When looking at numbers for a mobile home park, do you value park owned home sale contract income?
It depends on the interest rate. It is possible to take a $10,000 mobile home, sell it for $17,500 at 0% interest. It is also possible to take that same home and sell it for $7,500 at 29% interest. Either way, it’s a $10,000 home and you should not pay more than that for it.To come up with a value, homes are generally valued at what they can be sold for for $2,000 - $4,000 down at 12% - 14% interest. It also makes a great deal of difference whether the contract has 9 more months to maturity, or 9 years. Obviously there are a lot more payments coming to you if the home has 9 years to go, rather than just 9 months.Whatever you do, don’t ‘cap’ the income from the homes. Don’t let a mobile home park seller tell you that they rent the home for, say $300/month (above the lot rent), and only have $50 in monthly expenses, and are making $250/month net profit x 12 months - $3,000/year, and at a 10% cap rate they want you to pay $30,000 for that home. It could be a 1980’s 2BR/1BA 14x64 with that kind of ‘income’ and it’d likely only be worth $5,000 - $10,000 depending on your market (run test ads). On the other hand, if that home is a 2010 or newer 4BR/2BA 16x80, then it probably is worth $30,000, but you’d come to that conclusion not by 10-capping the income, but rather by running test ads and determining that you can indeed sell that home for $30,000 with $4,000 down at 12%+ interest.Buy the books off this website and attend the next bootcamp. It’ll be time and money very well spent for you and your future tenants.Good luck,-jl-