Mobile Homes - Converting POH to TOH

[Ryan C.]

Hello,

I am a new investor looking into a property that currently has ~100 pads with 57 of them occupied by tenants with tenant owned homes, while the remaining pads all have vacant park owned homes, at varying levels of livability. The price of the park is based off the NOI of the 57 occupied pads with a 10% cap rate and no value is attributed to the other 43 vacant POHs. Basically any warm body I can get into the vacant POHs will add value to the park, so instead of fixing up the units, I was thinking about just selling the existing POHs for next to nothing and charging lot rent. Is this a good idea or is there something I am missing?

Thanks for any help!