60/30 rule


#1

Anyone, How does the 60/30 rule account for land. For example, suppose you have two parks, fifty pads each, 10 vacancies each with one park on 5 acres and the other park on 15 acres ? Or, is the 60/30 just an approximation of the income approach to value ? Please advise…

Thanks,

gsl


#2

The additional land must be valued separately. In most cases, the extra land is behind the park and must be developed. Very few people actually develop the land into more pads because it is cost prohibited. In this case, I wouldn’t give anything or very little for this parcel.

However, if the additional land can be used for some other commercial venture or maybe subdivided into land/home packages, I would compare it to other parcels of the same type in the area.

Steve


#3

Thanks for the response Steve. So the 60/30 rule does assume a “typical” pad size ? The reason I am asking is that I am looking at a park that has “non traditional” lot sizes in that the owner/developer “paralelleld” the homes with the road rather than the typical “perpendicular” positoning. This creates homes on lot sizes around 1/4 of an acre. Any thoughts?

Thanks,

gsl


#4

The larger lots don’t really impact the overall income of the property. The net operating income is what value is based on in most cases. It’s great to have larger lots because the homes are easier to sell, but I wouldn’t add any value to this aspect.

Steve


#5

Steve, when you say developing more pads is cost prohibitive if the excess land is behind the existing park can you clarify what the development costs are? I am looking at a small park that has 7 pads and additional land next door for 4 more according to the seller. both pieces of land can be accessed off the existing street (unless the city disagrees), seller says $30,000 would be enough to develop the additional 4 pads–which seems cheap to me but I am brand new at MHP.

thanks

jeff