I am trying to determine the right CAP rate on a rural park with low population but high demand.
The park is very near a lake and has very high demand for vacation homes. 80% of the current occupants do not live on site but use this as their lake house. A park resident recently sold their 15 year old doublewide in the park for $100K. Other parks in the area have been selling new single wides for $90K. The lake is surrounded by RV parks that are full all summer and some of them are now refusing to rent unless the tenant agrees to a year round lease.
What is the right CAP rate for such an area?
Utilities are direct to tenants and the park only needs to repair the gravel roads and septic sewer.
Park is over 80% full. It would be 100% but the owner refuses to allow RVs and has not been selling homes.