What is a Cap Rate? A cap rate tells you what return you're getting on a property based on its actual income. A 10% cap rate means: take the NOI, multiply by 10 — that's your offer price. What is NOI? Net Operating Income. Revenue minus expenses. The number that actually matters. ================================================== 📅 2021 Gross Revenue | Actual Expenses | Actual NOI $144,392......... | $55,513.............. | $88,879 Expense Ratio: 38.4% Offer @ 10% Cap (Actual): $888,790 Offer @ 10% Cap (Pro Forma 35%): $938,550 Gap: $49,760 ✅ What Does This Mean? This was the healthiest year. Expenses were close to the 35% benchmark investors like to see — only slightly over. The park was running pretty clean. This is the number the seller will probably try to point back to. At a 10% cap, the real numbers support an offer around $889K. ================================================== 📅 2022 Gross Revenue | Actual Expenses | Actual NOI $154,440......... | $70,345.............. | $84,095 Expense Ratio: 45.6% Offer @ 10% Cap (Actual): $840,950 Offer @ 10% Cap (Pro Forma 35%): $1,003,860 Gap: $162,910 ⚠️ What Does This Mean? Revenue went up — that's good. But expenses jumped hard. Even though the park made more money, it kept less of it. The gap between the real numbers ($841K) and a pro forma pitch ($1M+) is $163K. Expenses are moving in the wrong direction. ================================================== 📅 2023 Gross Revenue | Actual Expenses | Actual NOI $168,204......... | $99,425.............. | $68,779 Expense Ratio: 59.1% Offer @ 10% Cap (Actual): $687,790 Offer @ 10% Cap (Pro Forma 35%): $1,093,330 Gap: $405,540 🚩 What Does This Mean? Best revenue year in the stack — but expenses nearly ate all of it. NOI actually went DOWN from 2022 even though the park brought in more money. The operation got more expensive faster than it got more profitable. The pro forma gap ballooned to $405K. Something drove costs way up this year — heavy maintenance, subcontractors, something. You need to know what before writing any offer.

I just ran the numbers on a 4-acre facility. This is a classic example of why you have to look at the "Actuals" vs. the "Bank Rules" before you ever make an offer. Here is exactly how we are breaking this deal down to find the right offer price while making sure we walk away with a $150,000 Assignment Fee. 💰 ============================================== 📍 THE PROPERTY STATS - Total Units: 290 (Mix of 10x10, 10x15, 10x20, plus RV/Boat spots) - Occupancy: 80% (Room to grow!) - Actual Annual Income: $159,000 - Gross Potential (If 100% full): $240,820 - Extra Juice: Expansion land (1.4 acres) + 10.5k sq ft concrete pad already poured! - What does this mean? 🧐 This facility is currently under-managed at 80% occupancy. That "missing" 20% isn't just empty space; it’s a massive opportunity for us to increase the value once we take over and fill it up. ============================================== 📉 SCENARIO A: THE "BANK RULE" (35% EXPENSES) Banks are conservative. They assume 35% of the money coming in goes right back out to bills. - Gross Income: $159,000 - Expenses (35%): $55,650 - Net Profit (NOI): $103,350 - Property Value (10% Cap): $1,033,500 - Our Assignment Fee: $150,000 - THE OFFER: $883,500 What does this mean? 🧐 Banks use this 35% rule to protect themselves against surprises. Even if the owner spends less, the bank calculates value based on this "safe" number. We use this to make sure the deal works for a buyer who needs a bank loan. ============================================== 📈 SCENARIO B: THE "OWNER ACTUALS" The owner says they only spend about $21k a year on taxes, insurance, and utilities. - Gross Income: $159,000 - Actual Expenses: $21,000 - Net Profit (NOI): $138,000 - Property Value (10% Cap): $1,380,000 - Our Assignment Fee: $150,000 - THE OFFER: $1,230,000 What does this mean? 🧐 Owners usually spend less because they aren't paying for professional management or marketing. This shows the "real" cash flow happening right now. We subtract our $150k fee from this higher value to see the absolute max we should offer.

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