Help with Mobile Home Park Analysis/Offer
We just made an offer on a 20 unit MHP. 100% occupied, 10 units are Park Owned. Broker said our offer didn’t have a shot with the owners and wouldn’t present it. We offered 440-460k plus market value of the park owned units. Here is how we based our offer:
Average pad rent per month based on the 10 TOH’s - 350
350 x 20 = 7000 per month GOI
7000 x 12 = 84k annual GOI
We averaged the expenses provided from 18,17,16 financials = 46k
Average NOI = 38k
Value based on approx 8.5% cap 450k
Then we would add the market value for the Park Owned Homes to be determined during due diligence.
Their asking price was 669,000.
Am I missing something ie. Additional value for the POH’s income generation? Their 16 and 17 financial showed some high expenses for maintaining those homes. I didn’t feel it prudent to pay above market value for depreciating assets.
I appreciate any insight anyone can provide.
Robert