How to value 10 lot park with all city utilities?


I am looking at a 10 lot park where city water, sewer, electricity and trash is direct billed to the tenant.

All homes are owned by tenants who mow their own yards.

The streets are not owned by the park but by the city.

There doesn’t appear much to do other than collect rent and resell a home if you have to do an eviction. I am not sure I would need a manager for this as it is so small.

Lot rent is $210 a month which is at market. All the home are old and paid off.

What kind of an expense ratio and cap rate do you set for a small park where there are no utility bills, no mowing, and no street maintenance?


Get a copy of the current owner’s expenses and see what they are paying. There’s likely to be some turn over costs, advertising, legal, bookkeeping (unless you do that yourself), minor travel and offsite management, property taxes and permit/license fees.

I once spoke with a broker regarding the resale value of a similar situation (even smaller park ) to this. He essentially put the value at what would be a 20 cap. Also, keep in mind you will still have your insurance, it can run higher as a percentage due to the fixed costs of the policy , make sure the taxes are proportionate , and check any trees if applicable. As @BruceM said, you will still have fixed costs that will be a higher (in terms of percentage) so don’t delude yourself into leaving out costs especially like leaving out the cost of a manager. Even if you are going to run it yourself, be sure to add in a cost of a manager ( and it would be good to have eyes/ears at the park unless you are going by very frequently).

I think a property like this can be a great source of supplemental income for a smaller investor but keep in mind, its not a 40 space or 100 spaces park so go in with the expectation of getting a low price because you may get stung the same way should you go to sell.

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I’d hope this is close to your home, because if you have to travel to take care of any problems, your flight/hotel/car/meals expenses could eat up a good chunk of your annual profit.

But if I had to put a number on it, I’d say it’s worth a 15% cap rate. Your expenses are going to be 30%, so:

Your mileage may vary,