14 cap rate but priced high.

[Chad C.]

This is a subdivision of 9 individual parcels. Each parcel is .4 acres, and not possible to add more without spending lots of capital to meet city guidelines of a park. It’s a really nice setup, and well ran. Wooded and spacious, just a little far out, but only 10 minutes from the interstate. Sales price is 600k 9 units rent average $900 Expenses are just lawn water taxes insurance 15000 Gross income 97200 NOI 82200 The cap rate of 14 works but is valued at 66k per unit. I know I probably could recreate this for 420-500k but it would take me a year, or two, and have to find the best deals. With the time it would take to develop this, I can justify the extra expense it’s just hard to pull the trigger on it. It would really jumpstart my portfolio but at the cost of debt.

[JC K.]

Looking at this as a MHP:

Hard to see such high lot rent in a place "far out", but let's play with that and some other assumptions:

12% Cap, 9 Lots at $350/mth, 50% expense ratio (park provides water & small number of homes),  = $158K.  Add $180K for 9 homes at $20K /ea = $338K.  

Looking at this as 9 homes on individual lots:

???