This is how I would evaluate this park quickly. I would also advise you to get the profit and loss statement on a cash basis if it was not presented that way to you (i.e. a Tax return).
$360 x 52 x 12 = $224,640
$224,640 x .65 (35% expense ratio) = $146,016
$146,016 / 10% = $1,460,160
The park owned homes are only worth what you can sell them for for cash. If you could reasonably get $10,000 cash for those homes then that is what they are worth. Do not capitalize the income they generate. There exists a program within 21st Mortgage where they will act as a finance company for used homes. I don’t know much about it, but you might be able to get a higher cash sale price if you could arrange financing on the home. Discount the amount appropriately based on the hassle of arranging it.
The two single family homes will need to be evaluated by you based on the following:
- If they can be separated from the park and sold off separately, you need to evaluate them on a comparable sales approach. What I would do is take their comparable sales value and pay roughly 60% of that. You won’t be selling these off for top dollar and you also want to make it somewhat attractive for another investor or wholesaler to alleviate your headaches getting rid of them.
- If they cannot be separated from the park, then their max value would likely be between $80,000 and $160,000 together. SFH investors use 1% to 2% of monthly rent as short hand for determining a price that will cash flow.
The garage can probably be capitalized with the lot income. It’s hard to value without knowing the quality of your renter and having the lease at hand to determine the expense load. It is probably worth no more than $10,000 to $15,000 as an income stream though.
The max value of this property on a 10CAP is likely around $1,750,000. The real question I have is what is your goal? It is usually advisable to start out in any form a real estate by finding properties where you can add value. From the sounds of it, this park is probably already maximized (or at least very close). The market generally gives a more favorable CAP rate for a turn-key investment, like this seems to be.
For example, I own a property much like what you describe but it had an 88% expense ratio when I purchased it. The expenses were high entirely because the finances were poorly managed. Those types of properties are very easy to turn around and they are also much easier to buy at a “discount.”