Hi all,
Back again to get some much needed advice from those with more expert opinions than I.
So, to begin with the park is located in a town with a population of around 24000 with two major employers located there. Median cost of houses is $99,000 dollars, and there are two other MHP’s in town. The lots are good size, and can easily fit large singlewide’s and possibly doublewides. All lots have city water and sewer, but are not submetered. In trying to lock down a potential valuation, at a 10 cap I came to around $495,000. Here are the numbers that got me here:
Lot rent @ 190$ X 40 occupied lots (includes WST) = $91,200 gross income
less collections at 3% gives $88,464
48 lots total
14 POH
7 POH on rent credit @$300.00 per month with periods ranging from 4 months to 5 years.
4 POH available to rent immediately, 2 need work 1 and one is basically trash.
Total seller expenses from P&L= $41,654
NOI=$46,809
14 POH Value @ $2,500 each and 25% discount =$26,250.
(46,809/.10)+26,250= $494,340 total valuation.
Now for my concerns. The park is master metered for both water and sewer as well as electricity. This being the case, the expense ratio being 45% with 14 POH seems too low? Another concern is how much it will cost to remedy any problems in the future with the Master Metered electricity. The park is currently under the market rent, but I have no experience with master metered electrical systems so this is disconcerting. Any advice on whether my valuation is wrong, or pitfalls to be aware of here would be very appreciated!
Thanks,
Adam