How do I determine the value of this Unique property?

mobile home university
1

Hello!

A customer of mine mentioned she is selling off all of her properties as she is 80 and looking to enjoy the rest of her life task free.

My wife and I are going to look at one of those properties this week but don’t know exactly how we should calculate the properties value as its unique to the area so there are no comps. My customer also has no idea what the value of said property is worth in todays market.

The property consists of approximately one acre of land located in Maine. It includes a 3-bedroom, 1-bathroom ranch house along with a private street hosting a small mobile home park with 5 units. From what I have been told, these Mobile homes are grandfathered in as they no longer allow these in this area. ( I have researched further and found that these mobile homes can all be replaced at anytime with ones of the same dimensions).

I’m hoping for some guidance and any suggestions/ help is greatly appreciated.

The specifics of the property are as follows:
Land: 1 acre

Income Generating Units: (All MH built between 1988 -1993 all in good shape)

All have separate Electricity

Ranch House: Rental income of $1,200/month

Mobile Home 1: Maintenance personnel reside here rent-free (not generating rental income)

Mobile Home 2: Rental income of $980/month

Mobile Home 3: Rental income of $1,000/month

Mobile Home 4: Rental income of $1,200/month

Mobile Home 5: Rental income of $1,200/month

Financial Information Expenses:

Estimated Annual Taxes: Approximately $2,500 annual

Dumpster: $1620 annual

2x Well water:

Snow Plowing:

Septic pumping:

Insurance:

1 Like
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have you asked the Seller what price she is looking for with this first? i know she doesn’t really have a value for it, but at least a rough, realistic number in mind is helpful to know. i’d recommend asking her first.

if you value just the park with assumption of $300 lot rents with a 40% expense ratio (well & septic) on a 9 cap, the valuation from the 5 lot rent is $120k.

3 Likes
3

Hey Manny!
Thank you so much for taking the time to help out.

I did indeed ask her if she had any idea of what she would be looking to get but she gave me nothing and stated she’s going to have someone she knows come to do an appraisal.

From what I got, this person deals with typical residential properties only which could be an issue…

Could you explain a bit how you came up with those numbers? This is all new to me.

4

$300 lot rents x 5 = $1500 x 12 = $18,000 x .6 (40% expense ratio) = $10,800 divided by .09 = $120k

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5

Thank you so much Jmoorhead23!

6

5 × $300 x 70 = $105,000

Dave’s gross rent multiplier is 70.

7

jdgpro

I’m not sure what you are saying. Could you please explain?

8

Sure. 5 lots x $300 pet month per lot = $1500 per month.

Dave Reynolds is a partner with Franke Rolfe in Mobile Home U. His gross rent multiplier in their course work is 70.

$1,500 x 70 = $105,000 value

1 Like
9

If the ranch house is a bit away from the mobile homes you can try to sell the house separate from the mobile homes. You can get more money that way.

10

That’s a good point!

11

That’s a smart idea!

12

Just wanted to give a little update on this.

My wife and I finally made it up to see the property a couple of weeks ago after the seller had to cancel due to being sick. Everything we looked at was as expected in overall good shape. We only got to go inside the ranch house and the 3 bed 2 bath mobile home as the others were occupied. I have since been keeping in contact without pushing her and making her feel pressured.

I spoke with the seller again today to try to get the ball rolling and she mentioned her daughter is a realtor
and she had her ask a friend that deals in larger MHP whom said the property is worth over $300,000 but stated that because of the size and lack of comps its hard to give an exact amount.

I asked her if $300,000 was what she was looking to get for the property and she said she was thinking more like $250,000 as she owns it out right and would rather see someone else benefit from it like her and her husband did.

A similar ranch home not even a 15 min walk is under contract for $280,000 currently. It has 1 less bedroom and no 2 car garage but 4 acers more land and obviously no MHP.

This seems like it could potentially be a great deal but Just wanted to get some feed back on this from you folks here…