Mobile Home Park Valuation once and for all

[Eliot M.]

Frank Rolfe says: MHP value = Lot rent per month x # of units x 60 or 70

Laura Cochran says:  MHP value = (Lot rent x 12 x # units)/19% or higher

Basic real estate common sense says: MHP value = NOI x market multiple (or divided by market Cap Rate... pick your fancy)

The problem with using the NOI is that you can never trust a seller's numbers. So, do you make your own expense numbers up in order to get to an NOI? Or do you just use the GRM formulas above?

So, how do you guys value mobile home parks?  

[Omar Khan]

@Eliot M. The seller's P&L is just the start regardless of what asset you're investing in. Hence, I would start with the seller's P&L, normalize income - by adding/deducting and modifying revenues/expenses - to make it more reflective of reality (or your expectation or reality) and then use the income valuation approach. 

You should never trust the seller's P&L especially in thinly-traded private assets like MHP (i.e. no liquidity due to hardly any buyers/sellers for most parks). You will have to use your own estimates using the the seller's financial as a starting point. 

Once you've done that, you can value using anyone's approach - Frank Rolfe, Laura Cochran, yourself - to triangulate your answer. Approx. all answers should be within a reasonable range.