All Forum Posts by: Sean Reilly

@Sean Reilly I disagree. I keep a database of all the parks I’ve reviewed and those I own. Typical expense ratio ranges from 40% (typically large parks) to 60% (typically small parks). There are a few outliers, but that’s the range in my experience. I wouldn’t underwrite a 25% expense ratio, especially on 60 space park.

@Lawrence Gillett

However, there is a basic "back of the napkin" evaluation that will usually tell you if the deal is worth a closer look. Similar to other commercial real estate, that formula is the NOI times a market cap rate. On a park, you can calculate the NOI by multiplying the number of spaces occupied by the lot rent, and then multiply by 12 months, subtract the expenses (can range from 35-50%, that % depending on the variables above). Once you have the NOI, divide the NOI by the market cap rate (in today's market conditions, the cap rate will likely land between 6% and 9%, depending on the market you are in. So if you are in a 7% cap rate market, you would divide the NOI by .07 and that would give you the value of the asset.

@Sean Reilly I don’t know Houston and don’t know what MUD means. The complex is a mile from downtown Houston and a short walk to Bayou.

@Sean Reilly thank you. Tax is, according to sellers, 2.7% of the appraisal price by the county, which is a lot less than the asking price. I see you appraise commercial building in Houston, is that that true in Texas? I know in Fort Lauderdale the county tax 2.2% from the purchasing price.