Value RV lots, I've read a few versions here

Looking at small park 14 MH lots and 26 RV lots. She charges additional $60/ month for RV to cover water/sewer/cable and the electric is metered and billed to RV’er monthly. Theres NO amenities in park for RV’s. My question is how do i value these units for purchase of park. I haven’t seen the books yet just looked at park today but she says these units are NOT short term units. She will not rent nightly/weekly and says she has books to show the average occupancy over last 10 years minimum. I looked through old posts and saw a few ways to value them. This deal has a little hair on it but this is my biggest hurdle. Any help would be greatly appreciated. PS I’m away from home and no access to my books to reference. Thanks for your help!

What is the lot rent for the mobile homes? I missed the additional part in my first post.

Ken Lavoie

Hi, former RV park underwriter here. There are a couple of items you need to consider when reviewing RV sites.

Length of Stay
You need to consider how long RV renters stay when factoring in stability of revenue. I would split RV income into Annual (6 months and greater occupancy by one tenant), seasonal (1 month to 3 month) and transient (< 30 days). You mention that she doesn’t rent to short term tenants, so that’s a strong start.

Of the long term tenants, do any have built on structures, nice landscaping or anything keeping them there? This may not apply if it’s a cold weather state. Biggest takeaway is that the more like a standard mobile home tenant an RVer is, the closer the value of their cash flow is to an MH

Typically in an all “annual” park, id value the NOI something like 100 to 200 basis points higher in a cap rate basis than a comparable MH, but there are a lot of factors.

If the occupancy of those sites is quite low and volatile year over year and month over month, I might only value the cash flow at one or two times. Just my thoughts.

A couple of other considerations:

  1. What is amperage of pedestals? 30 or 50 amp
  2. Management: management of RV sites, if they’re shorter term can be more time consuming. Something to keep in mind.

Let me know if you have other questions

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I agree 100% with everything said here.

I think the most important considerations are length of RV leases. Most campground/RV Park leases for seasonal sites are annual with payments made once a year. This eliminates the transient nature and makes for less management.

Also, are the sites large enough to fit the modern campers?

Another thing that I forgot to mention last night is depending on occupancy, I wouldn’t rent a MH lot for the same price that I would an RV lot. RV lots, or RV customers on MH lots, are inherently less stable since they can often pick up and leave on a moment’s notice. This is mitigated to a point by what I mentioned earlier (see “stickiness”), however the instability or inconsistency of cash flows would make me consider charging them more each month for rent. That being said, if you’re trying to fill your park when you have significant vacancy, I would factor in market rents and may end up keeping it closer to MH rent. All depends on how your product compares to that of your competitors.

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Unfortunately there are too many issues with the park to continue this deal. Over value of park owners home in MIDDLE of park, no room to replace septic leach fields if necessary without loosing sites. No municipal sewer system in area or planned in future. No leases on the rv’s ever and all of them are hooked up with hoses and plugged in like camp sites meaning they can go whenever they want. Top it all she won’t finance (for now) but i’m passing. This was a learning experience for sure and I have more knowledge for the next park. Thank you to all that responded to my post. Gunnar

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Sure seems like when park owners put those rv spots in it just muddies up the water…