Having trouble valuing a park


#1

I visit an imaginary park and want to know what price to offer. Say it has 100 spaces on 20 acres, no amenities, no zoning issues, crime is low, lot rent is $200, city water and sewer, infrastructure is in good shape, 30% vacancy, expenses are 50% of gross rents, asking price 1.2 million, no park owned homes, good schools and employment rate in the county - assuming a bank will give me a loan despite the vacancies at 9% interest, 200k cash down, 20 yr amortization, no seller financing.

But there are so many ways to do it.

The park breaks even at 50% occupancy at an offer price of around $800,000.

My cash-on-cash return is 10% when the occupancy hits a target rate of 80% at a price of $900,000

Applying the formula 60 x (#occupied homes) x (lot rent) + 30 x (#vacant) x (lot rent) = offer price of $1,020,000

At a 10% cap rate the offer price is $1,050,000

At a gross rent multiplier of 5, the offer price is $1,175,000

What’s the correct purchase price?

-charles


#2

Charles,

Two suggestions 1. Purchase the park analyzer from this site.I did, it does a nice job but I am trying to get some help to clear up a slight glitch. 2. Go to MHP.info and go to the MHP tools bar, I think you will be impressed.The guy who developed it is a realtor / investor .