Has anyone purchased an RV park and added all Park Models then sold on a rent credit program? I am looking at a few parks that are part Mobile Homes and Part RV Park. Looking to find some semi permanent solution to the RV spaces. Thoughts anyone? Or am I wasting my time on these type of properties? Thanks!Steve
The problem you have when you do something out of the ordinary is the risk you run of nobody else buying into the idea. Park models were designed for temporary “overnighter” occupancy. Many lenders and buyers are not going to apply 10% caps to them. You better run the idea by some lenders and see what the feedback is.
Are you thinking that you will convert an RV park to an MH park or are you thinking that you will convert the RV spaces that you may have to MH spaces? I’ve been thinking the latter. So, I’ve been having an email conversation with a broker in AZ and it sounds like RV spaces cannot be converted to MH spaces outside of what the park permit specifies. So, I’ll ask him for clarification on that issue, that is, does a parks permit specify or spell out how many RV spaces and how many MH spaces there are to be? Although, as a broker he may not know or may not feel comfortable giving that kind of advice. Hopefully, Frank or Dave or Jefferson or someone else on this forum with expertise will weigh in and clear it up.
Jim Allen
Jim,That is a great point. If we can change to percentage of RV spaces to a much lower percentage, then we might have a chance. Here is a question to add… What is the smallest “Mobile Home” that is not considered a “Park Model”?
Park I have under contract has a permit outlining specifically how many homes and RVs are permitted. Of course, that may vary by locality.
This completely varies by the city, county and state. In some parks, there is no regulation as to whether RVs or MHs go on any lot. In other areas, it specifies what type of spaces they are, and in others the park is allowed up to a certain percentage of RVs on any spaces (for example, a 100 space park where up to 25% may be RVs, but it does not matter what lots they are on).For you to consider this issue, I’m hoping that everything else about this park is phenomenal (price, location, city utilities, etc.) or I would not bother with it. You’re scaring me with questions like “how small a mobile home can you put on a lot” because 1-bedrooms don’t sell or rent at all, and they even make efficiency mobile homes. If the lot will not hold at least a 2 bedroom 14’ x 46’ mobile home then consider it either an RV lot of a permanently vacant space.I also cannot emphasize enough that most banks and buyers HATE hybrid RV/MH parks. There is one subset of buyers and banks that like MH parks, and another that likes RV parks. But these are two different subsets, and they both hate each other’s business model, so mixing these together is a huge problem for financing and exit strategy.But once again, there’s no perfect deal, and if everything else is a 10, then maybe the risk of this issue can be tolerated.
So, from what Frank says, there may be an opportunity to increase the value of an individual park by converting RV spaces to MH spaces provided everything else works. That would be lot size, park permit, service size etc. This also means that as part of due diligence you would want to prove these things before closing. For my benefit, what is a ‘park model’ and how big is it? If banks and buyers hate hybrid parks, and I can see why, then that means there is a possible business model for someone to try out. It also means that they are likely hard to move, or sell, and should then have more room for negotiation on price and terms. For my part, I’m trying to get a handle on the MHP industry, how it operates, what are the key principles, typical owners and renters and so on. I used to own SFR’s which are easy to rent and easy to sell but the returns are generally fixed to the inflation rate with some increase for the elbow grease that you apply to it. I’ll let folks know what I hear back from the broker in AZ.
Jim Allen
We have an upscale 4 star park with RV’s and mobile homes. Our RV"S are on yearly leases to avoid slack month and to have a cash flow. We have had 6 RV parks and NEVER used a rent program. Banks have a problem with the seasonal nature of most RV parks but in our case with yearly leases and having two RVs on one mobile home lot the lenders in our area are thrilled to lend. What is neat is that 25% of our RV owners eventually buy a mobile in our park when they want to settle down and have more room at a lower cost than a RV. Every situation needs close evaluation since sometimes new ways of doing things IF successful become mainstream. We know our niche market well after 40 years of experimenting I would not gamble in your situation if it was me. Our rents on the RVs are the same as the mobile home spaces but again we have boat slips and a beach.