I’m looking at a park with 51 spaces, 43 POH’s, 5 lot rents, three vacant. The homes are older, mostly 80’s and 90’s models in decent shape. Lot rents currently 130/month a little low for the area, income of 18k total a month. How do I value the park and the homes with such a large amount of the income coming from the rentals? I’m willing to stand the headaches from the tenants and the upkeep but don’t know how to value the POH incomes?
Justin,
Your situation is similar to ours. We own a park in Michigan that has about 50 occupied spaces, of which we own 22 houses as rentals. I would start by assuming a pretty good vacancy rate, say 20% for the rentals. We find that many renters bail before the lease is up, and there is little we can do about it. I would then put in some money for monthly repairs, say $25/ month/ rental. In Michigan, we are supposed to pay 6% sales tax on mobile home rentals, so that should be factored in as well.
We have been told many times that a park with so many rentals in not desireable to new buyers. We intend on selling all our rentals to the tenants on land-contract terms as soon as we are SAFE act licensed.
It is much easier to kick out a deadbeat tenant here if they fail to pay their loan payment vs if they fail to pay their rent. Rentals take 90 or so days for eviction, loan defaults more like 30.