The one good thing about this is, when I was building and selling $300,000+ homes in Knoxville, I kept thinking “this can’t last”. So, we went “out” and bought this property for $450,000 ($17,300/acre), which even today is pretty good. At that time, in Knoxville, this acreage would have ran about $1.2 or $1.3. I think a price of $380,000 to $400,000 would be the best you could do today in the area we bought, while Knoxville is now down to $20-$25K per acre. So, we didn’t necessarily overpay for the property. However, I think we did overpay by about $100,000 for the excavation cost. They have since gone under and we are stuck fixing a few things they should have taken care of. Also, our engineer and everyone involved told us “$1,000 per lot for your underground. It’s been that for 5 years…bank on it.” Well, instead of $60,000 we spent $170,000. Local utility decided to use us as their new policy of we pay for everything, labor, material, installation, etc. and when someone hooks up “bingo” they profit from day one. Typically those costs are shared and the utility gets paid long term. So, we’re probably in this about $200,000 more than we should be, which at 100 MH lots, with everthing set up and ready to go we should have right under $1.5 total in it, or $15,000 per lot.
I’m still working to see if this is a reasonable lot cost for new MHP’s. I’ve never seen an appraisal on one, so I’m not sure how they value them. PV or Future Cash Flows at % occupancy or similar properties with PV of purchase price? Hell, it seems most appraisers right now just want to put a very small number and go hide so nobody can question them!