Opportunity or Money Pit?

[Shea Spinelli]

We have been presented with a pseudo mobile home park just outside of town by the college where we live. I'm enticed, it grosses (when full) $13k/month and appears to cash flow roughly $4k/month. The owner received an appraisal on pro forma stating $550k. But, when I crunch my numbers I come up with a ballpark value 'as-is' of $350k. The units are half MH and half SFH. There are 25 units and they all need a lot of work. He has them filled with a rough crowd aside from 7 empty units. I like the numbers, if I have the value right when looking at a MH. If we improved the property and filled them with a higher quality tenant, there is tremendous upside. I am skeptical on how to value 20-30 year old MH's. From an income approach without looking at the units, it would be valued higher than the appraisal, but there is ALOT of work needing to be done. Any tips? How do you value MH's? I have been reading and researching, but don't really have a strong hold on this.

Thanks!