Posted by JHyre in Ohio on January 25, 2002 at 06:42:00:
You could use per pad price to reverse-engineer your way to Lyal’s answer. At $10k per pad, if you need 12% net return, the thing has to produce a net of $1200 per year, or $100 per month. The real trick is correctly identifying the expenses that get your gross down to that net…hint: pro-formas from owners are near useless in this regard. You have to do lots of due dillegence, particularly if you are dealing with septic tanks, low-end trashy parks, or non-city water (that last one involves the EPA- BIG DOLLARS!). Ray Alcorn’s MH Park course is an excellent value in this regard, as are the posts on the Commercial News Group.
Hi, try reading the articles on www.mobileparks.com. It is Canadian (so am I), but it has some good articles under related links. It gives ideas on how to value a park and what makes a park a good park. Hope this helps.
Mike,
Income per pad is not really relevant.
See responses further down to “Cap Rate” and “Purchasing a Small Park” for pointers on how to evaluate commercial properties (that’s what mobile parks really are).
All the best, Lyal