Here are the numbers on the mobile home park I looked at today. This is dedicated to all you number junkies!

This is the average for the past 4 years.

Income: $168,068.75

- advertising $559

- auto & travel $4909.50

- cleaning & maintenance $26,160.50

- insurance. $2820

- legal & professional $1038.75

- interest $27,835.25

- repairs $14,346.25

- taxes $14,500.50

-utilities $14,500.50

- depreciation $27,951.25

-other expense $56,248 ( will break down later)

Net income / loss. -$18,719.75

Now, right off the bat there are a few things to look at. #1 depreciation and interest. Obviously his numbers will be different than mine.

Do I at a minimum add his depreciation back in to the cashflow? That alone would make is a 9k positive.

Also, the travel is much different for him than it would be for me. He is 2,5 hours away and has to stay in a hotel when he comes here to view/work the property. I'm 35 minutes away.

Here is the breakdown of the "other expenses" average over the

past 4 years

Court filing. $2,123

Credit reports $253.25

Office expense $237.50

Postage and delivery $425.50

Mgmt fees $660

Supplies $11,143.50 (this included installing water meters on the homes in 2016, which he isn't back billing for)

Telephone $881.25

Trash removal $12,165.25

WATER & SEWER $14,058.25. ($1,000 a month just for the engineers daily testing)

Title transfers $169

Lawn maintenance $1178

Bank charges $287.40

Inspection fees $25

Meals & entertainment $613.75

Guaranteed payments $876.50

Trailer Set up. $481.60

There you have it. What I do know about the park is that he has moved in / remodeled 9 trailers in the past 5 years

My plan for something like this would be 1-2 years of white knuckling it only! Handle only emergencies and basic infrastructure maintenance to keep the ship sailing until I get a pulse on the park.

Then after that I may turn over a trailer per year or move in a new one per year.

I certainly would not go in there and try to install 11 trailers and fill those empty pads in the first 6 months.

I have a devil and an angel on my shoulders.

On one shoulders, Robert Kiyosaki says look at 100 deals and offer on 10 and buy one.

On the other shoulder, a speaker I can't remember says beat the H3LL out of the deal and get it to make sense before passing on it.

These are big numbers. He's asking $790,000. He has 2 more parks and one he paid 1.5m for. It was REALLY COOL hanging out with him today and talking that kind of stuff.

I'm excited and terrified at the same time.

Have fun with the numbers and let me know what you think.

There are good parks and bad parks. Make sure you know which you are getting. My town is a big resort area with numerous upscale parks and a number where you don't enter alone, unless you are buying meth.

We literally bulldozed an entire park last year because every single unit (of about 25) was involved in nefarious activities.

Here are my back-of-the-envelope calculations, without knowing more:

--Let's say you bargain hard (I know you will!) and he gives you an interest-only loan for the full amount at 6% simple interest with no money down. You'll pay $47,400 in interest alone the first year. Even adding depreciation back in you'll still be $20K out of pocket each year.

It doesn't cash flow.

When I ran the numbers, I left out the interest and depreciation, but I did add a vacancy factor of 6% ($10,084) and a management fee of 10%. ($16,806)

Expenses of about $161,080 to a cash flow of $168,000

You would not be able to make P&I

I do like your enthusiasm!

I understand it doesn't cashflow. Most properties never cashflow at asking price.

What would you offer?

I don't know what to offer, but a speaker I saw at a previous Mr.LL event said offer ZERO interest. This way Owner doesn't have to pay taxes on interest, and only pays taxes on the *gain* annually, not the total purchase price at once.

Rounding up the net cash flow to $7000 It would only have a business value to me of $45,000

That number would get me a 15% CAP

That would be my offer but I would not present it.

We all have different investment goals.

What do you think it's worth and why?

Elliot, I listened to an audio file with the mobile hole park info. What you might be referring to is a master lease for the property. Not sure if that's possible when the owner has a mortgage.

The audio talked a lot about buying free and clear parks.

Dave MO, what do I think it's worth and why?

