All Forum Posts by: Jane W.

@Jay Hinrichs Duly noted. The way I see it, the kind of risks for sceptic system issues such as a total failure or towns decide to enforce the owners to connect are like grey swan / black swan events (beyond what is typically expected and is extremely difficult to predict). So therefore hard to price accurately and bake that number into the transaction price. Basically, that risk warrants a huge discount on price to have a margin of safety.

@Account Closed 

Thanks for your formula! I don't claim to KNOW anything about MHP. As they say, you know nothing, JW. :)

I am curious about 70 times lot rent. It is very fast at getting a valuation. Is the 70 just a rule of thumb number or does it stand for an end result of some ratios?

@Andriy Boychuk According to the brokers, $240 could be the going rate of lot rent.  

But I found a comp nearby, with lot rent of $130. I used $130 for the calculations above. The brokers say the comp nearby is completely a different beast, where anecdotally the owner makes no improvements, has no acceptance criteria, and keeps accounting written down on pieces of paper (and therefore has no historical expenses). Additionally, when they visited the park to talk to the owner, the owner pointed them out where the dealers lived. So basically quite unique and not a good comp. 

In comparison, this park is very clean. Probably $180-$200 based on what I see online and can maybe push up to $240 someday. 

Re: township enforced to connect, ouch... Could this be passed onto the end users?

@Paul Stout Thanks! I will take you up on your offer. 

@Account Closed Do you have a quick formula for ballpark valuation? Would like to hear it if you don't mind share. I'd like to understand the different ways to slice the numbers.

@Paul Stout Thanks for the rule of thumb ball park. I got updated numbers.

Based on that, I assume $130 / pad, 29 occupied pad, 0.06, 12 months and let's say 8% cap.

Pad Fair Price: 130 * 29 * 0.06 * 12 / 0.08 = $339,300

Trailers: 9000 / ea. * 32 = $288,000

House (I forgot to mention that there is a single wood frame house): $90,000

$339,300 + $288,000 + $90,000 = $717,300

Do you think this is the right ballpark? This park is in the SC. Thanks for taking another look!

@Jay Hinrichs Would you ever consider any MHP on private utilities? How many pads was your park that the replacement bid for sceptic was $300K? I hear horror stories of septic tanks all the time, but I wonder sceptic could be a risk that can be managed and therefore discounted with the right transaction price.

Basically, is it a risk that can be managed, or the downside is too great that it is best to fold?

@Alex Deacon Thanks Alex for the comment. I think septic tanks are a concerned. I wonder if it is common that the township can enforce to owner to pay out of pocket to tie into the sewer. This is definitely something to look into!

Hi Laura, I'm quite familiar with Sunset Park. $1000 per month is low. Is this building stabilized? It sounds quite strange it is this low if it is close to the park as you say.

Hi BiggerPockets Community, I'd love to get another set or many sets of eyes on this deal. This is my first MHP deal and I would so appreciate all the guidance! I'd love to share this deal as it solidifies:

- 40 pad on roughly 8 acres

- 15 pads are vacant with no mobile homes

- $790K asking

- Within 10 miles to a super Walmart

- Rent per unit is from $375 - $500

- Run rate of about 110,000 in revenue, expenses is about 33% of revenue ~$36000, NOI is about $74,000. Put this at 9.37% cap at purchase.

- There is a quite of a bit volatility year over year in expenses so ~$36,000 is a run rate but on the high end going.

- Minus: on septic tanks but all other utilities are individually metered and tenants pay

What do you think of this deal?

BEST SCENARIO

Best case scenario of renting out the empty pads of $175 *15 pads *12  month = $31,500 added revenue. Total revenue would be $141,500.

Bumping expenses by the same ratio puts it around $46,310

NOI is 95,190. Puts this at around 12% caps if operating at full capacity.

What you do all think? Thanks for any inputs!