Hello, I’m looking at a 40 lot MHP park with 8 additional RV lots in a large MSA. The RV lots are rented year around but how do I evaluate the RV lots?
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If the RV’s are Park Models then I would use the same formula as for MH. Park models are not easily moved and are a close substitute for a MH unit (12 x 30 style not the Tag along style).
If the homes are Motorhomes or trailers then I would use a higher cap rate as they can easily move out.
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Yes, unfortunately they are actual RV’s. Thank you.
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I might also ask if they are on the site with an annual lease agreement or just month to month?
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Motor homes and Fifth Wheel style trailers can move out with minimal notice. Even if they have a long term lease they can just drive the thing off your property. I would expect a much higher cap rate on the income.
Only way to protect against that is to have a deposit and require 30 or 60 days notice of intent to vacate clause in lease. If they bail you get to keep the deposit.
Thank you for the information!