Keith,
Vince is right on! Separate the homes from the park to determine value. I determine the value of the homes using a very conservative wholesale number. Add the wholesale price of the homes to the value of the park and you have your offer price. One way is to go to a used mobile home dealer locally and ask them what they will pay for the homes!
Corey
Ron,
You would need to come up with a separate value for each of these and add to the park value.
In the case of the apartments, I would place it at a 10 cap rate based on ACTUAL NOI.
The laundry facility will be harder to place a value on, but I know of one investor who placed a 5 times NOI value on the facility he purchased. It worked great for him.
Steve
What about a park with L/O deals that take up over 20% of the occupied lots. How do you place a value on that additional income that adds up to about 25% of the gross. It won’t be included into the cap rate evaluation.
Terry,
I evaluate lease/optioned homes in the same manner as promissory notes. The process involves discounting each lease/option agreement or promissory note to get a yield I’m comfortable with. In most cases, that’s between 15-20% depending on the borrower and condition of the home.
Steve
Steve lets say there are 25 homes on L/O with inc $56K a yr. Would you separate each home and then add how much to the sales price of the park.
Steve, Please clarify what you mean by a yield of 15 - 20 %. Are you referring to the loan value left on the home?
Terry,
You will need a financial calculator to figure out the discounted price. It’s very simple, just plug in the monthly payment, number of payments left, the desired yield (18 or 21%) and the calculator will figure out present value. That number is what you should pay for the note.
Steve