Evaluating MHP Purchase

[Brian Borchers]

Ok, one of the purchases that I'm considering seems to be a bit overpriced, but I want to make sure I'm calculating my numbers correctly.

This part has 49 lots with the following breakdown - 31 tenant owned, 15 POH, 3 empty lots.

That looks like the following:

Lot Rent = $235 * 31 * 12 = $87,780 * 70% = $61,194 * 10 = $611,940

POH ($267 ave. extra rent) = $267 * .5 = $133.50 * 12 = $1,602 * 15 = $24,030 * 10 = $240, 300

Total = $611,940 + $240,300 = $852,240

According to the sellers numbers, the NOI average over the past 4 years is ~$91,000.

Tenants pay for trash, electric and gas. Water and sewer are sub-metered, but not charged back. City maintains streets and lights. Water and sewer average about 30% of total expenses.

Rents are slightly below market.

Seller wants $970,000.

I'm sure I have forgotten something, but that should be enough to get everyone started.