MHP Deal Analysis: Need Some Wisdom

[Will Graham]

I am interested in what folks think about this deal. I'll try to not get too nitty gritty but also give enough info.

Park Info:

-Asking Price: 200k

-95 Space Park: 30 Occupied Tenant Owned Homes | 15 Vacant Park Owned Homes

-City Water / City Sewer that is direct billed to tenants. 

-Lot Rent is $125 | Gross Monthly Income is $3,750

-Roads have some potholes and will need some work.

Location Info:

-The population of the town has decreased by over 20% since 2000

-Median Household Income: 30,000

-32% of the population is below the federal poverty line

-Median Rent: $670 | Median House Value: $75,000

-Crime Rate is 4x U.S. average

Summary: 

I feel like the numbers of the deal are solid. I believe rents are below market by $50 or so. Which would make it slam dunk. Even if you didn't fill any more lots. My concern is the city. The high crime, high poverty, and steady population decline. Thoughts?

[Chris Ebert]

@Will Graham, location aside, the deal looks like a home run. Now, when you include the location issues, I would view the investment as having a limited life or no terminal value. In other words, let's say you hold the asset for 15 years and at year 15 it's worth zero (unlikely). What was your IRR over the hold period? I'm guessing it's pretty good.