Hi,I’ve been following the forum for several months as I have been learning about MHP. I have apts. but am tired of the maintenance. So, I have made up my mind to by a park. This is a great website!My question is-I am looking a a MHP that has 73 spaces, 63 single and dblwide spaces and 10 RV spaces. How do you value the RV lots compared to the MH lots.? -The RV spaces are all vacant. (10 spaces)-Park is right off of the Interstate-Park is on city water and sewer- RV lots are not individually metered for electric (MH lots are)- Water is paid for by park.- Park is in average condition.Thanks
An unoccupied lot is worth 0
Boy, I sure don’t get that. That means that if I find a park in great shape, infrastructure-wise, but all the homes got wiped out by a military jet which crashed in the park, but the park has been all cleaned up, and is near a good-sized town, and there appears to be demand, and the park is ready for occupancy…it has absolutely zero value, except for the value of the empty land… How can that be? Surely the potential for producing income is worth something. In fact, I’m selling a park right now. Let’s say it’s all full except for one space. To say that that space has zero value just doesn’t seem right. I’m not saying it has the same value as if it were occupied and producing income, but to say that it’s worthless, and has no potential for producing income, just doesn’t seem right. Even from the perspective of a buyer, if I were one, I wouldn’t think that it has no value unless the city, say, has ruled that no home can be put there. In that case, then, yes, it has no value, except as a garden plot.
I agree with you dshinnick. This is my first MHP purchase but I have been buying and selling real estate for 14 years and I can tell you with confidence that a vacant RV lot has some value even if it is just used as a garden plot.In Dave Reynolds book “Mobile Home Park Investing” he says to value vacant MH lots at 25-50% of occupied spaces. But, there must be a formula to value RV lots too. They must be valued differently. They are smaller, not individually metered, more transient tenants… A different product than MH lots.7% of the lots in the park I am trying to purchase are RV lots so I don’t really want to get this wrong. There is another park I am also looking at with 20 MH lots and 10 RV lots. All the RV lots are vacant too. So, getting the valuation wrong could be costly.Personally, I feel like I would rather have all MH lots and no RV lots. Unless you could get some long term tenants. But that is a different topic.
The only way to value RV lots is to take the last three years of performance (or longer if you have it) and average it. So if the RV lots produced $5,000 in revenue in 2011, $10,000 in 2012 and $7,000 in 2013, then the average would be $7,333 in revenue, and that’s would you might use in your calculations. Getting a bank to believe in that concept, however, is much harder (or impossible). There is much more to the story…RV lots in mobile home parks are very undesirable to modern RV users. Modern RV lots are “pull through” and mobile home park lots are “back in”. That turns off 90% of RV users alone. Then there’s the fact that the modern RV park has a ton of amenities, and your park has none (fishing lake, mini-golf, store, etc.) The final deal killer (maybe the biggest) is that modern RV parks are just that: modern. And they are filled with classy people with expensive RVs ($100,000+). You park is filled with people who are twenty seven levels lower on the food chain, so RV folks don’t want to be anywhere near them.What’s it all mean? It means that RV lots in mobile home parks only appeal to construction workers or people who live full time in them, and your potential market for customers is about as big as a mosquito’s umbrella. The only exception is when the park has such a fantastic location that RV users will stay there even though they don’t like it, just because of convenience (like our park in Kansas City that is just down the street from the Legends Speedway).And that’s why vacant RV lots are typically worth zero.
Our RV lots have yearly leases and make more money per sq. ft. than mobile homes. Yes we are on a beautiful lake with a beach and have a waiting list of RV’s wanting to come it. It is all about location, location, location. We will not do nightly rentals that is too much work with no more income.
Ah…yes. Agreed. I guess I was thinking vacant mobile home spots.DeanS didn’t specify. My bad.
dshinnick, my park is also for sale and the big boys want cookie-cutter parks and if yours does not fit their criteria It has less value or none for certain amenities also the same for wells or septic tanks. I am marketing to owner operators that appreciate all the value that only on site owners are willing to do and the big boys will never accept that fact with wells that my cost for water for 136 sites with less than $200 per month but insist on valuing it like on city water that when I switched it cost over $5,500 per month! The big boys only want to see rent rolls and P and L’s and your selling package making a trip is not there first response EVER. From my present experience I am not seeing any reason to send them information. LoopNet is bringing many inquires from future owner that only want to own one or two parks at the most and operate it themselves.
Great insight. The park I’m looking at is a working class family park. It is next to the freeway so access is good but there are also two other RV only parks just down the road so I doubt these ten spaces get used much. I’ll inquire about their historical occupancy. If there is any value in them it might come from the fact that they could be converted into two or three more MH lots. Thanks for the pointers everyone.
Always makes changes to increase value and make its future sales easier. Empty sites make no money so find a use even storage units that will make a profit.