MHP is renting homes instead of spaces??? - Posted by Christy

Posted by Christy on March 05, 2001 at 22:54:22:

Thanks for the excellent advice on both of my recent posts. One question: In your opinion, what type of approach would be used then to determine value? I am having trouble with that one.

MHP is renting homes instead of spaces??? - Posted by Christy

Posted by Christy on March 03, 2001 at 19:39:25:

Today I looked at a MHP that owns 25 homes set up on 25 spaces. Question is: If you look at this as a typical park, then the best thing to do would be to sell off the homes on terms. Make money on notes held and lot fees. Trouble is, they are bringing in a substantial sum set up on a weekly rental basis. Should we leave them as is and just figure in a replacement fee for worn out ones? Ages of homes 1984-1992. Size 12 x 60 government-built ones for disaster areas. Ideas anyone?

“No Tell Motel on Wheels” - Posted by Tony-VA

Posted by Tony-VA on March 03, 2001 at 21:15:02:

I assume you are looking to purchase the park. Ray Alcorn will teach you that parks with park owned rental homes are less valuable as they are less desirable (higher maintenance). Weekly rental units increase this headache exponentially (in my opinion) and devalue the park in my eyes. Now if you were to buy it based upon this devaluation and then lonnie deal the homes, you might be onto something. Make certain that there is an ownership market for these type of homes. You are looking at smaller homes that have been heavily used. You are also going to have to overcome the stigma that this is essentially a “No Tell Motel on Wheels”. You are going to want to find good, long term tenants and homeowners. It may be a battle to convince the buying market. Just keep this in mind going into the deal.


on the FLIP side… - Posted by David S

Posted by David S on March 05, 2001 at 09:11:37:

Most of the parks discussed by Ray Alcorn are properties that allow (can afford) for onsite management, usually 75+ sites. The smaller parks typically are operated by the owner or a family member. I call this “in house” management.

That being the case, if the park is performing “as is” and a buyer plans to manage the tenants, then these small parks can be real “cash cows” as rentals. I have several myself.

In short, don’t discount the (smaller) park’s potential as being a good investment just because there are rentals; daily, weekly, monthly or otherwise. It’s a management issue for the potential buyer.

In addition, NEVER use the rentals when determining value. You have to separate the mh’s from the dirt. You have a rental stream from the dirt at X$ per site, and you have the value, if any, of the mh’s on the sites.

David S