Buying a struggling small MHP

[Samuel Coronado]

I have the opportunity to buy from a motivated seller. 1 acre with four lots consisting of 3x POHs and 1x TOHs, plus a single detached garage that can be rented out as a mechanic shop. The situation is this-

Lot rent x1 is 195/month. 

Rent for POH x2 is 450/month

4th unit empty and needs large renovation ($8k or so) or drug off. 

Garage is currently used as storage for the current owners' other business. 

Units all on one water meter. Landlord covers water 150 a month. 

Insurance is likely 100 a month based on other parks I own in the area. 

Taxes are super low because it's AL. Possibly 30/month. 

Pinched field line on septic and likely some other septic issues. 

Market rent for POHs are easily 700-800/month. Garage would be 800 or more if used to highest use. Lot rent could be 250-300/month. All for a total of 3450 with garage or 2650 without garage mechanic rental. 

Current income is only 1100 a month. Owners do not owe anything on the property. They are selling because they're tired of nonpaying tenants and want to throw some money at new businesses they are starting and expanding. Asking price is 105k OBO, down from 130k in October 2023. 

I am thinking about making an offer of about 70,000 with a contingency of owner finance for the first 18 months with a balloon for refinancing later. I need this time to make the renovations and bring rents up, process evictions, etc. What is the best way to present this? I am looking at it almost at book value vs conventional commercial valuations (especially since it's really only four units until I can get the garage set up). $10,000 for each POH and another $40,000 for the acre of land and improvements. This will need a lot of work and improvements to get it back up to standard, but it's not impossible. 

[Nathan Harden]

I think the risk here is minimal. If I were you, I would try and make all units TOHs. This will ensure that you are going to be even more hands off because if a roof starts to leak or whatever, that is their house and it's on them. Takes stress off your back and fewer things to worry about.

Offer to sell the POH to the tenants for cheap so that way you make money from the sell. This just puts cash in your pocket.... Then crank the space rent up to $300 a month and you will be sitting PRETTY.