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Mob Home Park Cap Rates

Discussion in 'Commercial/Industrial Appraisals' started by Terrel L. Shields, Oct 14, 2011.

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  1. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    424
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    Appraising a MH park with 12 spaces... 5 are leased, and typically no more than 6 or 7 have ever been occupied at once. Out of the city limits.

    In the Income Approach, I am trying to take into consideration the abnormally high vacancy rate at the same time, trying to rationalize how to arrive at a cap rate when the last MH Park that I found sold that wasn't sold by a bank or by a bankruptcy trustee was sold to convert to a bank building...in other words, would you eschew the direct capitalization and attempt a sort of generic yield capitalization method???

    I would lean to a simple GIM but again...I gotta go back 5 years to find a sale with useful data.
     
  2. kristin0731

    kristin0731 Sophomore Member

    0
    Jan 16, 2009
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    http://dl.dropbox.com/u/21548730/Mobile%20home%20cap%20rates.png

    Here is a link to some general cap data for mobile home parks in Florida. I recently appraised a very small and old mobile home park. It didn't have high vacancy but had very old mobile homes resulting in a very high reserve for replacement.

    If the vacancy is high, perhaps the mobile home park is just an interim use. Though it may not be the actual HBU of the land, there probably isn't a lot of demand for redevelopment - especially for a property that actually is producing some income. You may want to consider estimating an interim value to add to the value of the underlying land. You can do this utilizing a simple DCF based on the actual rental rates and vacancy. However, similar to the cap rate....what is the holding period? Could be 3, 5 or even 10 years...

    good luck!
     
  3. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    424
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    Good reply - yes, I did use a published source and gave little weight to the income approach. It was a simple land tract but is "off the beaten path" and unlikely to convert to anything else for a while..but certainly was a "judgment call" it seems.
     
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