Valuation of Mobile Home Park

6 Replies

Hey guys! Curious where you would value this park.. 

Details:

42 Total pads (28 TOH's, 11 POH's, 3 long term RV) Plus a 1600 square foot house that is very nicely renovated

City water 

Septic sewer

Lot Rent is $325 (includes water, trash and sewer) 

11 Park owned home bring in $5225/month on top of the $325 for lot rent

All expenses including water, common electric, septic upkeep, trash, maint, lawn, insurances and taxes, and property management is around $73,900/year

Park is in great condition. Roads are private but were redone with asphalt 5 years ago. Septic just redone 6 months ago. 

Sitting on 5 acres. 

42 x $325 x 12 x .6 = $98,280 estimated net income. Those 3 RVs are not what a bank is going to want to see so they better be nice looking and have all the trappings of long term with outdoor furniture, etc.

11 POH are probably worthless as you need to put more money into them for rehab than they will bring to sell them unless they are 1990s or newer and you can get on with 21st Mortgage at a value of probably $10,000 a piece.

Not sure what the stick-built house will rent for since it's inside a trailer park.

I'm guessing your first offer would be around $1.2 million.

But the big question on the value would be the location. Both size of metro as well as housing prices.

The other big item is what the market lot rent is vs. the current rent.

@Frank Rolfe $1,250,000 was exactly what I was thinking. The location is fantastic and lot rent in the market is pushing $400 for the parks that are well maintained. 

The POH are actually all pretty decent. All I would say 1995 or newer. 

The house would easily rent for $1000. Its located in the rear of the park and is very well maintained. 

Seller is asking for $1.7M. This is an off market deal from a 3rd generation mom and pop. Any suggestions on how to structure an owner financing option on this one if she will not budge much on price?

If you're going to bridge the gap with financing:

1) It would have to be 15+ years term on a 30 year amortization

2) It would have to be 10% or so down-payment to spike the cash-on-cash return.

3) It would have to be 0% interest year one, 1% year two, 2% year three, 3% year four and 4% year five through fifteen

4) It would have to have no pre-payment penalty

And you would HAVE to make sure that you can cover the payments monthly with room to spare based on your assumptions of increasing rent levels.

@Shane Jeanfreau it’s actually a Treatment plant. We’ve done zero due diligence as of yet on it, but my understanding is that treatment plant is large enough for the entire park. Costs around $150/month to maintain and was completely redone about 6 months ago.