How do you valuate a Mobile/RV park that's empty?
So I'm looking at a park that has a house on it and about 18 spaces. all empty .
park hasn't been used in years. seller says licenses/permits are up to date but it'll probably need new wiring, maybe fixes to sewer.
How do I go about figuring out a value for this particular property?Would you go for something like this? There are about 2 other parks within a 5 mile radius
I've read multiple articles on park valuation but they always take into account the rent income.
Carlos if this is your first park I would focus on buying one that already has some cash flow but has room to improve. This is a heavy lift and you’re going to have to float the property for a long time before it’s cash flow positive.
Someone looking to develop communities could possibly look at this as an opportunity because it has some infrastructure (although questionable) and has the zoning and permit (I assume).
hope this helps! If you’re looking for a lot of good resources to invest in MHPs check out my profile where I have a bunch listed. Of course biggerpockets is always a great place too.
From an appraisal standpoint, you would value the property as if it were stabilized. In your market not sure what percentage that would be, but often 90% - 95%. Then you would deduct the cost to reach stabilization. That would be the lease-up. You would need to deduct the rent loss for all the lots that are not leased over the duration of time that it would take you to lease it up. Additionally, marketing and profit would need to be included as well. Once you have calculated those costs you subtract them from the stabilized value and that should give you the current value. I would try to find out why the property went vacant or has not been leased. Hopefully, there are no stigmas attached to it or other reasons that make it difficult to lease.
