Deal Analysis & Due Diligence - Questions

[Steve F.]

Hi folks,

I was wondering if I could get some thoughts on a deal I have under contract, and also some guidance on due diligence.

I just put a park under contract in the Buffalo, NY area, with the following metrics:

Price: $640K (no vendor financing)

39 pads, with 35 occupied @ $285 per month (residents pay pay utilities directly; water is paid by the park, but charged back to the residents on a quarterly basis)

33 pads are resident owned; 2 are sold on a RTO basis for $100 per month

City water & sewer

Park tenants are mostly older and retired (no riff-raff; current owner is an older ex cop)

Based on a high level analysis, I would say the fair value of the park is:

$285 x 35 x 60% x 12 months / 10% cap rate = $718K (so the purchase price is +/- 90% of "back of the envelope" fair value)

There is potential upside in the rent, because $285 is very cheap for the area. Other parks are renting for closer to $390 (albeit, they have amenities, doublewide trailers and this is a plain park). I figure I can slowly raise rents by $50 per month, plus the potential to fill the empty lots down the line.

Overall, I think the purchase is okay, but I'm struggling with how to complete the due diligence. I know all the items I need to request from the seller (based on various checklists on this website, and from Frank Rolfe's website), but for the physical due diligence, what should I do?

Should I hire a plumber, electrician and tree specialist to help verify the condition of the property? Are there any other professionals who typically help with this kind of task?

I don't really have a real estate agent I work in the area (the purchase was negotiated directly with the seller), and I'm not entirely sure how to proceed. Beyond that, I have never bought a mobile home park, so I'm not entirely sure of the steps involved in DD.

Any advice would greatly appreciated. Thanks!