I’m a traditional mobile home park owner but I have recently found several extended stay rv parks(95% of the park with year leases) and I want to see what the groups thoughts are around purchasing these. Obviously the model is different and expenses are going to be closer to 50% if not higher but want to know what others are seeing out there for entry cap rates and cash and cash return. I’m starting at 12 caps with room to go up with rent increases to market. I’m also looking in the Pacific Northwest. These are big resort rv parks these are true affordable housing. Any input would be helpful.
You’d be surprised on expense ratios - they are all over the place and can be as low as well run MHP’s. Depends a lot on whether utilities are submetered and if there are complimentary amenities, and whether those are well managed.
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RV parks could be a whole different business. But I have run into parks that are RV parks but people live there all year around just like a MHP. If you are running it like a hotel then you will see a large increase in expenses. If you are running it as a typical MHP then your expenses (depending on amenities) will be lower.
Because of the size and ease of RV’s, I have meet park owners that have filled their parks with RV’s and have signed long-term leases with the owners. Its an inexpensive quick way to fill up your park but not always allowed within your city/county.
@heat685 A lot of people have had success taking park model homes and putting them in RV parks here in Florida. Is that something you intend to do in the Pacific NW?
Potentially. This is a 144 space rv park so the capital and time may not make sense but something worth exploring. The other side is a lot of these residents have been there for years so is it worth it to transition to park models? I don’t think so at least in my opinion.
I have 54 space RV park under contract in WA and most of the current tenants have been there for years. The park has 15 park model homes that are usually 100% occupied and the other spaces are long term RV tenants. My intention is to run it like a MHP and sell those park models to the current tenants. I believe there is a huge need for this type of housing in the rural parts of the PNW.
I have it under contract for just over a 12 CAP with the current expenses just under 55% of gross rents. The current owner is paying the water bill, which is significant and the main driver of those expenses. My short term goal is to decrease the monthly expenses by about 15-20% simply by sub metering for water.
This is my first park and my first post on MHU! Hopefully this was helpful and I am looking forward to any input.
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