I am in process of finding my first MHP which can be local in SO CA, or maybe out-of-state.
I have been doing some study and research on how to do due diligence and financial analysis.
IF you have purchased your first MHP, I would really appreciate sharing your stories with us here on how you found the park, inspection, finance analysis, funding, negotiation, offer structure.
Dealing with MH parks can be a daunting process
You need to take the number of sites x the per month rent less the vacancy rate
(Number of rented sites) x space rent per month x 12 = income
Less operating expenses = your NOI now divided by your cap rate will give you the value of the subject park.
I just wanted to weigh in on how to determine a parks value. At one time I was a business broker and researched the rule of thumb for valueing a park.
This is the rule companies like Gulf Coast Financial (one of the leading national business valuation companies) would use as a basic rule of thumb. After determining amenities, the rule states $3K to $8K a lot. A value must be put on the amenities such as location to a metro area, community center, pool, mail center, fitness center, paved roads, curbs, playgrounds, 200 amp service, gas, etc… i.e. a park that has very few amenities if any would have a per lot value of $3K or possibly less. A park with a lot of amenities would bring $8K a lot.
Since vacant lots produce little or no value I would be inclined to apply the above rule to occupied lots only.
A well run park can be worth $10k or more per pad. I buy at $3k or under per pad, turn things around, then sell at $10k per pad with owner financing. The Owner Financing is what allows me easy sales at full retail. This is true for a park, a single mobile home, a single family home, or commercial property. I’ve done around 400 transactions this way over the past 21 years.
I happen to like the mobile homes because they are small investment increments and easy to sell to investor when I need cash. They can also be sold in IRAs and pensions which is a $7 Trillion resource!!
Let me know if you need help.
Rob