Mobile Home Parks versus RV Parks and Campgrounds

When considering the purchase of a mobile home park as compared to an RV park there are many factors to consider.  While mobile home parks and RV parks are often sold by the same brokers and are combined in one facility, they are not the same and both require different amounts and types of management.   The following comparisons are for Overnight/Destination RV parks as compared to the typical mobile home park in which the lots are rented out on a monthly basis.  In many cases, the seasonal or extended stay RV parks will have more of the qualities of the typical mobile home park rather than those of the Overnight/Destination type RV parks.

Length of Stay:  Mobile Home owners are in the park permanently or at least until they sell their home and move somewhere else.  RVer's are in the park for usually a week or less.  The longer a home or resident stays in the park, the more likely it will have the qualities of a mobile home park and the less time a home or resident stays in the park, the more likely it will resemble the operations of an RV park.

Management:  This is probably one of the most significant differences between RV and mobile home parks.  In most cases, it takes less time and manpower to run a mobile home park than an RV park.  There are several factors for this:

• With a mobile home park, the manager will typically see the residents of each space only once per month when the rent is paid and anytime there is a problem.  However, with an RV Park you may have a new camper in the space every day or every few days.  You may have to acquaint them with the park, the facilities, and in many cases the area.  How to get here or there, where to eat, etc.
• In addition, many RV parks will have showers and restrooms that need to be cleaned several times during the day.  Most mobile home owners have their own showers and toilets.
• In Mobile Home Parks, the manager usually only maintains the common areas and the residents maintain their own spaces, etc.  However, in an RV Park, the manager will not only maintain the common areas, but should check each space to make sure it is clean before renting.  As before, these spots may have a different RV'er each day and so it is ongoing.

Ease of Movement:  While it will cost an owner of a mobile home 1-2 thousand dollars or more to move their mobile home out of the park and set it up somewhere else, the owner of an Recreational Vehicle can hook up, move and reset their RV up in another park in a couple of hours or less and for the cost of gas.  Thus, you have to work much harder at keeping the RV'er satisfied with the park if you want to keep them there.

Eviction:  In a mobile home park if you have someone that is not paying rent or causing other problems, you will have to go to court and deal with the judges and it may take several weeks to have them evicted out of the park.  However, in an RV Park, the rent is usually paid in advance and if it is not paid, you should be able to have the RV removed immediately for lack of payment or other issues.  These laws differ from state to state so make sure to check first to stay legal.

Rent Control:  RV parks owners are not typically subject to rent control ordinances as are mobile home park owners.

Utilities:  In a mobile home park the park owner will generally only pay the utilities for any common areas and buildings as well as for street lights.  The individual mobile home owners will pay for their own gas, electric, water, sewer, cable, and internet.  However, in an RV Park, this is all bundled up in a nightly or weekly rate and that rate should be adjusted to include all these utilities and amenities.  You might shudder when a big 40' rig pulls in the middle of July and powers up a couple of a/c units after plugging into your electric pedestal.

Other Improvements:  While both RV & MH parks will have the sites, utilities, roads, it is common for RV parks to also have a store, recreational hall, and restrooms and showers.  In addition, a higher percentage of RV parks compared to MH parks will have a swimming pool and other recreational facilities such as shuffleboard, basketball, and video games.  What this will equate to is once again, more management time and energy.  An RV Park of 400 spaces will probably have two to three times more employees than a comparably sized mobile home park.

Taxes:  Just like the taxes you pay when you stay at a motel, you will pay taxes to stay in an RV park.  Usually the only way around the lodging/transient tax is to stay for 30 days or more.  The residents in a mobile home park are not subject to this type of tax.  They are just subject to the yearly mobile home taxes to the county treasurer.  The park owner will pay the taxes on the land (dirt and improvements) for both MH & RV parks.

Capitalization Rate:  Typically a mobile home park will sell at a lower cap rate than an RV park.  There are always exceptions but this is the general rule.  If a mobile home park is selling at a cap rate of 10% then an RV park in that same market area will typically be selling for a 11-13% cap rate.  Smaller RV parks generally sell for higher cap rates than do larger ones.  Destination and overnight style RV parks are generally priced at higher cap rates than the extended stay and seasonal type RV parks.  Also, parks that are rated higher by Woodalls or any type of star ratings will generally sell for more $$$ (a smaller cap rate).

Finding a Park to Buy:  In my experiences as a broker, investor and by running the Mobile Home Park Website as well as the RV Park Website for many years, I have noticed that there are usually five times or more buyers out there looking for Mobile Home Parks than there are for RV Parks.  What this equates to for the RV Park Investor, is that there is a better inventory of potential RV Parks to purchase as well as less competition.  I have seen some very good RV Parks sit on the website for a few months and wonder why they have not sold.  There are Great Opportunities out there especially if you are not set on one particular area.

Long Distance Ownership:  Mobile Home Parks are often owned by individuals or companies that do not live in the same city or state where the park is located.  They hire an onsite manager and visit a couple of times per year.   However, with an RV Park, most owners live at the park or nearby and are involved with the management of the park on a day to day basis.  It is possible to run an RV Park from a distance but in order to do so you have to really trust your manager and other staff and have a good system in place.

Financing:  It is usually harder to obtain a loan for an RV park than a mobile home park and that is one reason why a higher percentage of owners offer to seller finance RV Parks as compared to Mobile Home Parks.  When seeking financing on an RV park, you will be typically obtaining a loan with interest rates a point or two higher than that of a mobile home park.  For many types of investment properties, the loan is based on the property more so than the purchaser.  However, with an RV Park, the loan is not only based on the property itself, but also the borrower's credit and experience in running similar types of businesses.  It often helps to have a well drafted business plan when applying for financing.

Excerpt from How to Buy, Sell and Operate RV Parks and Campgrounds

By Dave Reynolds, March 26, 2007, 130 pages.