How to evaluate or buy an RV Park
Real Estate Investor · Dallas, TX · Member since 2015 · 50 posts · 11 votes
How to evaluate or buy an RV Park
Most Popular Reply
Real Estate Investor · Ste. Genevieve, MO · Member since 2009 · 363 posts · 944 votes
6yRV parks are evaluated more like a regular business than most other real estate sectors. Take the last three years' Profit and Loss statements and average them together. Compare to the tax returns for some degree of confirmation. Apply a cap rate roughly 2 points higher than mobile home parks. In diligence, compare the prior annual revenue to the reality of electrical usage (come up with a constant of power cost per day per occupied space and then take the actual power bill and see roughly how many occupied units you have).
Much of RV park and mobile home park is 100% overlap: how to find them, negotiate them, do diligence on them, renegotiate them, finance them, turn them around and operate them. The big differences are that RV parks are typically amenity rich which requires more overhead, can be seasonal in nature (but not always), require a nearby destination to work well (as opposed to employers), and use values that are typically 2 points higher in cap rate. The same loan brokers that do MH also do RV, as do the insurance companies.
We own both, and the only benefit of an RV park is that -- if you find the right one -- you can ramp up revenue faster because it costs you nothing to fill a vacant lot. If mom and pop did poor marketing and you bring in professional-grade internet SEO and other methods you could theoretically double your revenue in one year without any additional cap-x. You could never do that with a mobile home park unless you can double the rents in one year (which would be world record). To fill a vacant mobile home park lot typically requires bringing in a home and selling it, while filling a vacant RV park lot simply means somebody pulls in their motorhome or travel trailer.
Think of RV parks more like owning a restaurant (and the hands-on management that entails) while owning a mobile home park is more like owning a parking lot that rents spaces out monthly and is much more passive in management.
Some people just prefer one business model over the other.
8 Replies
- Real Estate Investor · Ste. Genevieve, MO · Member since 2009 · 363 posts · 944 votes6y
RV parks are evaluated more like a regular business than most other real estate sectors. Take the last three years' Profit and Loss statements and average them together. Compare to the tax returns for some degree of confirmation. Apply a cap rate roughly 2 points higher than mobile home parks. In diligence, compare the prior annual revenue to the reality of electrical usage (come up with a constant of power cost per day per occupied space and then take the actual power bill and see roughly how many occupied units you have).
Much of RV park and mobile home park is 100% overlap: how to find them, negotiate them, do diligence on them, renegotiate them, finance them, turn them around and operate them. The big differences are that RV parks are typically amenity rich which requires more overhead, can be seasonal in nature (but not always), require a nearby destination to work well (as opposed to employers), and use values that are typically 2 points higher in cap rate. The same loan brokers that do MH also do RV, as do the insurance companies.
We own both, and the only benefit of an RV park is that -- if you find the right one -- you can ramp up revenue faster because it costs you nothing to fill a vacant lot. If mom and pop did poor marketing and you bring in professional-grade internet SEO and other methods you could theoretically double your revenue in one year without any additional cap-x. You could never do that with a mobile home park unless you can double the rents in one year (which would be world record). To fill a vacant mobile home park lot typically requires bringing in a home and selling it, while filling a vacant RV park lot simply means somebody pulls in their motorhome or travel trailer.
Think of RV parks more like owning a restaurant (and the hands-on management that entails) while owning a mobile home park is more like owning a parking lot that rents spaces out monthly and is much more passive in management.
Some people just prefer one business model over the other.
- Specialist · Scottsdale, AZ · Member since 2014 · 626 posts · 700 votes6y
@Charlie Rushton you have received great perspective from @Frank Rolfe here. In addition to what he shared, location will be extremely important and I will share why.
A traditional RV park has transient traffic that moves in and out of the park. The traffic is made up of motorhomes, 5th wheels, and travel trailers, that are often referred to as “rolling stock”. That makes them inherently more volatile and they behave more like a motel than a mobile home park.
However, there is a case for RV parks that more closely mimics a MHP when the location is appropriate for a full time living solution. An RV park in the middle of nowhere alongside a major freeway will likely always be a 100% transient RV park, where that same park in a good location in a strong MSA could be a park where tenants call that a home. Location will be a major factor in determining the potential strategy for the park, as well as projecting how the park will perform. Location, location, location.
All the best!
Jack
- Rental Property Investor · Paterson, NJ · Member since 2019 · 2 posts · 0 votes4y
Quote from @Frank Rolfe:
RV parks are evaluated more like a regular business than most other real estate sectors. Take the last three years' Profit and Loss statements and average them together. Compare to the tax returns for some degree of confirmation. Apply a cap rate roughly 2 points higher than mobile home parks. In diligence, compare the prior annual revenue to the reality of electrical usage (come up with a constant of power cost per day per occupied space and then take the actual power bill and see roughly how many occupied units you have).
