Apple to Oranges - Office Building vs Mobile Home Park

[Michael Willis]

1) Local Office Building  (option 1)

Hi All, so for the past few months I have been sharing my finds for a 1031 exchange in the NYC metro area. I have found a solid deal on a 16.5k sq. ft occupied office building for 2.4m at about 8% cap with room to improve. However, financing is becoming a challenge and expensive and appears to be eating away at the net proceeds to me. My personal target was with 600k down with 100k/yr to me net post financing costs. That number appears to be closer to +/-75k/yr. 

So I have kept looking.

2) Mobile Home Park (option 2)

After reading up on mobile home parks, I stumbled across one thats 55+ only and 1 hr 15 mins from where I live and appears to be well maintained and is 98% occupied. The park has 56 units (up to 60 approved) 28 homes owned by the park. While lots goes into the analysis for a Mobile Home Park (for which I am less versed - due diligence will flush those issues out) this much I do know.  The park at ask is 11.5% cap with 16% cash on cash return - no bank required, no points or fees but there is a requirement of 900k down. With 900k down the net return after owner financing over 15 years would be +/-150k/yr. Investing 50k more into the remaining vacant pads would lift the net to me post financing to about +/-200k/yr. 

I am leaning towards the mobile home park at this point for ease of purchase, relative proximity, only 1 hr 15 mins away, and return. Those are the facts. Thoughts??

Thanks in advance!  

[Jay Hinrichs]

I am not being an alarmist however the reason I will never ever buy a park with private utls again

is I had one that I loaned on and the state shut it down.. and it was 400k to redo the whole thing and could only be done because I was lucky enough to do a lot line adjustment with a neighbor to increase leach field secondary space.

we had to empty the park  ZERO revenue.. big loss.. now not saying that would or could happen.. but not for me that one was painful enough.

there is a reason that park is trading that high in cap rate.. good risk parks trade in the 5 to 7 cap.