Looking for some advice / opinions on selling our park. Here are two options:
80 lots total.
60 Tenant Owned Home's (TOH's) paying $300 per month lot rent.
20 vacant lots.
Value = 60 x 300 x 12 x 0.7 x 10 = $1,512,000
Same park with 80 lots, all 80 occupied.
60 TOH's paying $300 per month lot rent.
20 NEW-TOH's (with park guarantee) paying $300 per month lot rent.
Value = 80 x 300 x 12 x 0.7 x 10 = $2,016,000
The difference of the two options is that in "Option Two" the park has acquired 20 new homes via 21st Mortgage's Cash Program. For each of these new homes (i.e. the "NEW-TOH's), the park has guaranteed the notes for the resident. The average note is $50,000 each thus a total guarantee of $1,000,000.
Of course, although the 20 residents with NEW-TOHs each own their homes (i.e., have the title with a lien), some will probably default.
Would appreciate hearing people's opinions / advice as to if going through the effort to covert from Option One to Option Two makes sense. How accurate are the two "values" shown above?
How will / would an investor or potential buyer view the two options?