New here; sorry if the topic has been covered before.
It always seems like the park owner wants to negotiate the value of his/her park-owned homes based on income. Yet the bank/appraiser won’t consider them as part of the income. And these homes are often really old and, rather than have value, are a LIABILITY because they really need to be removed and destroyed. Personally, I have no interest in the home-rental business, just the lot-rental business.
First off, my idea for disposing of the homes (not exactly original) is to give them to the tenant signs a 36-mo. lease and pays for maintenance and repair and makes 34 of their next 36 home-rent and lot-rent payments on time. If the home is renting for $300/mo., that means the maximum value to me is 36 x $300 = $10,800. But no 30+ year old home is worth that!
Seems to me (never done it) the strategy is to separate negotiations for the park and the homes. My goal would be to put all the homes in a separate LLC. The cap rate for the park can be negotiated fairly easily; it’s probably 8-14%. If the seller is stuck on using the income method to value the homes, then the cap rate for those needs to be HUGE: 20%, say?
Anyway, curious how others have negotiated the value of the homes when talking to the owner. Straight $3000 ea.? 18 mos. of rent? 20% cap rate? Remember, I don’t really want these homes…I just want the lot rent.