Posted by JohnBoy on June 05, 1999 at 15:43:14:
I would venture to say the type of cap rate is going to depend on the type of park it is. I read that a 5 star park in excellent condition should be at a 11% cap rate.
What does the park have to offer? Swimming pool? Tennis courts? Club house? How many MH’s on how much land? (a 5 star park usually has no more than 5 MH’s per acre from my understanding to give you an idea) Are all the MH’s owner occupied? Any rentals? Any park owned homes? City sewers or septic? Is each home metered separately? Paved streets? Condition? Vacancy? How many singlewides Vs. Doublewides? How big are the lots? What’s the largest size MH that will fit on the lots? What’s the over all condition of the park? How much cost is involved to get the park in top shape? What are the lot rents? What could they be raised to once the park is in tip top shape? How long would it take to get it there? How old are the average MH’s? Ect, ect, ect.
All of these things can determine what a good cap rate is to buy at. The less desirable the park the higher the cap rate.
I walked away from one I could of gotten at a 21% cap rate. It still wasn’t worth it!