Cap Rate, 60/30 Rule, Cash On Cash Return
I found a park that meets 60/30 rule, but the cap rate is only 6.24% something. It is a very nice park in a nice neighborhood and less than 5 yrs infrastructure. No seller financing; hence, low cash-on-cash return. In the nice small city with low employment rate and steady growth economy and population. It has 68 pads and 23 vacant. It includes 5 acres undevelop land. It does not seem I can ask for big discount. I am guessing after negotiation perhaps I can get 7% something cap rate. This is the best park I have seen so far. I believe there is enough demand to fill the park. This may not be a killer deal, but it seem to be a safe one. Is that worth pursuing? Any input will be appreciated. Thx.
if you are still reading, i would suggest that cap rate has to get up to double digits, minimum. even 13-15 considering a mhp with its variables.
sage
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[ Edited by joel on Date 02/28/2012 ]