Lilly: Midwest mobile home parks generally trade at roughly a 10 cap
Jefferson Lilly · What if You Could Invest $100k Once, Make $20k/Year Forever? EP 251: Jefferson Lilly · Jun 2, 2016 · at 17:10
Mobile home park investor Jefferson Lilly explains standard baseline valuation multiples based on net operating income in the Midwest.
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“Well, yeah, I would say for the Midwest, probably a 10 cap, just multiply the NOI by 10.”
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More from Jefferson Lilly
Lilly: Mobile home park investors should earn at least 20% cash-on-cash returns
“Basically in this business, if you're not earning 20% on your money, you're doing something radically wrong.”
Lilly: Park Street Partners has mobile home deals generating over 40% cash-on-cash
“We've got a couple deals that are doing over 40% cash on cash.”
Lilly: Value mobile home parks by multiplying monthly lot rent by 84
“Another way to look at it, if there's funny business going on with the P&L, just look at what the park earns per month, and multiply by about 84.”
Lilly: Mobile home land has 30% expense ratio versus 70% for homes
“And then in this business, the land business, probably you're going to have, let's just say, 30% in expenses. Being in the house business is the inverse. It's more like 70% expenses.”
Lilly: Leveraged 10-cap mobile home parks yield roughly 16% cash-on-cash initially
“A 10 cap with leverage means you're earning About 16% cash on cash before you do anything. If you don't improve it, you start with 16% cash.”
Lilly: Mobile home parks yielded 300-400 bps more than traditional apartments
“I came across mobile home parks that were this quirky little, you know, one out of every hundred multifamily listings that I'd see online would be a mobile home park yielding Like three, 400 basis points more than apartments.”