So I’ve been looking at a park that I really like. Rent is $330 mostly tenant owned homes. 43 pads, with a few doubles. Because the poh and double lots are few, I’ve just been doing 330x12x43 So Gross Potential Rents are around 160-180k annually. The tricky part is the owner’s expenses are extremely low, I don’t doubt that they are for him, because he is hands on, I however am sure to incur more expenses. Park is on city water and sewer, with water being billed back. This park appears to be one of the nicer in the market, and all parks are darn near full. Subject park appears to be at the top end both in rental rates and quality, with one other park getting $370 in the market. Park is really nicely kept, with great infrastructure.
Let me know what you think this park is worth. Feel free to ask anymore questions.
For a quick analysis, I’d assume a 35 to 40% expense ratio. ((330x12)x43)x.6 = $102k. your offer should be around $1M.
Put together your expense list based on how you would run the park: One of your larger expenses will be taxes so call the local assessor and find out what the property and pohs tax bill is (ask them how they calculate the tax bill and if there is a possibility that it could increase based on the purchase price of the park. Also ask them if the taxes will be increasing anytime in the near future… they typically assess properties every few years). Then mgmt fees (payroll, etc), insurance, utilities, trash, mowing, business trips, llc fees, license fees, estimated repair/maintenance, etc… Use the more exact expense number in place of the .6 to get a more accurate offer price.
Is the park listed for sale? They should be able to furnish basic P and Ls. If not, use the Frank and Dave (MHU) assumptions on expenses that are not listed ( use actuals on what you are able to verify) . Create an approximate offer on what you can formulate. Once you get into it and can get additional info, you will need to confirm that your items were as anticipated.
Dont forgot, if the taxes are low , they may increase upon a sale spending on the county/states reporting methodologies ( disclosure vs non disclosure etc).
Good luck and report back here with any additional questions.