Help with Acquisition Value for MHP

Member since 2024 · 54 posts · 17 votes

Looking at a MHP/SS property. I'm familiar with how to value the SS. Could someone suggest a value for the MMHP? I've searched forums and can't find good answer.

32 Units 18 POH ave rent $950 14 lots rented at $450 ..... for NOI after expense of 180K.

TIA

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Jordan MoorheadBusiness Member

Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes

Quote from @Mark Walker:

Quote from @Jordan Moorhead:

So all 32 are occupied?

95% occupied sorry

Personally I don't count the POH rent towards the NOI because my lenders won't either.

30 occupied at $450 = $162,000 gross income
Assuming a 40% expense ration your NOI would be $97,200

If you wanted to buy at a 9 cap you'd be at $1,080,000

Definitely check my math but I'd try to pay around $1 million for this. The problem I run into is they either want to capitalize POH rent or want money for the homes in most cases!

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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
2y
So all 32 are occupied?
[email protected]512-888-9122
The Moorhead Team5140 Reviews
Website View Page
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Mark Walker
OP
Member since 2024 · 54 posts · 17 votes
2y
Quote from @Jordan Moorhead:

So all 32 are occupied?

95% occupied sorry
0 Reply
Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
2y
Quote from @Mark Walker:

Quote from @Jordan Moorhead:

So all 32 are occupied?

95% occupied sorry
Personally I don't count the POH rent towards the NOI because my lenders won't either.

30 occupied at $450 = $162,000 gross income
Assuming a 40% expense ration your NOI would be $97,200

If you wanted to buy at a 9 cap you'd be at $1,080,000

Definitely check my math but I'd try to pay around $1 million for this. The problem I run into is they either want to capitalize POH rent or want money for the homes in most cases!
[email protected]512-888-9122
The Moorhead Team5140 Reviews
Website View Page
1 Reply
Mark Walker
OP
Member since 2024 · 54 posts · 17 votes
2y
Quote from @Jordan Moorhead:

Quote from @Mark Walker:

Quote from @Jordan Moorhead:

So all 32 are occupied?

95% occupied sorry
Personally I don't count the POH rent towards the NOI because my lenders won't either.

30 occupied at $450 = $162,000 gross income
Assuming a 40% expense ration your NOI would be $97,200

If you wanted to buy at a 9 cap you'd be at $1,080,000

Definitely check my math but I'd try to pay around $1 million for this. The problem I run into is they either want to capitalize POH rent or want money for the homes in most cases!

Thank you. But why would lenders not loan if the park owns the home? Depreciating asset?
0 Reply
Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
2y
Quote from @Mark Walker:

Quote from @Jordan Moorhead:

Quote from @Mark Walker:

Quote from @Jordan Moorhead:

So all 32 are occupied?

95% occupied sorry
Personally I don't count the POH rent towards the NOI because my lenders won't either.

30 occupied at $450 = $162,000 gross income
Assuming a 40% expense ration your NOI would be $97,200

If you wanted to buy at a 9 cap you'd be at $1,080,000

Definitely check my math but I'd try to pay around $1 million for this. The problem I run into is they either want to capitalize POH rent or want money for the homes in most cases!

Thank you. But why would lenders not loan if the park owns the home? Depreciating asset?

It's considered personal property, it's not attached or affixed to the property like a site built home is the best I understand it
[email protected]512-888-9122
The Moorhead Team5140 Reviews
Website View Page
1 Reply
Roger D Jones
Member since 2023 · 178 posts · 122 votes
2y
Mark,
Jordan is correct in his analysis but the problem lies in managing not to get thrown out of the seller's living room when you offer him $97,200 for his park. As large private equity firms and investor groups with fancy names buy up all the larger entirely TOH parks we as smaller private park owners are left with many of the mixed POH/TOH parks. These large private equity firms don't want to be bothered with POH rentals and subsequent maintenance.

POH homes can provide a huge lift in NOI depending on rental demographics and home maintenance costs. With your park in question there are a ton of other metrics that need to be looked at prior to making an offer while also considering what type of investor you want to be. Those POH homes are pulling in an additional $108k over the pad income and if you assume 50% expense on those homes your drawing 54k NOI for you CAP analysis.

Remember though you either offer on total CAP rate or pad rate only plus wholesale value of the trailers.

Sounds like an interesting park with potential. Good luck.
Roger
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Mark Walker
OP
Member since 2024 · 54 posts · 17 votes
2y
Quote from @Jordan Moorhead:

Quote from @Mark Walker:

Quote from @Jordan Moorhead:

Quote from @Mark Walker:

Quote from @Jordan Moorhead:

So all 32 are occupied?

95% occupied sorry
Personally I don't count the POH rent towards the NOI because my lenders won't either.

30 occupied at $450 = $162,000 gross income
Assuming a 40% expense ration your NOI would be $97,200

If you wanted to buy at a 9 cap you'd be at $1,080,000

Definitely check my math but I'd try to pay around $1 million for this. The problem I run into is they either want to capitalize POH rent or want money for the homes in most cases!

Thank you. But why would lenders not loan if the park owns the home? Depreciating asset?

It's considered personal property, it's not attached or affixed to the property like a site built home is the best I understand it

Are there feasibility studies for MHP like SS?
0 Reply
Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
2y
@Mark Walker like a phase one, for what purpose?
[email protected]512-888-9122
The Moorhead Team5140 Reviews
Website View Page
0 Reply
Mark Walker
OP
Member since 2024 · 54 posts · 17 votes
2y
Quote from @Roger D Jones:

Mark,
Jordan is correct in his analysis but the problem lies in managing not to get thrown out of the seller's living room when you offer him $97,200 for his park. As large private equity firms and investor groups with fancy names buy up all the larger entirely TOH parks we as smaller private park owners are left with many of the mixed POH/TOH parks. These large private equity firms don't want to be bothered with POH rentals and subsequent maintenance.

POH homes can provide a huge lift in NOI depending on rental demographics and home maintenance costs. With your park in question there are a ton of other metrics that need to be looked at prior to making an offer while also considering what type of investor you want to be. Those POH homes are pulling in an additional $108k over the pad income and if you assume 50% expense on those homes your drawing 54k NOI for you CAP analysis.

Remember though you either offer on total CAP rate or pad rate only plus wholesale value of the trailers.

Sounds like an interesting park with potential. Good luck.
Roger

Great advice, thank you.
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