How to adjust purchase price if 1/3rd of park is on leased land


Looking at a park that has about 90 lots with about 1/3 on leased land. The park has enough vacancies that most all of the homes could be moved to the non-leased land. I am trying to figure out how to value this?

Should I just offer based on the 60 lots on owned property?

Park was built decades ago and encroaches on local government property. The same problem was all over the region and the govt decided to issue leases to everyone in the region.

90 lots - about 30 on leased land. Currently about 50 homes leased. I could move the homes to the owned land if I had to.

How do I value this?
$5200 in monthly rent on the owned land and $3450 monthly rent on the leased land.
Lease is about $7500 a year.



When does the lease expire? That will determine how much of a proration to consider…if it’s 30+ years away you probably wouldn’t be able to justify any reduction.


Lease expires in 2 years. I called and they said they have been renewing everyone’s leases so far but would not commit to future decisions. The only leases not renewed were due the business or homeowners decision to terminate.


I think your best offer to the seller can be as follows:

  1. Value the portion of the park on the leased land separate from the owned land. Consider as part of the valuation that you’re likely not going to be moving new homes onto there unless the lease terms are better.

  2. Negotiate a payment schedule (e.g. form of owner financing) on that which is wholly contingent on the lease being renewed.

  3. If the lease is not renewed, the payments stop. If it keeps getting renewed, the payments keep flowing.

  4. You will need an attorney to carefully craft this.

  5. After closing, focus on infilling the owned land until you can work a strategy to either obtain a longer term lease or purchase the land from the govt.