How Much Is My Mobile Home Park Worth?

1. The Capitalization Rate

If you're a mobile home park owner who wants to maximize the value of your land, then there's one number that should be at the forefront of your mind: the capitalization rate. This is defined as the annual rent for a property divided by its market value. 

For example, if a property is worth $100,000 and rents for $8,000 per year, its capitalization rate is 8%. The capitalization rate can help determine whether a property is over-or under-valued. 

Cap Rate = NOI / Purchase Price

An over-valued property would have a capitalization rate of less than 8%, while an under-valued one would have a higher one. Why is this important? Because like any commercial real estate, mobile home park has to generate profit. Without it the risks will scare off potential buyers.

2. Market Analysis

The next step to determining your Mobile Home Park's value is to conduct a thorough market analysis. In the ideal world, you would hire an appraiser to give you an official appraisal of both the land and the improvements. 

In reality, for most small park owners, this is cost-prohibitive. A less expensive option is to get an appraisal from a certified general real estate appraiser specializing in Mobile Home Parks. 

The appraiser will then assess your property's value based on its current condition and what comparable properties are selling for in your area.

Once you have this information, you must compare your park with other parks. This can be done by visiting different parks and talking with their residents or with local Mobile Home Park owners with similar amenities and sizes as yours. 

This will allow you to determine if the price you received was fair or if it was an excellent time to sell your mobile home park.

Do's of Market Analysis 

• Find out how much the park is worth
• Find out what other parks are worth in the same area and their amenities.
• Write a business plan for your park, including projected income and expenses for each year for the next ten years.
• Create a marketing strategy to attract residents who will pay top dollar to live in your park.

Don'ts of Market Analysis

• Don't rely on your own opinions.
• Don't rely on the opinions of friends, family and co-workers.
• Don't rely on what you think the value should be based on the price per square foot some other mobile home park is selling for in your area (or even a different state).
• Don't rely on a real estate agent with no experience in this niche market to give you an unbiased opinion about what your park is worth — unless they have been involved with dozens of mobile home parks over several years.

3. Demographic Analysis

When buyer is considering purchasing your mobile home park, the most important thing for them is the demographic analysis of the area. You want to know everything you can learn about the people there. 

Moreover, the visitors who pass through give you an idea of your potential customer base and how much money they have to spend. This is key to making your business successful. 

Demographic analysis includes all sorts of information about the surrounding area, including age, race, income, number of people per household, and education level of residents. 

Besides that, the number of children living in each household, the employment rate (for both men and women), employment type, average number of vehicles owned by each family, and average property value within a certain distance from the park's location (for those homeowners who are still paying off their mortgages), and average income per capita. 

With this information at your fingertips, you'll be able to see what kind of a market you're dealing with—whether it's a rural or suburban area filled with families or if it's mostly an urban or tourist destination. You'll also see if there is any competition nearby and how it might affect the value of your park.

4. Location of the Park

Another factor that should be considered when determining how much to sell your mobile home park is its location. How many employers are in the area? What are the property taxes and overall financial situation of people living in this area? Are there any new developments? All of these will factor in your final price.

If you own a mobile home park in an area with many other parks, then you should probably ask more for yours than if your park was in a room with few other parks available for sale.

5. Check Out the Competition to Determine the Mobile Park Value

The next step in determining the value of your mobile home park is to check out the competition. This can be done by visiting other parks in the area and seeing what they are selling for. 

The mobile home parks of the nearest competitors can both increase or decrease the value of your park. For bigger buyers and investors a much better deal would be to buy parks in bulk within your area, especially if the location and demographics are good. So, it might have sense speaking with your competitors to see if they are willing to put their parks on the market together with you.

6. Consider Your Situation

When determining what price to set for your mobile home park, it's essential to consider your situation. For example: how much money do you need? Are there any repairs that need to be done? Do you have any significant expenses coming up? 

All of these factors should be considered when setting the asking price on your property because they will impact how much money you'll ultimately make off of it and could affect how much time and effort it takes before someone is willing to pay top dollar for your park!

7. Consider Your Asset Management Practices

You may have noticed that when you're selling something, it's often not enough to tell people what it's worth — they want proof. 

This is especially true when selling your mobile home park, as it will be difficult for potential buyers to determine how much money they should pay for it without seeing how well its current owner is managing it before making an offer. 

As such, consider hiring an appraiser who can evaluate whether or not your asset management practices are up-to-date and if they are doing their job correctly before putting your property up for sale. This way, prospective buyers will know exactly what they're getting into before signing on the dotted line!

8. Take Inventory of Everything That Is Included in the Lot

Before selling your park, take inventory of everything included with the lot . This includes lawn chairs, playground equipment, and other items that may not be immediately obvious when looking at a property from afar. 

By taking inventory of everything included with the lot or park, you will know precisely what is needed for its operation and maintenance, as well as any additional costs associated with running such an establishment.

9. Consider How Long It Has Been On the Market

The longer your mobile home park sits on the market without an offer, the higher chances that you priced it wrong. If a mobile home park has been for sale for an extended time, this can indicate that it may be overpriced or in need of repairs and renovations. You don't want to sell your park within days either (usually). This means that most likely your price was way too low.

10. Determine If There Are Any Leases Currently Being Negotiated

Any leases currently being negotiated will give you an idea of how much money is coming in and going out of the park. It is also essential to know if anyone is looking at purchasing one or more lots in your park so that you can determine if they would be interested in buying out their lease or if they would prefer to rent it out.

11. Determine How Many Units Are Vacant and How Many Are Occupied

This will help you determine how much money is coming in from rentals versus what is going out for expenses such as utilities and maintenance costs. You should also consider how many vacant lots there are and whether or not these are likely to be rented out quickly or if there are other factors involved like an owner with health issues who may not want to sell but may want someone else managing the property for them until they pass away (or perhaps even longer).

12. Be Realistic With Your Pricing

To sell your mobile home park, you need to price it appropriately. A seller who overprices their park will have a hard time selling it because they are competing against other parks that are priced more reasonably in the market. 

On the other hand, if you underprice your park, it may not sell because buyers will assume there is something wrong with it or that it is not worth as much as you say it is.

13. Look At Recent Sales in the Area

One way to get an idea of what things are worth is by looking at recent sales in the area. If there have been other mobile home parks sold in your area recently, that information can be very helpful when determining how much yours should sell for. 

If there haven't been any recent sales in your area, look at similar properties nearby that have sold within the last year or so. This will give you some insight into what your property might be worth if it were on the market today.

Summing Up!

Overall, the value of a mobile home park is determined by the value of its homes and land, divided by the number of lots (which are then multiplied by the number of dwellings per lot). 

Mobile home parks with well-located land, or those in satisfactory condition, tend to fetch higher values for investors. 

To ensure that you're not overpaying for a mobile home park, do your research beforehand and calculate the actual values of homes in that area.

Conventional wisdom says that cash is king, and that's why here in MHP Offers we made selling fast for cash our motto and promise to our clients.

Find out how much your mobile home park is worth today! Submit a form below to get a real cash offer from our experts. No costs. No obligations.