I have a 72 lot park. 44 lots are tenant owned and 22 are POH’s. 6 lots remain empty due to the large cost of removing large trees, lack of parking, overhead wires, etc. I am considering biting the bullet and making the lots habitable. My plan would be to buy and place 6 homes on these lots for rental or to sell. Help me justify this large expense. What type of increased park value could I expect ? Thanks
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Just a very quick back-of-the-napkin calc, 100x the monthly rent per lot.
That’s {monthly rent * 12 * [1-“expense ratio”] / [cap rate for your situation]}
Edit-update – however, in “real life” buyer’s financing (i.e. “the bank”) will discount your income by some fraction for “vacancy loss” no matter what your occupancy is. So the marginal “value” added by the last few lots is less (but it’s still more gross coming in the door).
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