How much can you sell a mobile home park for?
The exact asking price for a mobile home park depends upon a lot of different factors. An older mobile home park with lower rent might sell on a website like BizBuySell in the low six figures. A mobile home park in a more desirable location with better rent can go for $1 million or more. Most mobile home park sales occur through non-traditional channels, such as a cash offer buyer or real estate investor. The number of people competing for a mobile home park is typically smaller than other types of commercial real estate transactions.
How does the capitalization rate work?
Let’s say that you sell your mobile home park for $250,000. If the mobile home park has ten lots that generate $250/month worth of rent, the annual income of the park is $30,000. In this situation, the capitalization rate is 12%. The average capitalization rate for mobile home parks is about 7% to 12%. A 12% cap rate will let the buyer recover their investment in about 8.5 years. A lower cap rate will take longer. Let’s say that the same mobile home park selling for $250,000 had a lower rent, $150 or $18,000 per year. That same unit would take 14 years for the investor to pay off. With a lower capitalization rate, it will be harder to find a buyer for a park.