I know that Frank & Dave suggest selling ancillary assets when you are in the mobile home park business. My question is- what if the park contains ancillary structures that are mixed in with the mobile homes and can't easily be parceled off? 

1) Do you need to parcel off these homes in order to sell them?

2) If you absolutely cannot parcel off these homes and are okay with operating them as rentals, how do you value these structures in conjunction with the rest of the mobile home park?

3) Is there a quick and dirty value that i can attach to these rentals? 

My scenario:

- 3 single family rental homes (cabins) renting for $500/month

- hard to account for expenses attached to these homes because seller has not separated expenses in financials 

Additionally, if you receive debt on the property from a bank, will selling a single family home (included as collateral on mortgage) trigger a "due-at-sale clause"?

Not all ancillary structures should be sold in a mobile home park. The only ones that you should consider doing so are ones on the frontage that have the ability to have separate utility connections and access. To sell them off you have to subdivide the parcel, and you also need a release from the lender which allows it to be removed from the collateral pool. By far the majority of ancillary structures are maintained in the mobile home park, and their rent is used as real property value, the same as lot rents.

In many cases you would sell off ancillary structures to make the property more attractive to a future buyer or lender. For example, if you have a self-storage facility along the frontage that is in poor condition and half full, you might be able to find somebody that is excited about storage who would buy it, renovate it, and more professionally manage it. You also benefit in that transaction since you are now a pure mobile home park and not a hybrid storage/mobile home park.

And don't forget that you sometimes would subdivide and allow the seller to keep that ancillary structure if they feel it to be hugely valuable and you don't. The perfect example of that would be if there's a bunch of raw land that comes with the deal that you feel is worth $1,000 an acre and the seller believes is worth $10,000 per acre.

Originally posted by @Frank Rolfe :

Not all ancillary structures should be sold in a mobile home park. The only ones that you should consider doing so are ones on the frontage that have the ability to have separate utility connections and access. To sell them off you have to subdivide the parcel, and you also need a release from the lender which allows it to be removed from the collateral pool. By far the majority of ancillary structures are maintained in the mobile home park, and their rent is used as real property value, the same as lot rents.

In many cases you would sell off ancillary structures to make the property more attractive to a future buyer or lender. For example, if you have a self-storage facility along the frontage that is in poor condition and half full, you might be able to find somebody that is excited about storage who would buy it, renovate it, and more professionally manage it. You also benefit in that transaction since you are now a pure mobile home park and not a hybrid storage/mobile home park.

And don't forget that you sometimes would subdivide and allow the seller to keep that ancillary structure if they feel it to be hugely valuable and you don't. The perfect example of that would be if there's a bunch of raw land that comes with the deal that you feel is worth $1,000 an acre and the seller believes is worth $10,000 per acre.

 This is helpful. Thank you for clarifying your stance on the topic. 

In my case, the structures are within the park and not easily subdivided. I find it interesting that you would view the income from these ancillary structures as part of the real property value, like you view lot rent. But, it makes sense. I was under the assumption that since it is a community owned structure, it be viewed more like a community-owned mobile home. 

Because these ancillary structures (stick built cabins) are attached to the land, would you count all of the rental income from these structures in the overall "lot rent revenue"? *As long as you include their expenses, of course. 

Anything that is "real" property counts (lot rent, apartment rent, stick-built, commercial building, etc.). Anything that is "personal property" does not (mobile homes).

@David Denzy sometimes the location of the ancillary structures within the park makes it difficult to separate them, in which case you either figure out a way to make the deal work including them, or pass on the deal.  From the sounds of it, you have some rental cabins that are of that flavor on the deal you described.  

On occasion, we have acquired parks with site built home(s) that were originally occupied by the owner and family and they are in the middle of the park, or another location where it is not feasible to parcel off. You can make those structures into rental homes, into the manager's unit /office, or you can convert to a clubhouse or any amenity that will add value to the park resident experience.

Rental homes will likely create more income, but keep in mind that choice comes with increased maintenance expenses, tenant turnover, and additional management.  It can still make sense on paper, so this is not a bad move, especially if the home itself is of the right quality and materials where a tenant cannot do a lot of cosmetic damage easily.

Using as the manager unit/office is appropriate if it is in the right location within the park and there is no other option in the park that makes more financial sense as a trade-off.

Using as a park amenity (clubhouse, game room, library, etc) can make sense if you are seeking to provide a higher amenity package. 

All the best,

Jack

Thank you @Jack Martin