Help Me Value This Property Please
Well after doing the SFH fixers I am going to venture into commercial RE. I found a mobile home park 33-40 spaces with a 60% vacancy rate. The owner states that he just recently removed problem tenants and cleaned up a bit. The entire place need TLC. Current CAP is 6% asking price $749,950. This park is located in a fast growing area (booming) and the way I figure I could spend 50-75k on fixup, bring in newer homes, raise rents and have a new NOI of at least &120,000/7% cap=$1,714,285 Does this sound right?
Also, these people own thier homes and I would owner finace the newcomers ala Lonnie Scruggs. Any other ideas?
a 6 cap is too expensive for my taste especially since you will need to put a lot of work and investment to improve the cash flow.
Unless you can work out owner financing terms that would make sure you had plenty of cash flow operating as is from day 1 (1.2+ debt coverage) I would look for something else.
What is the value of the property itself, as if it were vacant land?
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