2020 was a tumultuous year for virtually every business. Even the industries that took off during the pandemic could not have predicted it. Once the dust settled, the mobile home park industry ranked among the successes. It became clear that our favorite field was here to stay, pandemic or not. With that said, it’s always good to have a consistent source of knowledge about the industry. That’s where The MHP Expert comes into play. We take on the duty of educating industry hopefuls on the many aspects of the industry. One of the most important steps in the field are mobile home park evaluations.
Let’s say you’re a park owner and you get an offer on your property. How would you know that you’re getting a fair rate? This is where park evals become important. Many consider mobile home park evaluations to be the true first step to selling a manufactured home community.
This assessment of your property can help you determine its true value. You can plan, judge cap rates, get rent comps, and sale comps with this information. And if you’re working with a broker like us, you can guarantee the suggestion will be made fairly quickly.
The right and wrong way to evaluate
It is important to note that not all park evaluation methods are created equal. Using an evaluation method that works for a different type of property will not work here. This is common with investors in other fields due to the methods having similarities. Still, they are different enough to completely derail progress if used. Keep this in mind, as it could end the game before it even starts!
Something to also keep in mind is your cap rate, specifically the lot rent only cap rate. The correct process is to establish how much the land that the property is on is worth by separating out the various types of income the park produces and establishing the lot rent NOI. Then you determine a separate value of the personal property, things like Park Owned Homes (POH). Otherwise, you are at risk of paying far more for the park than it’s valued. This can tank profits, ending your plans before they’ve had a true opportunity to begin.
The Mobile Home Park Expert
We here at the mobile home park expert dedicate our platform to helping you navigate the field. Even before the pandemic, the industry was a complex pursuit. If you’re looking for even more info, have a look around on our site! If you’re serious about joining the industry, contact us today!