Help me understand this asking price

[Mark Brown]

OK - I found about a pocket listing a few weeks ago.  Here are some of the details. 

26 total spaces, 11 occupied with park-owned homes, the remaining 15 are vacant.  However, 10 of the vacant spaces are newly outfitted (electrical and water hookups, and septic tanks with all plumbing laied).  Park is located about 10 miles from a city of about 180,000.  Close to major highway.  Lot rent is $175 per space, and the 11 homes are rented at $300/space.  This guy is asking $475K, which seems really hight to me.  I have the 11 occupied spots at a value of $115,500 (using the lot rent and a 60 multiplier).  Can any of you help me determine a good value to assign to the park owned homes and vacant lots ready for occupancy?  I'm thinking $10k/home (depending on the age/condition), but have no idea what to assign to the vacant lots.  Right now, I'm coming up with about $270k value for this park.... What the heck am I missing?

Thanks,

Mark

[Edward Hamill]

HE is using an old "Southeast REIT formula" made successful by Sam Zell. There was a time, when a small park was priced at $30,000 per full lot and $10,000 per empty lot (Larger/newer parks got $40,000 per full lot). Using the numbers, that would be $330,000 for full lots and $150,000 for empty, so he sees it as giving you a $5,000 break!.

That being said... Way overpriced based on the new market.