How to quickly figure out what a MHP might be worth.

[Jim Johnson]

So there are some quick ways I figure out a ballpark value for a MHP.
First- I have some constants- expenses

If the park owner pays W/S/T I use 45%
If the tenants pay W/S/T I use 35%

next is rental homes- I ONLY use the space rent to determine CAP value. Rental homes are a business, and you will use a different return model for them.

So with this in mind-

40 space park, $200 / month pad rent- owner pays w/s/t
40 x 200 x 12 = 96,000 (gross)
96,000 x .55 = $52,800

Now you just need to apply the CAP that fits your market- say a 12 CAP

52,800 DIVIDED BY .12 = $440,000

So if I saw this park listed for $96,000 I would know someone was looking at the gross, and applying a 10 CAP to the figure.

If it was listed for $300,000- I might be looking for what is missing, like maybe a sewer plant needs to be replaced, or the park is on a master lease that will expire, or maybe- they are only collecting 50% of the rents- maybe a manager is stealing the rest of the funds...

So how do you do it?? Chime in.
Many I know use multiplier numbers... some people use spreadsheets or programs...
what say you?

[Dale Osborn]

On the old mobilehomeuniversity.com site they used to have a formula based on the following:

1 months lot rent X number of occupied spaces X 60.
+ 1 months lot rent X number of vacant spaces X 30.
Add the 2 totals to determine the max amount to pay for the MHP.

After Dave & Frank took over the site this was modified to 70 instead of 60 and I am not sure if they eliminated valuing the vacant lots in the MHP.

For a quick test to see if I am interested in checking out a MHP I take the occupied spaces and calculate a gross rent from only the occupied spaces and then multiply times 60% to eliminate 40% for expenses and have a rough NOI to divide by the cap rate I desire from the MHP and arrive at a max price to offer.