I was looking at that formula for estimating the value numberofspacesspacerent70=total. Where does the 70 number come from?
I was wondering the same thing -
Did you get the answer?
The nearest I can figure, is that gives you about the value of a park at 10 cap. (assuming 40% expenses)
That’s a formula that Dave and I developed to get a quick 12% cap rate for an offer, when the seller does not have a price. The formula is:
number of occupied lots x lot rent x 60 (if the park pays water and sewer)
or
number of occupied lots x lot rent x 70 (if the tenant pays for their own water and sewer)
It is merely a quick guideline, as it is based on the lot rent being around $200 to $400 per month and the expenses in the normal range. Unusually high taxes (in Chicago for example) or other extreme items render it useless.,
The general concept is that you offer a 12% cap rate, the seller counters with a 8% and you meet in the middle at a 10% cap rate.
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@frankrolfe
What about POHs? How do you value a park that has 86% POHs? They’re from the 90’s and 2000’s (3 are from the 80’s).
On a side note, would you recommend buying a park with that many POHs? Won’t banks avoid financing a park like this?
Thank you,
G