Posted by Tom on July 03, 2003 at 19:46:40:
Thanks Scott
To give a few details:
16 spaces all rented,
8 of the homes are rentals
The lot rent is $110 a month witch is slightly below normal for this area (most parks charge $125)
The rentals account for another $1,865 per month
This is all before expenses of curse
After breaking down the NOI the value the park (without rentals) is around 140K (using a 12% cap rate) There is also a 30x40 high ceiling building on the property the owner uses it for storing his ?stuff? I don?t need the building but I will find someone who can use it maybe the current owner, for a price of curse.
The owner named a price of 240K we haven?t done any negotiating yet I wanted to gather as much info as possible before I get into it.
This area of the country has only a few MHP over 50 spaces but many parks in the 10 to 30 range. They were developed thirty to forty years ago for 10?x 50? or 60?homes. That being said the parks are somewhat crowded today with 14?x 70? and 16?x 70? homes. This one was developed in the late 70?s early 80?s it is crowded in a fue spots but not as bad as many in this area.
Maybe this little bit of info. Makes things clearer
Thanks
Tom
Value park and rentals - Posted by Tom
Posted by Tom on July 02, 2003 at 19:03:32:
I have read Doug Ottersberg’s articles on buying a MHP and found them a great resource. I now have a good understanding of valuing a MHP, but what if there are rentals that are part of the deal. The owner?s asking price would require me to keep the rentals in order to have the park pay the bills and produce a modest profit.
One idea I had was to separate the lot rental from the home rent (annual) then multiply that number by 3. What do you think?
Any guidance anyone could offer me would be greatly appreciated.
Re: Value park and rentals - Posted by JoeS (FL)
Posted by JoeS (FL) on July 04, 2003 at 18:20:13:
Check this thread out…
http://www.creonline.com/commercial-real-estate/wwwboard5/messages/667.html
Best Regards,
Joe
Re: Value park and rentals - Posted by ScottS(NC)
Posted by ScottS(NC) on July 03, 2003 at 08:38:58:
Tom,
I understand your confusion. I am going to assume this park is small you didn’t give the size. These are my feelings on parks of 50 or less spaces.
I know I am going in direct opposition to what most others have and will post on this, but I am doing it with a small park I own and it works for me. Managed properly all the horror stories about maintaing mobile home rentals have not happened. People want apartment complexes where it is much easier for tenants to get on each others nerves yet this is taboo in our world for some reason? I have found good tenants that would much rather have a yard and space of there own versus apartments.
With that said I do value the income stream from the homes as rentals. If I didn’t I would not have been able to buy a park in Asheville NC. Here you won’t find small parks where the land will pay the mortgage not even close. Without counting the income stream from the home you will be on the sidelines forever.
I would ask anyone to explain to me why an apartment can count the income stream it generates but not a mobile home?
I can fix a mobile cheaper than you can fix an apartment. I can allow pets without the “common lawn” problems of an apartment. I can manage tenants and allow only good prospects in like an apartment. I rarely have less than 10-20 calls the first day my adds for mobile rentals hit the papers. I can section 8 mobiles and make big bucks like apartments if I choose.
I am only implying this for small owner managed parks that I can take care of myself. I do agree that in larger parks this can make them quite the eye sore.
Tom I would figure out what you need the park to pay you then figure that as an expense add it to all the other expenses. Figure debt service do your due diligence this is extremely important. After all expenses are listed including debt service and your pay see if the park can support this number. If not adjust your debt service payments until it works. This payment will reflect the price you are willing to pay for this SMALL park. I would’nt use this system on a lare park but it has worked for a couple here in Asheville. HTH Take Care ScottS(NC)