Everything must revolve around the value of the homes on a retail sales basis. On the two homes from the 1990’s the value would be what you can sell them for in the park today. If that number is $10,000, or if it’s $20,000, then that’s the value. Blue Book and NADA values are meaningless. On the notes, its the same thing – what’s the home really worth? If the note is for $40,000, but the home is worth $10,000 in today’s market, then the note’s only worth $10,000. How do you know what the home is worth? You need to become an expert in that market during due diligence, looking at homes for sale in other parks (and that park) and seeing what they go for. Also, look at the spread between the lot rent and the affordable housing allowance of around $500, and see, on a 5 to 10 year amortization, what the customer can actually pay for the home.
It may be that the value of those few home and notes is 100% of what the seller wants, or it could be that they are 25% of that figure. The only thing that keeps you completely out of trouble is never to “cap” the home income, but to separate the value of the lot and the value of the home and add the two together.