Evaluating a MHC with large number of POHs


I’ve come across a few MHCs with a good number of POHs in them. The problem comes that the seller is CAPing the POH rent which can be pretty substantial.

Example Property:
Physical Occupancy: 60%
Economic Occupancy: 100%
TOHs: 70
POHs: 30 (mid-late 2000s models)
GI Lot Rent: $360k
GI POH Rent: $162k
Public S/W
Exp Ratio: 40%

How are you approaching these properties in today’s environment when it comes to valuation?

If you don’t include POH rent in valuation, how do you present/discuss this with the seller?


It sounds like you already know that you can’t cap the home rent - you have to educate the seller. Tell him a bank will not lend on the home rental income, just the lot rent income and this is the standard in the industry. Perhaps ask a bank or broker to create a letter stating this. You should also educate him on the value of the homes in the park - your offer should be a wholesale price for them; after all, if you buy the park and the poh’s you deserve to sell them for a profit - you have rehab costs, marketing costs, and commission to pay your manager who sells them.


What about all these brokers you see on Loopnet and others that are inflating all of it?


We buy parks with lots for lease–the homes the seller is offering in the sale actually have very little to NO value! As a buyer you have a choice plus when you sell the property with out POH the sale is much quicker and easier!! WHY does any park have any POH–is there a problem with that market OR perhaps the real market has moved on to RV’s, ??? All the parks we have owned we did not need or have POH’s!! Finding a good parks with great bones is difficult–but so is finding a lifelong mate.


@Jddorsey - I’ve spoken to enough owners to know that most are unrealistic in this market especially with POHs parks. If that’s the case I see what they want in pricing. If it is way off you can discuss your valuation but most of time its better to move on. Offering someone 50% of their initial offer usually doesn’t make them want to call you back in the future. It’s better to end the call follow up in 6 months and hope you catch them in a time of desperation.