I need help assess a off market Mobile Home Park deal

[Neel Patel]

Hello everyone, I am a newbie to Mobile Home park investment. I have been reading and learning from BiggerPockets regarding the Mobile Home Park investment. I was wondering if anyone with Mobile Home expertise can help me assess the off-market deal I have received.

Property Description:

Approximate 1.6 acre lot size (252'x269'x266'x266') with approximately 252' of frontage on Hwy 231/431. Mobile Home Park includes the 1.6 acre lot, 7 mobile homes (fully rented with leases and deposits), laundry room - currently inactive (with restroom, 2 coin washers, 2 coin dryers)

The asking price for this Mobile Home Park is $189,000. All the Mobile Homes are owned by the park owner and it comes with the deal. 

I do know how to assess single/multi family rentals, but not the Mobile Home Park. I do want to point out that the Mobile Homes are a bit old. I am not sure if I should be worried about that. I would definitely have some due diligence contingencies when I sign a contract. Have this inspected fully. 

[Frank Rolfe]

Not enough information. You need the lot rent in the market (what other parks are charging in lot rent), the total number of permitted lots, and the type of water/sewer system and who pays for it.

But I can tell you immediately that it's not worth $189,000, as even best case if the lot rent is $300 per month and it's water/sewer paid by the tenants then the value would be: 7 x $300 x .5 = NOI $12,600 which at $189,000 purchase price is only a 6.6% cap rate -- far too low for a deal like this.

Remember that you can't count the mobile home rent but only the lot rent -- only real property income goes towards the cap rate.