Bainbridge Island, WA · Member since 2017 · 16 posts · 5 votes
HI All - I'm looking to understand how new mobile homes affect the land value of an MHP. Any thoughts would be hugely appreciated.
Question - If you are the landowner of a MHP, what is the incremental value to the LAND if a new mobile home is placed on the land?
Example - A MHP has a land value of $1,000,000. It has 100 homes on the lot. 99 of them are brand new mobile homes and there is one mobile home that is a complete tear down. In your opinion, what is the LAND VALUE of the MHP if that single tear down gets replaced with a brand new Mobile home?
In other words, Does 1 new home increase the value of a 100 lot park by 1%? 0.5%? 2%?
@JC K. pretty much nailed it. As an investor I would look at it this way. When I evaluate a park, I value the land (MHP itself), park owned homes, and park owned notes (seller financed/rent to own) all separately.
So, in your scenario. If you rented the lot for $200/mo and the overall expenses remained the same, then the LAND VALUE (or value of the MHP itself) would increase by $200*12= $4800/10% cap rate = $48000. All else being equal. Additionally, if the mobile home itself was worth $10k, I would consider paying for that minus my costs to sell it to an owner occupant.
Real Estate Investor · Great Falls, MT · Member since 2017 · 88 posts · 46 votes
8y
I would say the value increase is applicable to the park, not the land. In my mind, the value increase comes from assuming +1 to the lot rent income and NOI, and not from the value of the home. Thus, I would assume an increase of 1% since you are adding 1% to rent income and NOI.
@JC K. pretty much nailed it. As an investor I would look at it this way. When I evaluate a park, I value the land (MHP itself), park owned homes, and park owned notes (seller financed/rent to own) all separately.
So, in your scenario. If you rented the lot for $200/mo and the overall expenses remained the same, then the LAND VALUE (or value of the MHP itself) would increase by $200*12= $4800/10% cap rate = $48000. All else being equal. Additionally, if the mobile home itself was worth $10k, I would consider paying for that minus my costs to sell it to an owner occupant.
Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
5y
Hi @Andy Kelly. Just checking in a few years later. Have you made progress in your search to get into the MHP biz? It has heated up a lot in the last 2 years since this forum.