Advice Welcomed! How should I quickly triage parks for purchase?

Question

I'm hoping to get some advice from the experienced members here! I need some help vetting my triage methods.

If a park meets my basic criteria (# of spaces, local economy, etc.), I've been using the following two methods to quickly triage whether the numbers might work:

(1) Use an Effective Rent Multiplier and then compare it to the price to see if it's in the ballpark. For example, Effective Rent X (60 or 70 depending on whether the park pays water); if that number is within 35% of the asking price, I pass it to the second stage of analysis; and/or

(2) Estimate an NOI to see if I can get a 9-10 CAP on estimated normalized expenses. For example, I estimate NOI to be: Effective Rent - (35% or 45% of Effective Rent depending on whether the park pays water).

First, anything I need to change? Second, any other ideas for quickly determining (10 min or less?) whether it passes triage?

Joshua McGuire · Answer

Thanks Andriy. Yes, that's what I'm doing, too.

Andriy Boychuk · Answer

@Joshua McGuire if you are talking about the rule of thumb evaluation #1 and #2 work. I do the same thing. However, I make my offer based on a deeper evaluation.

Joshua McGuire · Answer

Thanks John. Others have mentioned "signals" that help identify low hanging fruit (e.g., no online presence and w/in 5 miles of superwalmart), but I'm still wondering if their is an intermediary stage in financial analysis before digging into the expenses. I'll reach out to Ken.

John Arendsen · Answer

I would reach out to @Ken Rishel. His name doesn't highlight but he's very active on BP in the MH arena. Good luck.