I know that the answer depends on the cash on cash or ROI but is there any way to estimate a community value by a rule of thumb for a price per lot? In other words I am looking at three star park with potential to go to a four star. It has room for growth Currently just shy of 100 lots with a 95 occupancy. Current per lot estimate is at $25K per lot.
I have tried to determine if that is too high or about right. The other data cash on cash and ROI will be above 20% with growth potential. I just wanted to see if there are other ways to look at the park by the numbers. The community is all owner owned homes.
What are the sizes of the lots?? Mainly really old single wide trailers or will they accommodate the newer doublewides??
Are the utilities offloaded to lot tenants?? That is a current trend to increase returns.
What is the average lot rent?? So the seller is asking 2,500,000 for the 100 unit facility??
I have owned homes in lots where the rent was $60 per month and have seen lots renting for $550 per month. I am sure there are greater extremes across the country. Parks sell on cap rates so you can see that the price per lot will vary.
Rule of thumb for a MHP is number of Occupied lots x lot rent x 60.
@ Joel - The lots are big. Most of the homes are doublewides now with a few singles. Occupancy is about 95%.
They pay electric - Water (wells) and sewer are park owned (septic system). There is the opportunity to increase the lot rents to offset some of the wells.
The lot rents are $300 now but could be raised.
There is the potential to grow the park by 50 plus homes but will require $450K to a new sewer system before plats would be approved so to get the new growth I estimate you would need about $700k all in to do the infrastructure.
All together there is 90 homes occupied.
@ Josh - I have also seen ROT at Occupied lots X lot rents X 70 so with the two it could be $1.6 - $1.9 M if the numbers are true.
Hey Rob, use 70 if each lot is sub metered for water, and the utility company bills each tenant directly.
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