I have found what appears to be a great option for my first MHP and want to determine what I should pay.
Here’s the details.
Let me know what you think I should offer and any tips.
Thanks.
Determining an offer comes AFTER knowing the seller’s expectations.
For example, if the seller wants $500k cash with a 15 day closing and you determine the park is worth half that, and can only get seller financing after a 45-day due diligence period, then any offer that would work for you would not meet the seller’s current expectations.
Keep us posted,
Mike
Offer $255,000 and see if you can get to $275,000.
Much more information is needed. Do the tenants pay the utilities or does the park? What is the condition of the park owned homes? If the tenants move out, can the home be used again or do you have to bring a new one in? How large are the lots (are they too small to accept newer homes)? Is the park licensed and legally able to be operated? Do you have any idea of the condition of the utilities? Does the owner have records or are the details in a shoe box? What is the competition, how does this park compare and are your park’s rents consistent with this? Have the rents just been raised from $120 per month to $215 just prior to offering the park for sale? Just a few that come to mind immediately.
If this is your first park you need to get Frank and Dave’s evaluation book to see what issues there are and what questions to ask? Most of the due diligence is done after contract but you need some answers prior to going in.
Good luck.
Many assumptions aside, a Park like this should have a 40-50% expense ratio since on the smaller side under your management. This means a fair offer would be around 200K, maybe a bit more if there are other things like POH or extra land, blah blah blah.
If this is on the west coast or some other special area where logic and real estate do not talk to each other then the price book is really about what return is acceptable to you and other investors.
This is a high level scratching the surface as a starting point, like @mhmike said you need more info from the seller about their needs to see if / how you can close the gap.
Can I get in on this “what to offer?” thread?
How did you come to your number?
Typically weekly mobile home rentals are the worst kind. Your density is going to make the homes stacked one on top of another, and they are probably tiny old POHs.
A deal like this needs to be so low for everything thats wrong with it. Maybe if it was dirt cheap and you were desperate to get in a park and thats all you can do and maybe you are into extreme sports or some other adrenaline thrill seeking 
Kidding aside, conventional rules don’t really apply to a park like this
I always like to ask the seller what they want and feel that is the best approach. The problem is , if you offer them too little, you might insult them or miss the deal ( where realistically, maybe you can get higher ). If you offer too high, you get into it and realized you offered to high and need to renegotiate. Thats not a good strategy ( not talking about things that come up in DD) and again may cause you to lose the deal. If all else fails, run the numbers that make sense for you ( i.e. what ROI or CoC or cap rate you are trying to hit). Don’t overpay for it , be conservative in your assumptions and make the offer. You can always come up a bit if you need to as well if you feel its justified on the price.
Jack is right that conventional rules don’t apply to a Park with hourly rates. But for the sake of learning the high level calculation commonly used around here is Lot Rent x Occupied Pads x 70 (12 cap multiplier for good size park on city utilities). You adjust the multiplier down based on abnormalities, such as well / septic, small size (under 25-30 pads), hot markets where lower cap rates are common, etc.
Other people simply like to break out the equation to customize their preferred cap rate and expense ratio, so for the original poster’s example: 18 Pads x 215 Lot Rent x 12 Months x 50% Expense Ratio x 10 CAP = 232K.