Help me analyze this mobile home park!!

[Zachary Clevenger]

Good morning everyone,

A mobile home park has come up for sale that I drive by every single day on my way to work. I need all of your expertise and help analyzing the property as I am still in the learning phase.

I have emailed the listing agent already requesting some additional information:

1) Cap rate

2 NOI/CFO

3) Rental amount per lot/unit

4) If utilities are absorbed by the park owner or by individuals

5) If the park was on city sewer or septic

I need all of your help analyzing this one, and any recommendations on further questions I should ask/inquire about.

**Update #1**

Reviewing the park's current website shows there is a unit for sale and here is the basic information it gives:

Terms:
$9,900
$900 down payment
$600 monthly (includes lot rent)

[Tyson Cross]

@Zachary Clevenger

First off, there is not enough information to really put a good value on the park. He doesn't give you any lot rents or any income and expenses related to the park. It appears to me as if he is valuing the park based on the land. So this would be my first question - I need to see income and expenses for the park and specifically I need to know lot rents and rental rates for the park owned homes.

Second, he places a value on the existing notes. How long have those notes been seasoned for, in other words, how long have those tenants been paying? If they have been paying for a couple years then that is good. If they are new notes, there is problem there. Also, I wouldn't place full value on the existing notes. A lot of times tenants will stop paying and move away, especially if they aren't seasoned. Then the value of the note becomes zero. So you have to discount those notes to maybe say 50-70% depending on seasoning and your interest in the deal.

Third, he is most likely valuing the additional park owned homes at face value. You have to discount those as well. What year, make, model and size are the homes? What condition? You'll want to see what homes are actually selling for in that market given that information. Then base the price accordingly. 

Finally, I would negotiate the personal property he is trying to lump into the "sale". You're buying the park, not the lawn mower etc. Focus on the park and use the other stuff as negotiating tools.

Hope that helps you get started.