New Park-Owned Home Valuations

Hi folks,

I’m a new user considering the development of brand-new Class A MHPs. At the moment I’m trying to determine a realistic preconstruction valuation methodology for a brand new completed and stabilized MHP community loaded with 100% nice new park-owned 3/2 double wide homes in the 1,400 SF range installed on lots in the 6,000 SF range.

I’ve reviewed many prior discussion threads (here and elsewhere) prior to asking this question but can’t seem to find a good match for our situation.

Many here are advocating the approach of using land income + home value to create an overall park valuation, using traditional occupancy, discounted income, and cap rate metrics to set the land value element, but using the fair market value of individual homes (less a volume discount) to set the home value element. This approach seems to make sense for older communities with older homes in various states of disrepair, but it does not seem like a good fit for new high-end communities with new homes.

Additional research has so far confirmed that newer double wide homes installed and trimmed on permanent foundations are considered single-family residences just like any other single-family home, albeit with lower $/SF market values corresponding to their lower per-SF installed cost. According to at least one local lender, these homes are also eligible for conventional financing just like any other residential home, though often at a slightly higher interest rate. Further, if new high-quality park homes are properly and regularly maintained by the owner, depending on the local market they often appreciate in value over a multi-decade lifetime just like any other single-family home.

So, if all the park-owned homes are offered for rent vs. sale, with positive standalone cash flow, with the park owner (not the resident) adhering to a rigid and proactive annual home maintenance schedule, and if the assets will generate regular predictable monthly income for 20-30+ years, why would the industry not use traditional occupancy, NOI and cap rates to set the home value vs. just the fair market value of the homes themselves?

Is this a topic best discussed further with reputable MHP appraisers?