Valuing mobile homes

[Joe Mills]

My portfolio currently consists of single-family stick-built rentals. I have the opportunity to purchase 4 mobile homes on an acre of land for $135,000. The owner reports gross rents of $2750/month (this includes the home plus lot rent). While the cash flow looks attractive, I am concerned about the long-term viability of the investment since the location is not ideal and these are older, albeit partially remodeled, mobile homes. I would like to have a good idea of the value of the mobile homes should I desire at some point to sell them off individually and then sell the land. Do mobile homes have a "book value" based on make/model, size, condition, etc. and if so, where can that information be found? My hope is that I would someday be able to sell the homes+land together as a "business" based on the NOI, but want to protect my downside should I need to liquidate everything on a piecemeal basis. Thanks in advance for some education on this topic!

[Roger D Jones]

Joe,
There is a lot to unpack here to answer your question.  Mobile homes are like cars but they do not have a book value that you can determine like a car with Kelly or NADA.  Older homes have almost zero value if you are hoping to sell them and have them removed.  I bought six 1980 doublewides from a park that was closing and paid $500 each for them and that was just to be able to keep the washers and dryers. 

Professional park owners will tell you to only consider the pad rental in evaluating a park investment.  If the seller thinks the rentals are worth more the seller can keep the homes and pay you pad rent and keep the difference.  They won't do it- because they know one of two things.  A) they know how much it costs to repair/maintain those old mobile homes every month or B) they have not been maintaining them and they know what is awaiting anyone who buys them.