MHP value add negotiations

[Dominique Vescuso]

I am negotiating a 62 unit park that is currently running at a negative NOI. The main problem is the water lines need to be replaced. The owner has been working on chasing leaks and now has the water bill down to a semi reasonable level. The park is at 52% occupancy and the current income is $207000 with expenses at $224000. That is including the 9 park owned homes that are occupied. The park also owns another 9 home that are vacant and in need of rehab. All city utilities. Lot rent is $318. 12 lots are vacant currently (no homes on them)

The first step is to submeter all of the units to continue to bring the water bill down. Confirm there are no active leaks in the water system. Then focus on rehabbing the vacant units in the park to bring up occupancy.

Expected NOI after stabilized just park no homes. $147,000.

Seller is financing 10% down at 5% interest only for 3 years.  Asking price $1,050,000

This price still seems high to me?  What are your opinions?  Estimated repairs $350,000