Deal Analysis small Park

[Joe Pitrolo]

4 lots .5 acres with 1 vacany for 40k. Homes are in great shape. Lot rent is only $125 mo. could easily be raised to $150. Alot of room in the back to put possible 3 to 4 more homes. I would want to add 3 or 4 homes for around 7-8 k a piece and owner finance for 16,500.
Only expenses are $50 mo garbage and taxes, ins around $125 mo (guess)

one possible negative, lower end is near a creek, so the water level gets high. Home on lower end won't flood if raised high enough.

Positive is location: Right near a busy inetersection and they are talking about a potential interstate connecter near by. My feelling is that the property might really go up in value should this happen.

There are two house in front in an adjacent lot , additional .5 acres with two old , but stable homes that rent for $850 total. He wants 40 for these. I would buy these for the increase in value and ability to more easily access the park. These will barely pay the mortgage and expenses.
The safer bet is to just buy the small .5 acre park and put a few more homes in.

6 lots $150 mo. $900 mo.
3 homes, $250 mo $750 mo. 13,500 loan at 5 yrs 10%- just averages for my owner finance homes
2 homes in front $850 mo.
rents-- $1,750
notes $7,50 5 years
total $2,600 5 years then $1,850

exp 20k down
20 yr. note 5% 120 k $800 month Taxes ins. $200 $1000 mo.
maintenance $ 250 month
$1250 mo.

The owner is motivated. He will owner finance with 20k down.
Another option is just to make a 35k offer on the park. I could pay cash out of my IRA.
If I owner finance, I probably won't go with an IRA purchase.

To summarize some of my concerns: buying adjacent property that will probably be a $300 monthly liabilty for upside and more control over property. The back of one home could probably add another MH lot.
Buying in a potential flood zone.
Buying with and SDIRA vs. Owner Financeing outright. I'm worried about finding financing down the road if needed.

Making a wrong call about property value.
I looked at a duplex yesterday in a busy area. They guy bought 10 yrs ago fo 100k. Beautiful lot in the back. He wants 60k. He said he thought real estate was like investing in gold. Said that he longed for day that renters were just alcoholics instead of oxycontin, meth users.
Funny sidenote, but I guess it empasized to me the point that you can't always bank on RE increasing in value.