40 Unit MHP Valuation on 10 acres Vs Apartment Syndication Invest

[Tim Rainey]

I am trying to value this off market potential deal. Here are the specs:

• -40 lots, I understand trailers are all owned by tenants
• -$350 per lot
• -10 acres
• -most homes are newer and well kept
• -outside city limits on well water
• -large central sewer plant
• -park is owner managed, his overhead is 25% but he is jack of all trades
• -owner told me he had appraisal within last few years and value was $1.5 million then
• -room for addition of at least 20 more lots

I have seen formulas online using a multipliers  of either 60 70. I am not sure which applies here? So I dont know what overhead would be if I owned it and I am paying someone to maintain and fix the things that he currently DIY's? Its not listed and I approached him.

Lets say 35% overhead? If my math is right, then this would be at a 7.25% cap, right? So my only value add component here would be to add more spots and fill them, right? If so, what is general cost of adding 15-20 spots?

So, I also invest in multifamily syndications. Typical conservative projections are 7-10% investor return on those plus and addition of potential refi cash down the road driving that higher.

In order to justify the extra work of dealing with sole park ownership vs passive investing I would have to have much better returns on buying a park vs putting that cash into multi passive investing. Also, I would expect that if the homes are not park owned, there is little depreciation on the park vs multifamily?

So, how hard is it to expand by 15-20 units and at what expense? Enough to drive cap rate into better returns?

Is it worth it?

Thanks

Tim