Would appreciate some advise that many of us probably encounter in trying to value a park.
Many of the parks we are looking at have both, POHs that have been sold to the tenant, where the park owner is
receiving Lot Rent AND payments for the mortgage, as well as some POHs which are strictly rentals.
My question is about those POH rentals:
Our broker asserts that it is fair to allocate part of this rental income to “Lot Rent” and include that amount in the CAP valuation.
He claims that he has done deals where banks will accept this approach. So for example, if the going Lot rent is $200 and the
POH is being rented at $450, then its fair to include $200/mo of the $450 in CAP valuation. I realize that there are
maintenance and other expenses/issues with POHs that are rented, and I am including those expenses in my analysis.
Just want to know if its a reasonably accepted practice so that we are not overpaying for the park. It does seem like
a fair and reasonable approach, but not if its not a usual and customary practice. Do note that in general, the number of these
POHs are less than 30% of all homes.