How much would you value this small park (9 lots)

I’m trying to understand if I am off base with valuing this park.

9 lots, 4 TOH, 3 POH ( 1 double, 2 singles), 2 vacant but ready pads. The park is located 15 minutes outside a major metro. Park is good condition, road is well kept, water lines are newer (less than 5 years old). Tenants pay all utilities (water/sewer/trash/electric/mowing). The owners developed the park 20 years ago and does all the work. They do not track their time/work so the expenses are extremely low.

Current yearly lot rent $25,800. The 2 empty lots would add $7,200 total.
Yearly Taxes $832
Yearly Insurance $788
Yearly Licence $187.

The 3 POH rent for $295, $295, & $470 on top of lot rent. This is another $12,720 in yearly income.
They pay $285 per year for licenses on the homes.

I am about 1 hour away and would not be looking to do the maintenance or upkeep and already have a property management company in the area for other rentals. I am making some large assumptions here so please give your input.
For the park only - $200/mo for lawn care/snow plowing, 5% ($1,290 maintenance), 5% (Management).
NOI = 25,800 - 832 - 788 - 187 - 2400 - 1290 - 1290 = $19,013.

For the homes, they would sell for a total of $60,000 pretty easily, based on comparable. All lot rent is at market with not much room to move now. Based on park size and what other parks have sold for an 8~10% cap rate is reasonable. This puts the park value at $190k~238k plus the homes.

Where would you put the value? Thanks for taking the time to read this and answer.

Your expenses seem really low, especially with 3 POH. One example, general liability insurance for the park plus a fire policy on three POH is going to run a lot higher than 788 per year. I was expecting closer to $2,500 on this item. What about tree trimming, trash / dumpster service, capital reserves, attorneys fees, etc?

The MHU Due Diligence Manual has a full sheet of expected expenses that you can pluck out what applies how you will run it. Get it if you haven’t already.

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Thank you for the suggestion. I’ll definitely go check out the expense sheet.
Regarding the expenses you’re talking about, I was going to utilize the POH income, which I did not include in the NOI, to cover all those expenses plus capital reserves.

Don’t forget those capital reserves!

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Im thinking 50k!! Income should ALWAYS be double the mortgage payment!

If you’re still working this deal You should remember to add in you 3rd party manager costs. What are they going to be doing exactly and for how much? Will they procure and sell two quality homes for you and how?

Thank you all for the comments. Unfortunately the seller’s asking price and my offer are too far apart and they are not willing to counteroffer or discuss anything at this point. Their realtor has inflated the NOI with the POH rental income and doesn’t agree with separating it from the lot rents. I’ll update if anything changes.

You should steer the seller over to this forum which provides over a decade of data supporting your position on value.

Thanks Charles. You are correct. We should take the time and help educate sellers. By offering service and connecting them with resources, it may help close a deal but more importantly it brings new people into our network.

I took you suggestion and linked to some specific articles and suggested they visit the forum and possibly post their park for sale. Hopefully they take me up on this offer and as a community we can help them.

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