MHP NOI for Future Refinance or Sale

[Diana Walcott]

I have a question for experienced MHP investors. Many parks I'm finding are majority, if not all, POHs. If I were to buy one of these MHPs and transition it to mostly TOHs, my NOI drops significantly, therefore when I plan to refinance or sell in 3-5 years, my property value is significantly lower and I have less equity. Am I looking at this correctly? What am I missing? Here is a simple example:

10 POH x $1k/month home & lot rent = $120k/year x .75 Op Ex = $90k NOI / 8% Cap = $1,125,000 property value

vs.

10 TOH x $500/month lot rent = $60k/year x .75 Op Ex = $45k NOI / 8% Cap = $562k property value