RV park, runs like MF?

Howdy from Texas,
I sold my house flipping business and RE education companies to my business partner last year to build a small real estate fund and buy more long term assets.

Lately, I am running into a handful of RV parks that are run like MF. The owner owns the park AND the RVs. Cash flow looks great, what I am concerned about is capex and utilities of the RVs.

The deal is 49 units with RVs and a small 7 unit MF. $410k gross, 188K NOI, contracted at $1.1MM, 17cap.

Property is in an urban industrial area, this is not a vacation rental. Demo is working poor locals and out of market contract labor for plant turn arounds and construction. Market is incredibly stable.

I feel like I am missing something on this deal. I do not remember discussing this scenario in Frank’s class. I would think that as median home price continues to skyrocket and land continues to increase in value, “rent the RV in the park” business model will become more popular for affordable housing.

Anyone out there using this business model?


The catch on these is that major cities have an ordinance that requires RV’s move every 30 days or so - and while they typically don’t enforce it they would probably start to if RV parks start becoming MHP equivalents. I assume that this type of usage could also be grandfathered, but have not specifically seen that element tested in case law.

Beyond that there are a couple issue: 1) being in the RV repair business. I suspect you can bulletproof these in certain ways in the same manner as a mobile home, but it’s still a hassle to manage - you will probably need a full time handyman if they don’t have one already; 2) Insurance on 49 RV’s sounds terrible for the rent spread you get; 3) You could be hard pressed to find a bank that will finance this so could be stuck with owner financing. Though there do seem to be some banks starting to do this more and more…your mileage may vary.

Last year I constructed a submetered (electric, water, sewer) RV Park in Texas within city limits. We don’t do Park Owned Recreation Vehicles (PORV’s), but do look for longer term tenants (at least one month) to reduce management overhead. This is in a city without a time limit ordinance on RV stays.

I do think this model is already the next version of affordable housing based on the demand I have seen and other RV park owners doing the same thing. Cities will tighten their ordinances to combat it just like they did with MHP’s. There are a lot of pockets of opportunity in the meantime.

Thank You jhutson. That is great insight.