I'm not sure yet. It's gotta cashflow after expenses, but how much? What's a good rate?

$30 per pad per month? $50? $100?

I don't know that answer or how to find out.

If I look for a $250 per month cashflow on a $650 per month rental, that's 38%. That's $118 a month per pad.

I don't know if that's a good target price for something like this or not because I don't have any experience to base it on.

I guess I'm finally at a point where I need to learn jargon? Cap rate? ROI? Oh boy...

Ne, That is why I use a CAP rate, it will tell you what a business in worth after expense.

To calculate a CAP, take your gross rents, then subtract the expenses and that number will be your net income after expenses. Divide the net number into the purchase price and you will get a % which is your CAP rate.

The only reason I don't do a ROI, what would be my return if I didn't put any money down, 100%?

Some also use the 2% rule which is also very helpful.

The other factor is I'm in Mo., so everything is subject to your area, and you have your eyes on the park. I know you are a wise investor and best of luck to you.

NE, you are a wise investor, but a park this size would require you to be a full time manager, I would reckon. You could hire it out, but that would cut into your returns.

I can make 8% or $63,000 on a $790,000 investment in my sleep. You can too. If you want to "step it up". Offer him $400,000 IF he carries 100% of the paper at 0% for say, 5 years.

JR, that's the type of offer making I'm taking about. I want them to fall over when I give it to them.

You may not need to spend any more time on this one, but you will never really get your hands around this deal unless you get in control of the due diligence process.

Verification of income/ expense/ cap ex/ rent roles/ leases/ condition of sewer lines/water lines/ phasee 1 environmental survey/ and all of the compliance issues.....there is more to cover, but you need a plan.

Thank you Sisco, I know it's not. You just gave me a good list. We don't know how to do it until we start to do it.

NE, remember that the total stock market, like an S and P 500 Mutual fund or ETF returns 8 to 9% annually without getting out of bed with really much less risk than any one specific investment like a trailer park requires you to make 2 or three times as much, like $200.000 a year WITHOUT your labor to manage it for an $800,000 investment.

The figures you mention aren't even close to this, with a LOT of your time involved.

Let's face it. The one thing the seller can offer you to make this deal even remotely reasonable to you is leverage. That is, terms like 100% financing at 4% interest, and a selling price of less than half of his asking figure. You would be, IMHO, an idiot to even consider trying to back down from his figure, You need to run the numbers with him, not forgetting to add add least a 10% fee for your management and a 10% discount for vacancies. Add 20% for the vagaries of running your own water and sewerage plants, and if the seller doesn'tl like it, let him dangle. You will be able to buy it off his widow for 25 c on the dollar when he is dead.

No edit button.

Would you offer $400,000 even a 0% interest to make $14,000.00 a year?

My parents, in partnership with mom's sister and BIL, created a MH park from vacant land. Aunt was onsite manager. Dad (who still had the day job) was maintenance.

They sold when I was 19. Uncle had passed, Aunt got cash, Mom and Dad held the note on the other half. (Stupid older sisters were not interested and I was too young to "get it". Many regrets over that. 44 spots at $350/month. Yeah.....)

Still has same owners. There are quite a few empty spots now and I can see by the county website that they're doing several Lonnie Deals.

The land alone has value. Is the land worth anything? Could you over time replace the mobiles with homes?

NE-I've seen my BIL scrambling to purify the water @ his apt. complex during a family party-more than once. Not fun, as you can imagine.

NE, Frank Rolfe (he was to speak at the convention) has a discussion forum on his website. He also makes available some checklists.

Purchasing a MHP or large apartment building is best done with you and seller agreeing on a price based on cap rate + wholesale value of homes, seller states all the infrastructure is in good condition, that the income/expense is as stated. Sign the purchase contract that gives you 90 days to complete DD.

What is the pad rent per pad per month?

How many vacant pads?

How many empty trailers which are also not paying pad rent?

How many park owned homes out of the total homes?

...I looked at a property today with 3 trailers and a duplex on it. ..