Park Analysis Questions

Working on a park evaluation - coupla things pop up, and I’m curious how the experienced people address these issues:

  1. Sometimes, a park will include a stick-built, or more than one. How does one evaluate this into the value? I understand that MHs owned by the park could be assigned a wholesale value, and any rental homes’ rent income is disregarded, due to the risk of losing that. But a SFH could have a pretty high value, even wholesale, when compared to a MH. A value so much higher, that it could negatively impact the value of a park. Yet, it would have a lower value than a SFH in a regular neighborhood, 'cuz its in a trailer park. How have experienced people assigned a value, positive or negative, to these houses? (the park I’m evaluating has 3!)

  2. In viewing the rent roll, I see many people behind. I will take their rent out of the income calculation - but how far behind do most people consider a chronic, deductible, problem? At first I’m thinking $1K or more behind, but then I backpedal and figure that if I throw out people more than a month behnd, the seller will take action to correct that. What do y’all do?

  3. Park is on a well for water distribution. Residents can be billed flat rate, because of R&M, but what about metering, and billing more for excess usage above a standard? Also, as a method to determine problems?

I hate seeing SFH’s in parks cause it throws the numbers outa whack in a lot of cases… I evaluate them based on rents or resale depending on what I can do with it. If it can be broken off I’ll comp the house for what it can be sold off for and estimate 65% less repairs for a quick resale to a rehabber or retail buyer. If it can’t be split it off I use 48 times the rental amount.

The interesting aspect I’ve seen on SFH’s with parks is that Scott recently refinanced a park based on a SFH subdivided from one of his parks and got full conventional financing on a 30 year fixed mortgage which is very cool compared to most commercial loan products!

As for past due rents, I find most of it to be mismanagement in the properties we’ve bought… when people realize they don’t have to pay most of them won’t and then they tell their friends! I start everyone with a clean slate and explain that unpaid rent is completely unacceptable with our company and will result in eviction! The habitual tenants will very quickly identify themselves for you and you remove them and replace… a few bad habit payers will over time fall back into current habits but until then they’ll help pay the bills. From my experience natural attrition claims about 25% of the tenants in a very poorly ran property in the first 4 months of ownership, it doesn’t all happen at once and this allows you to replace tenants as bad tenants are removed. I base value on what I know I can quickly rent a unit for, lot rent units should be fewer but they will still be present.

Sorry, can’t help much on the water as I haven’t gotten to the point of submitter yet.

Best wishes,

Ryan Needler

Collections problems can indicate a couple things. In the property I just bought, we had about $21,000 in past due rents. This had our lender VERY concerned. We weren’t as concerned as they were, but knew it meant we’d have to crack down and it indicated a big management problem.

Within a month we replaced the old manager, whom we have pretty good indication was slipping cash payments in her pocket and leaving balance due amounts on the tenants’ ledgers. We’re now seeing things with our receipts that we wouldn’t have dreamed. They increased from $15,000 the month she worked for us to $21,000 the month after she left! Not only was she likely not depositing some rent paid in cash, but she definitely wasn’t calling or sending notices to past dues (maybe she couldn’t remember who had truly paid and who hadn’t??) so once we got on the collections it shaped right up.

Bottom line is that when values are based on cap rates the turn-around investor benefits significantly from problems like this. It’s not really a “deductible problem” because if it wasn’t put in the bank, it wasn’t income so it doesn’t count toward value. But you do need to factor it in to the effort the turn-around requires. And I think the point Ryan makes about 25% turnover is valid. I think it becomes more of a cash-flow issue than a valuing issue. When you have these delinquency problems adequate cash reserves are critical. We all know they’ll probably end up as vacancies - and that’s better happening sooner rather than later.

We had $64,000 in past due rents when we bought our park. We did not use it in the calculation at all, since we bought using the 60/30 rule.

We have slowly been collecting a small amount of that money. We have evicted some of them as well, since they showed that their behavior was not going to change. It seems that most of our high-maintenance tenants are people who are on this “past-due” list.

There was also lot rent on this list for homes that were in the process of being repossessed. We bought those homes ourselves and obviously did not collect that money.

We have let a few tenants move their homes out without attempting to collect this money from the mover. We are better off without these particular people and it was “free” money to us, anyway. We have filed eviction on another one, which is currently in the system, and very possibly will evict another soon.

Some of the tenants add as little as $5 to their lot rent payment on a monthly basis. We accept that, and know that we will never truly collect all this money. Bottom line - collect what you can. The tenants weed themselves out…

Park we owned and the average family used about 3K gallons per month or less. That seems like a LOT of water, but that was the average we found.

you figure 5 showers per day and 2 loads of laundry, and 15 or twenty flushes, it adds up.

Onr problem in galveston county Texas and Florida is you can’t legally charge for water (a seperate line item) unless you operate a Municipal Water Sytem. these are hard to license and expensive to maintain. there is a lot of paperwork and testing involved. we added this water cost into our rent.

Where I live now we use about 4200 gallons per month and this includes irrigation.

Can you legally charge for excess water usage in WA?


perhaps I was not clear -

I look at my current rent roll (9/07) and there are a half dozen people who are over 1K behind. In formulating price, the seller counts these occupied lots as income streams. I will not - I do not expect to collect past dues, but I will not accept their evaluation based on squatters.

Greg, the state environmental water folks have told the seller (so she says - gotta verify) that since the park pays to maintain the chemical injection, runs the tests, qualifies and keeps trained a system manager, then the park is allowed to bill back the tenants whatever is deemed fair - 30 to 50 bucks, is what the seller tells me they said.

I was just thinking a step ahead - likely in error.

Those tenants that have moved their home out, that still owe back rent, and that are employed or may at some time be employed, I would get judgments on them. Unless you are in a state that does not allow wage garnishment, like FL and TX.

AL does, 25%. And you earn 12% as well.

Liability. If i was selling water, I would want some type of specific insurance for this. We do annual water quality testing (free at the Health Dept.). courts have ruled this is adequate for rentals if you include this info in your lease agreement and provide tenants the info where they can test water more often if they choose to.

If you charge for water here the State won’t test for free (at all actually) and you need monthly reports and a Certified Tech monitoring water quality. We just add water into the rent.

Seems like you have ample water in the NW. There is a real shortage in TX and FL. Water here is very expensive. Would be very good for you if you could line item rent for water, and then write off all your time ($50 per hour?) and all expenses plus the cost of maintaining a cap improvement fund for future expansion and maintenance.

Heard at MHM a Speaker with multi Parks state he would never own a Park with well water. I wouldn’t let this stop me from owning a park of my choice.

Good Luck on this Park Steve,


We do this for a living, submetering and billing. also, we are in the process of buying our first 56 site park. I emailed Greg to see if we could come and speak at the MOM but I haven’t heard back yet. There are ways around it. I know we do it in Illinois. Our web page is . thanks, Tracy