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Differences between buying a Mobile Home Park versus an
RV Park:
When considering the
purchase of a mobile home park as compared to an RV park
there are many factors to consider. While mobile home
parks and RV parks are often sold by the same brokers
and are combined in one facility, they are not the same
and both require different amounts and types of
management. The following comparisons are for
Overnight/Destination RV parks as compared to the
typical mobile home park in which the lots are rented
out on a monthly basis. In many cases, the seasonal or
extended stay RV parks will have more of the qualities
of the typical mobile home park rather than those of the
Overnight/Destination type RV parks.
Length of Stay:
Mobile Home owners are in the park permanently or at
least until they sell their home and move somewhere
else. RVer’s are in the park for usually a week or
less. The longer a home or resident stays in the park,
the more likely it will have the qualities of a mobile
home park and the less time a home or resident stays in
the park, the more likely it will resemble the
operations of an RV park.
Management:
This is probably
one of the most significant differences between RV and
mobile home parks. In most cases, it takes less time
and manpower to run a mobile home park than an RV park.
There are several factors for this:
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With a mobile home
park, the manager will typically see the residents
of each space only once per month when the rent is
paid and anytime there is a problem. However, with
an RV Park you may have a new camper in the space
every day or every few days. You may have to
acquaint them with the park, the facilities, and in
many cases the area. How to get here or there,
where to eat, etc.
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In addition, many
RV parks will have showers and restrooms that need
to be cleaned several times during the day. Most
mobile home owners have their own showers and
toilets.
-
In Mobile Home
Parks, the manager usually only maintains the common
areas and the residents maintain their own spaces,
etc. However, in an RV Park, the manager will not
only maintain the common areas, but should check
each space to make sure it is clean before renting.
As before, these spots may have a different RV’er
each day and so it is ongoing.
Ease of Movement:
While it will cost an owner of a mobile home 1-2
thousand dollars or more to move their mobile home out
of the park and set it up somewhere else, the owner of
an Recreational Vehicle can hook up, move and reset
their RV up in another park in a couple of hours or less
and for the cost of gas. Thus, you have to work much
harder at keeping the RV’er satisfied with the park if
you want to keep them there.
Eviction:
In a mobile home park if you have someone that is not
paying rent or causing other problems, you will have to
go to court and deal with the judges and it may take
several weeks to have them evicted out of the park.
However, in an RV Park, the rent is usually paid in
advance and if it is not paid, you should be able to
have the RV removed immediately for lack of payment or
other issues. These laws differ from state to state so
make sure to check first to stay legal.
Rent Control:
RV parks owners are not typically subject to rent
control ordinances as are mobile home park owners.
Utilities:
In a mobile home park the park owner will generally only
pay the utilities for any common areas and buildings as
well as for street lights. The individual mobile home
owners will pay for their own gas, electric, water,
sewer, cable, and internet. However, in an RV Park,
this is all bundled up in a nightly or weekly rate and
that rate should be adjusted to include all these
utilities and amenities. You might shudder when a big
40’ rig pulls in the middle of July and powers up a
couple of a/c units after plugging into your electric
pedestal.
Other Improvements:
While both RV & MH parks will have the sites, utilities,
roads, it is common for RV parks to also have a store,
recreational hall, and restrooms and showers. In
addition, a higher percentage of RV parks compared to MH
parks will have a swimming pool and other recreational
facilities such as shuffleboard, basketball, and video
games. What this will equate to is once again, more
management time and energy. An RV Park of 400 spaces
will probably have two to three times more employees
than a comparably sized mobile home park.
Taxes:
Just like the taxes you pay when you stay at a motel,
you will pay taxes to stay in an RV park. Usually the
only way around the lodging/transient tax is to stay for
30 days or more. The residents in a mobile home park
are not subject to this type of tax. They are just
subject to the yearly mobile home taxes to the county
treasurer. The park owner will pay the taxes on the
land (dirt and improvements) for both MH & RV parks.
Capitalization Rate:
Typically a mobile home park will sell at a lower cap
rate than an RV park. There are always exceptions but
this is the general rule. If a mobile home park is
selling at a cap rate of 10% then an RV park in that
same market area will typically be selling for a 11-13%
cap rate. Smaller RV parks generally sell for higher
cap rates than do larger ones. Destination and
overnight style RV parks are generally priced at higher
cap rates than the extended stay and seasonal type RV
parks. Also, parks that are rated higher by Woodalls or
any type of star ratings will generally sell for more
$$$ (a smaller cap rate).
Finding a Park to
Buy: In my
experiences as a broker, investor and by running the
Mobile Home Park Website as well as the RV Park Website
for many years, I have noticed that there are usually
five times or more buyers out there looking for Mobile
Home Parks than there are for RV Parks. What this
equates to for the RV Park Investor, is that there is a
better inventory of potential RV Parks to purchase as
well as less competition. I have seen some very good RV
Parks sit on the website for a few months and wonder why
they have not sold. There are Great Opportunities out
there especially if you are not set on one particular
area.
Long Distance
Ownership:
Mobile Home Parks are often owned by individuals or
companies that do not live in the same city or state
where the park is located. They hire an onsite manager
and visit a couple of times per year. However, with an
RV Park, most owners live at the park or nearby and are
involved with the management of the park on a day to day
basis. It is possible to run an RV Park from a distance
but in order to do so you have to really trust your
manager and other staff and have a good system in
place.
Financing:
It is usually harder to obtain a loan for an RV park
than a mobile home park and that is one reason why a
higher percentage of owners offer to seller finance RV
Parks as compared to Mobile Home Parks. When seeking
financing on an RV park, you will be typically obtaining
a loan with interest rates a point or two higher than
that of a mobile home park. For many types of
investment properties, the loan is based on the property
more so than the purchaser. However, with an RV Park,
the loan is not only based on the property itself, but
also the borrower’s credit and experience in running
similar types of businesses. It often helps to have a
well drafted business plan when applying for financing.
Excerpt from
How to Buy, Sell and Operate RV Parks and Campgrounds
By Dave Reynolds, March 26, 2007,
130 pages.
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