Out of the blue mobile home park potential purchase...need basic help

[Nicolas Franckenfeld]

Apologies in advance for a question that has likely already been asked/answered but I need some quick general guidance as to questions I should ask a potential seller of a MHP. I am meeting with him Friday morning.

Here is the background:

I am a very experienced SFH investor. Never have done a bit of research into MHP investing until now. However, I grew up in the Mobile Home business (family members did sales lots, service, manufacturing) Again I know relatively nothing about parks as investments.

This deal was connected to me via word of mouth.  Seller wants out, after 20 years, as he plans to use the money to build a few small apartments on some vacant land he owns in another town. He says the park has been a "gold mine" to him and his family....whatever his definition of that may be.

Property details:

Asking $218K

10 acres just outside a small town of 6K in the central plains part of US and on the outskirts of a larger .5 million metropolitan area. The property itself is about 2 miles "out in the country" from this small town. 3 miles from a "Super Walmart" :)

23 current mobiles (100% occupancy - but room for more pads)

• 16 are lot only
• 7 are 'owned' by the tenant with mortgage payments to the owner.
• 0 owned by park

I asked him to send his financials and he emailed me a scanned list of the receipts from last month.

• $3750 lot rental
• $2125 mortgage payment receipts
• $5875 gross rev/mo.

A rough estimate of an undeveloped acre of land in the immediate area is about $5K per acre.

No expense information yet, so obviously that is in my list of questions/due diligence.

I know his taxes are <$800 year.

Gravel roads

New DEQ approved septic system

County services (not the nearby town)

What are the questions I need to be asking at this initial meeting?

And as a further step, what kind of numbers should I be looking at for MHP investing that will help me determine a purchase price?

Cap Rate >15%? >20%??%

Monthly gross income/total acquisition cost > 2% higher?

Gross income multiplier <?

New DEQ approved septic system

Again, what types of numbers should I be looking to find answers for and what are those general targets given what little information I am providing?

Thanks in advance.