Two analysts break down buying an RV park in Quartzsite with seller financing. The park has a 3.44 debt service coverage ratio and generates $54,000 in pre-tax net rental income. They show how to negotiate: put $100,000 toward repairs to drop the seller's note from $500,000 to $400,000, and use holdbacks for easement and code issues.
This is an RV park that we are going to be doing a subject-to acquisition on. The hard money loan is going to stay current and in place with the owner of record. So we want to find out who the current owner is on that.
Want me to go back to the other deal snapshot? And I have mine whenever you're ready.
And so go ahead and let's pull up Amor's and figure out what we got.
Okay. I already fit in the like numbers he sent us, but I don't think you got to see. Oh, wait, sharing.
Oh, there we go. This is the RV park out in Quartzsite, right?
Yes.
So did he ever get back to us with some terms or whatever?
I put— and I put that in here. Okay. So I added in on a sheet what he sent us. Let me go back to it from his like tax documents. Okay. Let me just see where it starts though. The tax document part that I put in here. Oh, there. Okay. All right. These were the financials I put in that he gave me.
It said— what does it say there? Go up a little bit.
It says that this—
It's worth a deeper dive right there. Go down the headline right there, but don't move until the numbers are reconciled. So we reconciled the numbers and came out with what? With Phil, okay. The DSER possibly has a 3.44. Great. That sounds very high based on the fact that— is this what is he using as terms? Okay. How did you know that they make 54 before?
And then I put in their tax return. So like this is what they're saying, showing a net rental for whatever the tax return shows this. "Get the deal, terms immediately, ask the price, all of that." So then I went back in and told it, because I guess it forgot that I had told it the price or whatever.
Okay.
So it gave me the option. Then I went back in and I said, they told us they're willing to do seller finance, we would need to put down $60,000 to $120,000. And this is what it said.
Oh, they took $120,000. Is that 20%, right? That would be useful for us.
And it says, don't offer $120,000.
It also tells you that The higher down, the better the terms. So we'll get it that way per month. So we could do a holdback in that regard. You got the $120,000 down only with protecting seller's easement or credits unresolved, repairs and code issues. So anything that pops up, they take that off the end price. So like we go out there and we fix, put $100,000 into it because it's all jacked up. That seller note goes from $500,000 to $400,000. So we're getting those bad service numbers. So based on, if they're making $54,000 before, then $35,000 is awesome, right? So I like what the example is down there, performance-based down payment.
