Georgia Mobile Home Park Deal

[Jeff Bridges]

Can you help with general feedback and guidance on considering this opportunity not yet under contract? I have a lead on a 36 lot mobile home park on 16 lots and each lot is accessible to the county roads and has its own driveway. Park infrastructure is 50 years old. Only 5 of the 36 are occupied. There are 24 trailers than need to be removed and 7 vacant lots. 24 need to be removed to make way for infill. Each lot is on septic and shared well. There is one active well serving the current residents and 2 others that are inactive that I imagine will need to be brought up to serve the remaining lots and/or provide redundancy/backup. Septic condition is unknown but trying to get more info from local servicers. The nearby City sewer does not go out this far so I wouldnt be able to hookup to municipal water/sewer.

Town is population 4000 and closest major city is Macon, GA. Population has seen a decrease of 13% in last decade.

Seller (flipper) states NOI of 8832/year (based on 5 units at lot rent of 200-250). Using 6% cap rate and 8832 NOI, I get 147k valuation. Seller wanted 210, but willing to accept 152k so far, but I have yet to break the 147k valuation based on current occupancy.


Work needed:
remove 24 old trailers
landscaping on vacant lots
upgrade infrastructure to connect lots to wells if leaks present (vacant lots make big unknowns)
infill with used single wides (figure 10 per year for 3 years to fill all 31 unoccupied lots)
pump or repair septic where needed (DD TBD)
bring online 2 additional wells for redundancy and connect to existing lots

Post infill NOI after 3 years is about $47,500 based on lot revenue of 81,000 (75% occupancy). If I go through with the deal, I'll use my own capital and offer 50k down, with 100k on 5 year note @ 6%. ($1933/mo). cashflow is $24300/year.
This doesnt include the capital to remove, buy, place, restore used single wides, and up front capital to address other deferred maintenance.

Does this plan have too many risks? Is the private well/water too risky given age of the property? Does it seem like alot of value-add work for a mediocre cashflow once stablized at year 3?

Thanks in advance!