The Diet Solution Program
We Promise A Comprehensive Weight Loss Program That Will Not Only Remove Body Fat, But Guarantees Increased Energy, Health And Vitality.
Home Made Energy: Renewable Energy For The Rest Of Us
How Would You Like To UNPLUG Your House From Your Electrical Company, Knowing That You Are "100% Powered By Nature" With Renewable Energy?
Renewable Energy Solutions - Wind And Solar Power!
Instructions to make solar power and wind power at home. Use this guide to make a power producing solar panels and reduce your electricity bill.
12,000 Shed Plans with Shed Blueprints, Diagrams & Woodworking Designs, Kits, Storage Garden Shed Plans Patterns
Download free outdoor shed plans, garden and storage sheds plus wood working projects, designs with woodworking patterns. Comes with garage plans and projects
Master Cleanse Insider
The Master Cleanse Diet - Flush Toxins, Lose Weight, Boost Your Energy in 10 Days
I want to know how many lots there are, how many are occupied and paying, what the lot rent is, what expenses the owner is paying, and who is responsible for the water lines, sewer lines, and roads. A good rule of thumb that I use to start with is that I take the number of occupied spaces and multiply this by the average monthly space rent and multiply this by 70. For example if the park has 110 spaces with 10 vacancies, a monthly average space rent of $200. Then my initial value calculation is 100 x $200 x 70 = $1,400,000. If the park is on the market for $3 million I will probably pass. If the park is on the market for $1,800,000 or less than I will probably look into it further. Remember this simple calculation is very generic and may or may not be the true indication of the value of a mobile home park. In looking at the park in more detail, I will ask for actual operating income as well as actual operating expenses. The operating expense ratio can vary significantly from one park to another in the same city even if located adjacent to one another. One of the largest expenses in a park is the water and sewer expense. If the residents of the park are paying this expense then you can expect the operating expense ratio to be as much as 15% less than the average. The value a mobile home park may be $2 million for one person and $1.5 million to someone else. The key is really deciding what you are willing to pay based on your expectations of what type of return you want on your investment. This return on investment will come in several different forms: - Monthly/Yearly Cash Flow - Tax Savings - Equity Buildup - Appreciation - Rent Increases and Expense Reductions In analyzing the financial statements and tax returns, they are often different. The financial statements usually have more income and less expenses and the tax returns usually have less income and more expenses.(however, I have seen in some cases that the tax returns are also overstated in order to show a better net income when it comes time to sell or refinance a park. If by paying taxes on an additional 20k in taxes for a couple of years increases the value of the park by 200k then a real sophisticated and dishonest seller may be trying to pull a fast one. So be careful. The key then is to reconcile the tax return with the profit and loss statement and then interject reality into the whole process. Figuring out the actual income is usually not too difficult. You can take the actual number of spaces in the park and multiply this by the actual rents being charged and subtract out a reasonable allowance for collections and you should be able to come up with a good estimate of the income. I usually use 3% as the collections expense. The next thing to do is to come up with the anticipated expenses based not only on how the park is currently operating but also based on how the park will operate with you as the new owner. For example, if the current owner is managing the park, then you need to plug in an amount for management and payroll taxes and workers comp. If the park has vacancies and there is no advertising expense, then you need to plug in an amount for advertising. And so on.
To view Mobile Home Park Investing articles click here
Dave Reynolds is regarded as one of the leading Manufactured Housing Industry experts. He has purchased over 50 mobile home communities, 100's of mobile homes, and through his Mobile Home Parks website, he has helped thousands of investors buy and sell mobile home parks. Mr. Reynolds has also authored and co-authored some very informative books on investing in Mobile Home and RV parks and is founder of Mobile Home Park Store. He can be reached at 1-800-950-1364 or via email.
About the author:
- |
