Counting empty lots in pro forma

[Sharee Mason]

I have a client trying to purchase a mobile home park.  It has a few empty spaces.  The seller has those spaces listed on the pro forma income/expense sheet as what they would bring in if they were occupied.  My question is, how do you value the vacant pieces?  It doesn't seem right to value them at the income they would bring in, because there's a lot of work involved in placing a mobile home and securing a tenant.  It's not like the lot will perform immediately, so I don't think it's correct to value it as if it would.  On the other hand, there is income potential there.  So should the vacant lots be counted in the purchase value, and if so, how?

[Curt Smith]

This is settled clearly in mobilehomeuniversity.com boot camp and 30 day DD kit.

You only offer on paying lots.  zero for empty lots.  Zero.

Plus if the seller is pulling this, I bet they are cap rating park owned home rent, all of it.  VS pulling out just equivilant lot rent and 30% expense ratio.   

Paying on just lot rent and only on paying lots can drop the offer price almost in half!! LOL

Ok assuming this seller has 100% park owned homes ( configuration you really don't want, you want a park that is 100% tenant owned). Go with adding up all the rent from the park owned homes but apply 60% expense ratio. IE; (total annual rent) x 0,4 = NOI Then at 10% cap rate divide that number by 0.1 this is the offer price prior to adding in the value of the park owned homes. If 100% park owned homes, add in nominal value for the homes, often just figure $3k each x homes Add this number to the above offer price.