The 60 and 70 numbers are something that both Dave and I developed independently (back when we were competitors) but basically boils down to a shortcut to a 12% cap rate, assuming normal operating costs and lot rents of $100 to $400 per month.
Charles D is absolutely correct, this is just a ballpark value and you should never buy a property without doing an actual, much tighter examination of the revenue and expenses.
Here’s why we developed the formula. You call a Mom and Pop. Pop says “what will you give me for my park?” You say “well, how many lots do you have occupied? What’s you lot rent? Who pays for the water and sewer?” Pop says " I’ve got 60 occupied at $200, and the tenants pay the water and sewer". So you do the math of 60 x $200 x 70 = $840,000 and say “$840,000”. So he says, “that sounds kind of low, how about $1,200,000”. And you say “how about we split the difference at $1 million flat”. So what happened is you offered a 12% cap rate, he countered with an 8 % cap rate, and you settled on a 10% cap rate, which was your goal in the first place. Then you prove up the numbers in due diligence. That’s really all the formula was designed to do.