Need Assistance in Valuation

mobile home university
1

I own a park in NC that was built in the 70’s and getting ready to sell. So I would like to get a rough valuation before I talk to a realtor. Here are the details
21 Lots - 1 TOH, remaining 20POH
3 SFH - Need Renovations, vacant
Septic good condition, City water.

12 Occupied POH - Rents range from 325 to 400$. Most tenants have been here for more than 20 years, so rents were never increased
1 TOH - 125$ rent as he helps us with work in the park
8 POH - Vacant, all of them will need renovation

Neighboring parks lot rents are 250$/month.

Thanks in advance for all your assistance.
RK

2

So for the land, 21 lots * 250 * 12 = $63,000 in revenue. As it’s a small park, I’ll assume a 40% expense ratio.
NOI = $63,000 * 60% = 37,800

The lot value, as is, if all these home were TOH, would be $540,000 at a 7% cap rate and $472,500 at an 8% cap rate. As I don’t know where your park is, or much more else about it, let’s say the value, assuming all TOH is $500,000.

Now, we need to renovate, fix, and sell, 9 POH. I don’t know the condition of the homes, so let’s assume $4,000 per home. (Probably high, in not sure anyone would put $4,000 into a 1970s home - it will depend on what you can sell the off for once it’s fixed up). I’m also going to assume I don’t need to renovate the occupied POH and we can just sell those off. Total renovation cost: 9*$4,000 = 36,000.

Lot value would be $500,000-$36,000=$464,000. I may chop 10%-20% off this value so that once I do renovate and sell the home off, I have more room for error and some economic profit.

I would also need info on what I could rent and renovate the SFRs for.

My value of $464,000 could be high, it could be low. I’m not sure if anyone would really want to put $4,000 cash into 1970s homes. You may never get the cash back out when you sell it. As selling the POH probably be a low sale price, you may need to give the home away or take a loss just to sell it off.

Would love to hear how everyone else on here would look at this park.

3

Thank you, appreciate the response.

4

@RK
If I were to see the details you posted in a listing. I would pass on the deal.

Park Owned Homes are a red flag for me. 1 or 2 would be OK but 20 is not Good.

If you want to get the max value. Sell off all the POHs and get the park totally full. Fix the park up and raise the rents.

The funny thing is once you do all that you may just decide to keep it. POHs are a MAJOR headache and switching over to all TOHs will make management a breeze.

AW