How to evaluate MHP with a large amount of leased homes?


I came across the park with a mix of TOH and POH. There are just a few real POH while the majority of none TOH’s are newly built ones that the Park is leasing from the Vendor of those homes. And there is an 8 years lease term that just started in 2020.

I have two questions, in fact:

(1) How to evaluate such a park in part of these leased homes?

(2) what would be a strategy in dealing with those leased homes over the course of the Park ownership?

Thank you in advance for your advice(s).

Happy New Year to you and all yours!

Hello MHU Folks.

Any ideas what to do in my case? Am I asking something that was never seen?

Thank you in advance for sharing your thoughts.

Breakout the NOI for the park and POHs. This will allow you to value them separately just as the lender typically will.

Hi Jim,

thanks for the response. Indeed, In my valuation I left those leased houses beyond the capitalization part.

But what do I do with those houses? I can buy those units for another 7 years to convert them into TOH’s one way or another. Tho, it’s nice to have those new homes at the park, just a bit unclear how treat them throughout their life cycle. Those houses represent some value and at the same time there is some liability in them as well. Just cannot wrap my ahead around this component, even though I have some thoughts how to deal with the whole thing, i.e. MHP + leased homes. It just seems to be getting overcomplicated and I hoped to learn some simple way to achieve the same results.


I would assign a value to them, buy them and convert them to TOHs as soon as possible. Sure there is nice amount of income from POHs, but turnovers can get very expensive and it is a liability nightmare.

Hi Jim,

thanks a lot for your suggestion. This is what I had on my mind. I’m just afraid having those Legacy houses leased for another 7 years as Legacy Homes, the vendor, may insist on keeping them that way till lease gets expired.


are they leased or is that a loan. I see Legacy homes on 8 year loans from Legacy all the time so that makes me think you are actually just buying them

Hi Jim,

I’ve been told those Legacy homes are lease with the options (1) to buy at the end of the lease term or (2) extend the lease for another 4 years. I have to double check what actually it is. I appreciate your insight.