Hi everyone. How would you evaluate a park that has rents $60 above market ($260 vs $200). Assume all competing parks in area pass through utilities (including subject park), so those are all equal. Subject park is fully occupied, best or second best quality in market. Also, limited vacancy among competitors so not much of a possibility of losing tenants to competing parks. Also assume it’s a smaller town, (~10,000 ppl) in the midwest.
My personal take is that so long as (1) the market has strong fundamentals, (2) you don’t see much, if any threat from other parks in area due to relative quality and availability of sites and (3) the park hasn’t experienced above-average attrition post-rent increase, then you would evaluate it in a very similar manner to a park that has rents at market.
Really curious to hear everyone’s thoughts. @erikhanson, can you chime in on how that would be treated by an appraiser?