Help valuing Mobile home park

[Michael Baradell]

Hey guys, I would love some insight on your thoughts on value for this small mobile home park.

Park currently has 10 mobile homes. All park owned. 5 are currently rented ($600), 2 don’t have power due to new septic needed, and 3 need to be replaced. 

Park needs new septic and well. Quotes are around $70k. 

There is raw land connected that is permitted to house 5 additional pads. 

Lot rent in the area is around $250.

Most of the trailers are in poor shape, and park has been poorly ran. 
Seller is asking $225k. He is also willing to owner finance. He does not have any records of expenses, so I would assume 40%. 
Any thoughts? 

[Charlotte Dunford]

@Michael Baradell Being someone who owns parks on septic and well, I think 10-lot park is too small for that level of risk. It would be a different story if the well and septic are in good shape (even so, they are still expensive). Since I specialize in small parks, here's how I would make this deal work - Offer price would need to be significantly dropped to $130k with seller financing with very little down 10%, 3% interest rate, 30-year amortization, 10-year balloon. Explain to the seller that this is more like a development project and you are buying a vacant land rather than an established park. If the quote is $70k, expect $140k to finish the project. Private utilities can be very expensive to fix. You need to have enough cash on hand to finish the project. A bad deal can be a good deal at the right price and terms. Try that offer and see what happens.