Converting former MHP as RV park?

Question

Hi All,  newbie seeking opinions or views.  I recently came across some land in GA that is an abandoned MHP with 11 spaces. The land has RR tracks on one side which make me doubt trying to reestablish a HMP.  There is water, electricity and septic at each space.   I guess my fear is that there is no scaling it into an RV park, once you have one RVer interested you have a set of fixed costs that are activated (insurance, lawn maintenance, garbage and utilities).  Site is near a growing town with lots of construction ongoing. Thoughts or opinions?

Jay Hinrichs · Answer

Also keep in mind septic systems designed for owner occupied use set up to handle RV afferent.  MUCH harsher chems in RV waste.

also although i understand zoning can be lax in the rural deep south.. you need to check to make sure they will allow transient RV use in a property that was a MHP.   I see Micro parks like these working when you also live at the property basically you live for free and have a little side cash they throw off

Frank Rolfe · Answer

The only way this would work is if the lot rents are high -- like $400 per month. Those abandoned spaces are going to need to be probably totally repaired to make them safe to use, and you're right that 11 lots is not going to give you much scale. The fact that the park is abandoned is also a cause for concern. If you could buy this land for next to nothing, you'll still have probably $40,000 of cost in bringing the lots back to life (figure at least $1,000 each) plus building a nice entry fence and signage, removing dead trees and limbs, and road repair. You'll also have to make sure the city will accept your plan, as the park may have already lost its grandfathered status.

Then will come the problem of bringing in mobile homes to fill those lots. You'll have to run a test ad and see what the demand even is in this location and at what price point. A new home mortgage will add around $400 per month to your lot rent amount, so you may be stuck bringing in used homes. That's capital intensive and will cost you at least $20,000 per home when you take into account the house, the move, the set, and the renovations.

Then comes the biggest problem. No lender that I know will finance such a concept (unless you can find a really aggressive local banker). So you'd have to do it with all cash. And that gives you a really bad return on investment.

Warren  Buffett once said that business is not like the Olympics -- you don't get any extra points for taking a more difficult event. So why would you want to put yourself through this much risk and trouble for a 11 space park?

You'd be way better off buying an existing park with normal leverage from a bank, and just increasing the lot rents.

But then again, I've not seen this location. If this is a piece of land across from Walmart and next to a McMansion subdivision then it might be worth the shot. But since it's an abandoned trailer park in Georgia, I"m betting that's not the case.