Sold our 73 space park April 2021. Bought a
6 cap triple net medical bldg as part of a 1031 exchange and was able to get a 4% loan on it.
Another investment that was part of that 1031 was a condo in Las Vegas which we paid cash for. Because we believe residential housing is about to take a big hit we sold the condo and are doing a 1031 exchange. We’re thinking about buying a small RV park or a small MHP
that has some value add potential. I spoke with an experienced broker yesterday about getting another triple net property. He believes that triple net properties need to come down 10-15% in price just to get buyers interested. He went on to say they will
probably drop 20-30% before prices bottom out.
I can’t help but wonder what is coming up for
values of mobile home park. Any park brokers on here ?
Values have to give. Historically, cap rates are 150bps above interest rates on stabilized/maximized property. Kind of like your triple net, the interest rate was 4% and you paid 6% for the income stream.
Parks are still pricing at cap rates close to where they were when interest rates were 4%. If debt is at 6.5% and cap rates are at/under that; then logically it makes more sense to either use no debt or be the lender. Being an equity investor makes no sense when the income stream is more expensive than the debt.
As far as price drop. $100 at a 6% cap is $1667. At a 8% cap rate, $1,250 is the price of a $100 income stream. That’s about a 25% drop in price. Markets are sticky so expect that price drop to be a slow grind rather than an event driven type of thing.