Mobile Home Park Deal Analysis - Putting Park Under Contract

[Tom Pignatello]

Hi All, 

I reached a verbal agreement and my offer was accepted by the seller on a 15 lot park. I will be putting it under contract within the next two weeks. I'm looking to get some feedback and insight on the deal as this will be my first park. 16.5% cash on cash return buying the park as is. Rents are below market so we plan to implement a $20/month increase on all pads, bringing our cash on cash return to 20%. 

Is there anything I am missing in my analysis? It looks like a good deal to me. Any input is greatly appreciated! 

Here are the details

Size: 15 pads, 100% occupied and all 15 homes are tenant owned

Utilities: City water with each home being submetered directly billed to tenants; septic

Roads: The park is on city streets so we are not responsible for road infrastructure, curbing, plowing etc. 

Purchase Price: $425,000

Down payment: $100,000

Financing: Seller financed, 5% interest, 30-year amortization, 10-year balloon

Annual rental income: $64,620; increases to $68,220 after the $20/mo. increase

Total Annual Expenses: $48,200 

• Electric: $600 
• Maintenance $1,200
• Sewage: $2,000
• Insurance: $3,500
• Capex Reserves: $2,100
• Vacancy: $2,100
• Mandorty debt payments: $20,940
• Taxes: $15,760

Net income: $16,420; increases to $20,020 after lot rent increase

Thank you!