/septic??

thanks in advance 

[Frank Rolfe]

You're scaring me on much more than just the well and septic. 

Mobile home park values should be based strictly on real property income. The formula on this deal would be #occupied lots x market lot rent (since you are renting the homes you can't use the home rent but have to comp the going lot rent, which is about $300 per month on average in the U.S.) x .5 (50% expense ratio on a deal this small, best case) x 12 = net income and then divide that number by .1 to get the value of a deal like this.

If I assume $300 per month lot rent and that you have 10 occupied mobile home lots, then the value is around $180,000 and not anywhere near the $400,000 you are talking about. I don't know if those 4 RV lots are occupied with long-term RVs or not, but you can't use the RV lots so they are much less valuable.

Then comes the well and septic issue. Personally we would never buy a park this small with private utilities, because the cost of fixing a well for 10 lots about the same as 100 and your numbers can't survive the stress.

Again, I've never seen this deal or location, and for all I know it's located next to the Empire State Building, but I'm just trying to keep you out of trouble.