Working on my first MHP analysis and trying to figure out how to verify what lot rents should be in a market I don't know well.
The broker's OM says $350/lot but I have no idea if that's market rate or below. For those who've closed a few deals — do you just call nearby parks? Is there a database somewhere? Or do you trust the broker's comps?
Glenn, There are no databases that i know of to reference so it boils down to some detective work. Easiest way is to just take a drive through other local parks and get owner contact information to call and ask or just ask residents as you drive through. Another way is to find regional realtor's websites that focus on MHPs and review their current and prior listings. Many listings will have lot rents listed or gross income to do some math. You should be able to trust the broker on their comps but you should 'trust but verify'.
One piece of advice I would just throw out would be not to get too caught up in comps and market analysis'. Every park is different. Different conditions, age of homes, parking, yards, roads, amenties and most importantly core expenses. At $350 you have room to move.
The “detective work” part is what I’m trying to figure out. When you’re calling owners or asking residents, do you find people are generally willing to share what they’re paying? Or is it hit or miss?
For the parks owned by out of town PE groups it can be tough just to get them to answer the phone but most local owners are more than happy to visit and share information. That is just my experience. Residents are also willing to help if you just ask. I usually tell them I am looking at buying a home in the park. I would also just ask the listing agent to confirm their numbers and advise you how they got them.
I would advise though not to get too hung up on the comps of other parks. Your park is your park and there are so many variables to consider in setting your lot rent. The most important part is to set rent fairly to ensure you start out profitable and then raise your rent a reasonable amount every single year. Don't be the park owner who lets it go for multiple years and then has to make a big jump when costs suddenly escalate. I made that mistake years ago and it was a tough deal.