Valuing/Selling a mobile home park

[Duncan Young]

Hi- my father in law passed away a few months ago and I am helping my mother in law sell her mobile home park, which they have had for 40 years.  Any thoughts or advice on how best to value this?  The Net Operating Income from the park (which includes a 36 unit boat storage facility as the park is near the ocean) is about $110,000.  There is also a 1,500 square foot home on the property of which I would estimate the value at $100,000.  From what I have seen online a 10% cap rate seems about rate, so from this I would estimate the value at about $1,200,000 including the value of the house (which ties off pretty closely to the assessed county tax value of $1,275,000.)  Am I missing something on this?  Should the value of the land itself on a standalone basis- about $200K- be added to the value of the cash flows above?)

[Adam R.]

Your valuation will have multiple components. The house, the boat storage, the mobile home lots, and any park owned homes. The basic formula for the lots is # of lots X 60 X lot rents to give you a basic value at a 10% CAP rate. If you own any of the homes and rent them don’t include that portion of the rent in that valuation. So if you have 50 lots and they rent for $200.00/mo it would be 50 X 60 X 200 for a value of $600,000.

If the tenants pay for utilities you change the 60 to 70 in the formula.

For park owned homes, typically someone will only pay for what the trailer is worth and not base the value on the income stream.

Can’t help on the boat storage valuation.

I’m sure if you post more details, you will get specific help with a value and probably offers on the property as well.