While looking at parks and talking to sellers of parks with both park owned homes and some parks that have little or no park owned homes I have come up with a question of valuation.
For example say a 50 space park has no park owned homes, lot rents of $200 and city bills tenants water and electric. The value of this park would be 50 x $200 x 12 = $120,000 x .7 = $84,000 x 10 = $840,000
But a park that is 50 spaces, 15 park owned homes, lot rents of $200 and city bills water/electric. The value of this park would be 50 x $200 x 12 = $120,000 x .7 = $84,000 x 10 = $840,000 valuation on the lot rent and then the seller will want you to either CAP in the home rent income (which we all know never to do) or pay him a certain value for each home. If we say for example the homes are valued at $10,000 each, then you are paying $840,000 for the park and $150,000 for the homes for a total of $990,000
Thus it seems to a newby that parks with no park owned homes all else being equal are valued lower than parks with park owned homes. Am I wrong with assertion?
One caveat, I do understand some park owned homes are worth only their weight as scrap or are even a liability. I am talking about park owned homes worth $10,000 in the free market. And you can change that number to $5,000, $7,000, $12,000 and my question still remains don’t get caught up on the $10,000 number
Any thoughts would be greatly appreciated,