I am thinking about investing in a mobile home park. The park it self has 8 mobiles homes (which I would own) and has 4 lots that are rented out to individuals that own their mobile home. The location is in IL, close to St. Louis and a 5 out of the 8 mobile homes are currently rented out. The question I have is, is there a quick way (without an appraisal) to determine what a fair price is for this? The mobile homes themselves range from 1979 - 1993. Some of these are in good condition and some not so much....
Hey there. I have yet to buy. Mobile home park but the way I would do it is by going off what income it makes.
Take the lot rent each pad currently makes in a year and minus out all the current expenses besides any mortgages. That would be the net operating income for the year.
Take that number and divide it by the cap rate (usually the average cap rate of the areA I believe) and that would be your price.
Do not count the mobile home rental income. Lenders don’t calculate that and neither should you.
Kelly blue book should give you an idea of what the homes are worth so you can add those to the price of the seller is insisting a worth to those.
Again, Do Not include mobile home rental amounts in your calculations.
Hope this helps a little.
Thanks Josh, so do you have any examples of this you could give me?
lot rent * 9 paying lots * 60 = park value
Add in shell value of the homes, ~$5000 per * 8 homes = ~$40k
Thanks Jon. What does the number 60 represent?