Mobile Home Parks 101.ORG
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Learn more about Mobile Home Parks for sale.
When considering mobile home parks for sale it is essential to understand the demand for small mobile home parks and big mobile home parks. Often you will see a mobile home park sales price mentioned in terms of per pad sales price. This gives a buyer an indication as to what the community will cost on a per unit or per pad sales price basis. This has become a guide to buyers and a ruler to measure which parks to consider buying and which not to. The per pad sales price is a poor way to estimate the value of a community. It is just one facet of estimating the value of mobile home parks for sale. As mentioned in several Gorial Realty Articles published about evaluating mobile home parks for sale, you will learn that the capitalization rate is the all essential guide, and this factor is only accurate when a true picture of the income and expenses has been achieved. One of the factors that plays a role in calculating the capitalization rate is the number of sites. You do not see too many 8 site mobile home parks for sale at an 8 cap. You probably wont see too many 200 site mobile home parks for sale at an eight cap. The reason is simple. You will not see 8 site parks selling for 8 caps because the only way an investor may pay this much is if the land these 8 sites sit on has a higher and better use than a mobile home park. 8 site parks are good for small time investors and they sell between 9 and 14 cap depending on the condition that they are in.
The reason you do not see 200 site mobile home parks for sale at an 8 cap is not because they don't procure that value, it is because the sale happens so fast you do not have a chance to see it or, it simply never was posted for sale in the first place as these communities do not need to be marketed in order to be sold. There are world economic factors, industry specific factors, and local demographic and economic factors that have an affect on how fast a mobile home park for sale can achieve an acceptable offer. In the end the smaller parks are on average more difficult to sell than a larger park. and this is a fact.
The larger the park is the easier it is to sell. The smaller the park is the more difficult it is to sell. The reason is economy to scale. You can afford a professional management company to run a 200 site park. You can afford a professional management company to run a 150, 100, 50, or even 20 site park in some cases. An 8 site park however is a different story. The smaller park usually requires a local onsite owner operator where the larger community can a third party professional management expense. Larger parks can afford capital expenditures over time faster than smaller parks, again, you have the numbers on your side. The number of residents paying into that pool of money which will distribute monies to fixed expenses and non-fixed expenses is simply able to accomplish more when you have larger numbers. Lets not forget that the community with 200 sites is going to need several thousand more than an 8 site park when it comes to a large capital expense such as new roadways.
We hope you have a better understanding when it comes to mobile home parks for sale and considering buying a small mobile home park versus a large mobile home park. One very important point. When you are looking for parks, the smaller investor has the advantage of less competition thus the ability to negotiate differently than one would if bidding against other investors on a larger property. This is the smaller park buyer advantage. After collecting two or three smaller parks in a certain geographic, parks can be sold as a package and possibly gain more interest from a larger investor since the proximity to one another is a small distance and the numbers are bigger when you add, say, three small parks together as on sale. Easier said than done, but with the right mix of properties it has and can be done.
Should you have any questions about this site or any site within the Gorial Realty Family of web sites feel free to call upon us for answers.
-Samer N. Gorial, and John P. Gorial of Gorial Realty LLC (866) 66 PARKS