So Im thinking of putting in an offer on the park. From my calculations it is way overvalued at the current ask price. I am thinking of putting in a $60,000 offer and hoping to settle in at the $75,000 mark. Formulas I found on BiggerPockets and Mobile Home University. Let me know what you guys think. I came up with an offer price based on trying to make it fit within the cap rate percentage that I wanted.
My calculations:
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Income:
4 Mobile homes X $350 lot rent = $1400/month
$1,400 X 12 = $16,800
1 2bed/1bath house X $650 rent = $650/month
$650 X 12 = $7,800
Total Income = $24,600
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Expenses *Estimated:
Taxes = $1,750 Yr
Insurance = $1,500 Yr
*Landscaping = $1,200 Yr
*Utilities = $850/month = $10,200 Yr
*Maintenance = $25/month X 5 units = $125 X 12months = $1,500 Yr
*Capita Expenditures = $35/month X 5 units = $175 X 12months = $2,100 Yr
Total Expenses = $18,250
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Net Operating Income:
Total Income / Total Expenses = Operating Income Percent
$18,250 / $24,600 = 0.74
1 - 0.74 = 0.26 = 2.6%
Net Operating Income Ratio = 2.6%
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Cap Rate with current asking price:
Cape Rate = NOI / Property Value
Cap Rate = $6,350 / $260,000 = 0.025
Cap Rate = 2.5%
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Cap Rate with $100,000 offer:
Cape Rate = NOI / Property Value
Cap Rate = $6,350 / $100,000 = 0.0635
Cap Rate = 6.4%
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Cap Rate with $60,000 offer:
Cape Rate = NOI / Property Value
Cap Rate = $6,350 / $60,000 = 0.1058
Cap Rate = 10.6%
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Cap Rate with $75,000 offer:
Cape Rate = NOI / Property Value
Cap Rate = $6,350 / $75,000 = 0.0846
Cap Rate = 8.5%