Hi All, I have been lurking this subforum for a while now and am ready to start pursuing my own deals. I need to be careful with the details on this one, as I signed a C/A so as such I will ONLY be posting info presented on the publicly available flyer.

Details are:

City: Flint, MI (it is on Detroit water, not the hosed up Flint system)

Water/Sewer are municipal

Pads: 87 (weird layout of existing homes make the usable pad rate only 85)

Park owned homes: 85 (40 or so vacant--it seems this has improved since last year, maybe)

Average Lot Rent: $285/month

Roads: Asphalt

Asking Price: $525k

2013-2015 reported income (per flyer): $212k, $190k, $206k

Notwithstanding the obvious math discrepancies of 45*285*12 = $154k (far off the reported income), the really interesting part is the reported expenses for those years at $171k (81%), $166k (87%), and $149k (72%), respectively.

So it is obvious that the management leaves a lot to be desired if the actual operating expenses could be cut down to the 30-40% nominal. Master metered utilities obviously, which could probably be submetered for a quick return, but what else is going on here that could possibly explain why the expenses are so high? The flyer shows high maintenance and service costs, and it appears the homes (as they are park owned) may be rented for the equivalent lot rent.

It seems to me there is a huge upside here by selling off the homes that currently have people living in them, demoing the 10 or so that are completely trashed, renovating the others and selller financing them as well, and increasing the occupancy from its current 50%. Not to mention drastically slashing the expenses by sub metering and removing the maintenance expenses since the homes would no longer be parked owned.

What is it I am missing here? Are these sellers just completely out to lunch or am I?

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Good cap rate even with high expenses

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