Need Assistance On Cap Rate On Leashold Mh

[Eric Boggs]

Received an underwriting request regarding the value of the leasehold interest using a cap rate. Anyone know what cap rate to use and how to calculate it? This is an FHA reverse mortgage. All of my comps are leasehold estates. Thanks. Eric Thanks.

 

[George Hatch]

As a practical matter and since this is a residential property the simplest approach to this will probably be sufficient.

You have comparables with the same property interest, most likely selling with similar rents. If you have sales data for the pads (only) or the structures (only) you can draw the relationship between their income and their sale prices from those sales. If you don't have such sales in your project you might be able to find some in other projects. If you don't have ANY single component sales then you'll have to use your improved Leasehold sales and work backwards.

 

[Eric Boggs]

As a practical matter and since this is a residential property the simplest approach to this will probably be sufficient.

You have comparables with the same property interest, most likely selling with similar rents. If you have sales data for the pads (only) or the structures (only) you can draw the relationship between their income and their sale prices from those sales. If you don't have such sales in your project you might be able to find some in other projects. If you don't have ANY single component sales then you'll have to use your improved Leasehold sales and work backwards.

Thanks Mr. Hatch. All of the comps were leasehold estate sales. The problem is that the subject property was purchased in 2013 and the the new lease rates (I am guessing) are higher than in 2013. I haven't done any research on that yet. Nearly all of the sales in the development are leasehold with some of the older units having their own land, which is pretty uncommon. This is a huge golf course oriented PUD MH park. No land sales or sales of just the MH structures were found. There are no other developments similar to this one unfortunately. So, what I am hearing you saying is doing an Extraction Method to get the value of the leasehold?

 

[nstanbru]

Are you saying there is a single land lease for the entire underlying site or are the individual MH owners paying rent for the lot they occupy?

 

[Eric Boggs]

Are you saying there is a single land lease for the entire underlying site or are the individual MH owners paying rent for the lot they occupy?

No

 

[Eric Boggs]

No

I just noticed this request is under the old FHA 4150 handbook anyway. Certainly not relevant to 4000.1 handbook

 

[Elliott]

123456789 Long day.

 

[J Grant]

https://www.fanniemae.com/content/guide/selling/b4/1.4/05.html

https://hudgov.prod.parature.com/li...aise-properties-secured-by-a-leasehold-estate