mobile home park analysis

[Stephen Gooding]

Hi all, newbie here and i'd appreciate your thoughts on a MHP i found. The plan is to 1031 my single family rental property to go towards this one. 

-asking $350k

-12 lot rents at $300 each, 1 single family house at $800, gross income $52,800

-expenses $14,298, NOI: $38,502

-100% occupancy on lots and SFH

-city water/sewer

-"known issues" listed: park could use landscaping improvements, homes are older models but tenant owned, recently purchased with limited books and records

Thoughts? I think the numbers look good, but could use some help on additional due diligence questions I should be asking. Thanks in advance.

[Jack Martin]

@Stephen Gooding based on what you have shared here, city services and all tenant owned homes is a plus, but the item that jumps out is the low expenses.  A 27% expense ratio is low for a park, but when you add the rental home, it stands out even more.  Without knowing more details, I would budget 40-45% for this deal for expenses, which would make that about a 8-9% cap deal at the asking price. The answer to your question really depends on what you are trying to accomplish. Are you seeking to add value and resell?  Or simply acquiring to hold long term?  If the former, this doesn't look like a deal with much meat on the bone, so you should keep looking.  If the latter, it will come down to the yield expectation you have. If an 8-9% cap deal is a fit for you, then it would be worth pursuing.  If not, you can negotiate price, or keep looking.