What to offer for this park?

First time buyer. MHP Located in a western state.
154 sites
145 occupied
$365 lot rent
8 POHs
City sewer and water
Tenants pay electric
Park pays water,sewer,trash
What do I offer? Would like to lock it up and do due diligence as to demand and ability to charge back water/sewer to tenants.
Thanks for any feedback.

The economics of this are pretty good.

145 lots * $365 lot rent * 70 multiplier = $3.7MM

For the POH you’ll need to see their condition and do a one time purchase of those based on what you can sell them for. So if these are worth 100K in aggregate then your total offer would be $3.8MM.

Also consider the lot rent and where it is compared to market rents - is it about right, overpriced, under priced, etc? If the lot rent is higher than most Parks in the area it may already reflect the inclusive utilities, and you need to consider that as part of the offer.

If the rents are below market or near bottom of the market you may need to have some flexibility going to a 75 multiplier as a larger park like this will likely pull a premium on the open market, but you need to feel out the Seller a bit to see what you think is an appropriate starting point.

Depends on what you mean by Western state. Parks over 100 spaces in California, Oregon, and Washington in a major MSA on city utilities are prime REIT targets. Cap rates tend to be in the 3 to 6 range. Non major MSA or even out in the sticks could be 6 to 10. Most of the 10 caps are funny math (lots of POH income…).

Get some financials 2 to 3 years P&Ls and tax returns, rent rolls. It always amazes me that parks are on the market with out those 3 as a minimum.

If someone wants an offer with no financials then it is hard to say how serious they are. Unless they just want to find out how legit you are.

Are the POH straight rental or are they on a rent to own/owner financed sale program? If they are doing an owner financed sale and the tenant is building up equity in the home, then I would be more inclined to offer on the note balance assuming it’s less than the FMV of the actual home.