Need Quick Advice on Park Valuation
Question here from a hopefully soon to be MH investor. I am looking at buying a 6 home park in the $180k range. Cash flows are likely to be $1000/mo if I can work it right. I am familiar in dealing with real-estate, but not in MH’s. My question has to do with how to value a given MH deal. Do MH Park buyers (or even lenders) value the MH Park based on the land & MH’s or based on cash-flow (like commercial deals)?
From a Cap Rate and ROI standpoint, the deal is great. From a property stand-point, it’s not even worth 1/3 of the price. Not necessarily a problem since it flows cash, but what if I need an emergency exit…am I going to be upside-down on the loan? I would guess not, if all MH Park investors value them based on Cap Rate and ROI.
On a side note, check me on this please - The major difference I see is that after the mortgage term runs out, on RE you have the same or greater equity, while with MH Park you have little equity. So for me, it seems that the MH cash-flows would have to make up for the lack of MH equity build-up (if I’m comparing MH to RE investments).
Thanks for any and all comments and advice. I’m here to learn, so let me have it.
Raynull
[addsig]
Ok, let me shoot some questions at you to be sure about figures.
You are saying 180k on 6 homes!!!
Q; Year on the homes what are they...new or old?
When you say cash flow 1000.00!!!
IS that 1000 net?
Just guessing here, but if you are going to own the park you should be getting at least 150 for each lot.....
If the homes are owned by the park, then you should be getting at least 200 to as much as 300 for each home.
So with lot rent 350 to 450......
350 * 6 homes is 2100!!!
450 * 6 is 2700....
Your cash flow should be higher I woud think unless your expense is way high then if it is, I cant see why it would be.
Ofcourse If you are buying this creatively then your income would be cut so I can see how that might result in a low cash flow.
Not familiar with what your area park values might be, but here where I am 180 for 6 homes seems high.
I am doing a Park here 10 homes for 63000.
Now this is a little low but they are Older homes and I am rehabing them ofwhich I am nearly done doing.
Positive cash flow will be round 3200 a month.
I am considering flipping this park for a quick sale and profit of 30,000.
93,000 ..... As nice as this deal is looking I will have no problem getting it either.
Mark