Grossly overpriced parks. Do you still make an offer?


#1

As we know, it is very common to find parks for sale where the broker or owner capitalized the POH rent. How do we overcome this? Should I still make offers for these parks albeit at the price point I would pay or is this a waste of time. Has anyone had any luck talking to broker or owner about how to “properly” value a MHP?


#2

There are probably a few brokers and owners out there who still think it’s ok to cap the poh rent. It’s been a while since I’ve seen this, not to mention selling on a proforma. I would make an offer based on how you value the park and educate the broker and owner that they shouldn’t capitalize the poh rent - tell them that lenders won’t recognize the poh rent so neither should they.


#3

@tmperrault thanks for your feedback. I will make an offer and see what happens.

Cheers!


#4

It is very common for the broker (or owner) to put a cap on the POH’s and feel that an aluminum box with boarded up windows and tarp on the roof is worth $60000. Its tough to explain math and finance to them because that’s the way they have always done it. In addition, they are usually cash cows so they don’t have to really sell it. I still look at them because I will buy parks that have some POH’s and then sell them if the numbers work. However, most often you will notice that these parks with POH’s will just sit on the market forever. There is always a fool that will buy them though. I have tried making an offer on the value of the park ONLY plus the value of the homes ONLY. But again that seldom works either.


#5

@WhiteTrashGator thanks for your feedback. I am seeing the same brokers consistently cap the POH rent, but they appear to sell…


#6

Of course some sell. But if you follow closely as I have for a few years you’ll notice that they won’t or they will move to another broker. There are some parks with all POH’s I’ve seen listed now for months and months. If someone has cash they can buy it but if you need financing very very few banks will touch it.


#7

There are always crazy people in every market, but It’s the nature of this market that is driving the feeling many sellers have which is that they can name any stupid price and some idiot will pay it. In some cases they are right, but if it’s actually overpriced it will sit on the market. Eventually, the market will always dictate the value. It’s worth keeping tabs on these properties because eventually, if it doesn’t close, they will be adjusting the price.


#8

Agree with this. If the property has been on the market 6 months or a year, check to see if the seller is going to get realistic. Maybe they aren’t in the right frame of mind to sell. You want to deal with a “motivated seller.”


#9

Just made an offer on a park (rejected) where there 9 spaces, 4 TOH at 300 per month, 5 POH that needed to be removed. Well/Septic with one tank needing some work. The owner already had an all cash offer of 245k. At best lot rents are 425 in the area.
Just wow.


#10

I would bet the owner is lying about the 245 cash offer, I’d tell him to take it and will follow up with him in 30 days.


#11

If true, just another uneducated buyer. Plenty of them out there that are trigger happy.


#12

There are probably a few brokers out there who still think it’s ok to cap the poh rent.