Evaluate SFH on Mobile Home property

[Emory Clayton]

I'm currently evaluating a potential mobile home park, while small (10 lots total) it does have a single family home on the same property. This property is of interest because of proximity to town and because of the rehabbed SFH. My question is do I run the numbers on the SFH as if it were by it self, then run the numbers on the trailers in park and take the average of the 2 cap rates?

Other notes:
It has been grandfathered in as a mobile home park. I have checked with the City to ensure that if I were to purchase property, I would still be allowed to operate as a park and expand. Good to go there. I just can't expand further than the 10 lots that are currently there. 

2 TOH ($400/month, includes water/lot rent)
2 POH (vacant)
6 vacant lots
House is currently used a long term rental. $1200 per month.

[Roger D Jones]

Emory

Yes- you want to separate the two investments and add the two values together for an offer price. But a word of caution- mobile home park investors buy parks not only for the initial return but for the increased resale value as you improve the CAP rates down the road. The house is going to dampen the value of the park as a singular investment and subsequently the park is going to dampen the value of the house. You will have a difficult time selling the park with the house attached down the road even after you fill it up and improve the CAP.

And a second word of caution since I am sitting here spewing advice... those two vacant TOH homes depending on condition and the 6 vacant spaces should have zero value in establishing the park's value.  Don't listen to proforma numbers on things that the prior owner couldn't do and you shouldn't pay the seller for your future efforts and hard work.  Don't pay for a park's future potential if you are the one who will be doing all the work.

The $70k the two TOH rentals are worth at an 8 CAP probably doesn't cover the drawdown the house value will have sitting in a half vacant mobile home park.

Just my thoughts...