Much of RV park and mobile home park is 100% overlap: how to find them, negotiate them, do diligence on them, renegotiate them, finance them, turn them around and operate them. The big differences are that RV parks are typically amenity rich which requires more overhead, can be seasonal in nature (but not always), require a nearby destination to work well (as opposed to employers), and use values that are typically 2 points higher in cap rate. The same loan brokers that do MH also do RV, as do the insurance companies.
We own both, and the only benefit of an RV park is that -- if you find the right one -- you can ramp up revenue faster because it costs you nothing to fill a vacant lot. If mom and pop did poor marketing and you bring in professional-grade internet SEO and other methods you could theoretically double your revenue in one year without any additional cap-x. You could never do that with a mobile home park unless you can double the rents in one year (which would be world record). To fill a vacant mobile home park lot typically requires bringing in a home and selling it, while filling a vacant RV park lot simply means somebody pulls in their motorhome or travel trailer.
Think of RV parks more like owning a restaurant (and the hands-on management that entails) while owning a mobile home park is more like owning a parking lot that rents spaces out monthly and is much more passive in management.
Some people just prefer one business model over the other.
Hi, Frank, if the seller only has one year of income and expense data, how can we figure out the right number to purchase? I am new to the RV park, What are the regular expenses per month?
- Real Estate Investor · Titusville, FL · Member since 2013 · 121 posts · 26 votes4y
- Real Estate Broker · Chattanooga , TN · Member since 2008 · 46 posts · 25 votes4y
Quote from @Annie Chen:
Quote from @Frank Rolfe:
RV parks are evaluated more like a regular business than most other real estate sectors. Take the last three years' Profit and Loss statements and average them together. Compare to the tax returns for some degree of confirmation. Apply a cap rate roughly 2 points higher than mobile home parks. In diligence, compare the prior annual revenue to the reality of electrical usage (come up with a constant of power cost per day per occupied space and then take the actual power bill and see roughly how many occupied units you have).
Much of RV park and mobile home park is 100% overlap: how to find them, negotiate them, do diligence on them, renegotiate them, finance them, turn them around and operate them. The big differences are that RV parks are typically amenity rich which requires more overhead, can be seasonal in nature (but not always), require a nearby destination to work well (as opposed to employers), and use values that are typically 2 points higher in cap rate. The same loan brokers that do MH also do RV, as do the insurance companies.
We own both, and the only benefit of an RV park is that -- if you find the right one -- you can ramp up revenue faster because it costs you nothing to fill a vacant lot. If mom and pop did poor marketing and you bring in professional-grade internet SEO and other methods you could theoretically double your revenue in one year without any additional cap-x. You could never do that with a mobile home park unless you can double the rents in one year (which would be world record). To fill a vacant mobile home park lot typically requires bringing in a home and selling it, while filling a vacant RV park lot simply means somebody pulls in their motorhome or travel trailer.
Think of RV parks more like owning a restaurant (and the hands-on management that entails) while owning a mobile home park is more like owning a parking lot that rents spaces out monthly and is much more passive in management.
Some people just prefer one business model over the other.
Hi, Frank, if the seller only has one year of income and expense data, how can we figure out the right number to purchase? I am new to the RV park, What are the regular expenses per month?
I have owned a lot of them and the first thing you need to determine is what type of park you are buying. As one of the other guys pointed out if it is a recreational park it operates a lot like a hotel and weather, time of year, ect need to be factored in but if it is long term park it is a lot like a MHP. I have some that are a mix but I like the long term parks better.
There are around 1m people living in an RV full time and only about 600k long term pads in the US. Many of your recreational campgrounds are owned by the government (either state or local) and almost all of them do not allow you to stay more than 21 days so if you are running a long term park there is a very high demand in many states.
Below is a sample P&L (it is a real P&L from one of our parks) that will give you an idea of overhead. Some parks bill for actual power use and have a separate power meter for each pad. Some just have one meter and they pay the power and if you go that route the utility cost is very high.
- Rental Property Investor · Hewitt, TX · Member since 2020 · 27 posts · 17 votes3y
Quote from @Mark Lawson:
Quote from @Annie Chen:
Quote from @Frank Rolfe:
RV parks are evaluated more like a regular business than most other real estate sectors. Take the last three years' Profit and Loss statements and average them together. Compare to the tax returns for some degree of confirmation. Apply a cap rate roughly 2 points higher than mobile home parks. In diligence, compare the prior annual revenue to the reality of electrical usage (come up with a constant of power cost per day per occupied space and then take the actual power bill and see roughly how many occupied units you have).
Much of RV park and mobile home park is 100% overlap: how to find them, negotiate them, do diligence on them, renegotiate them, finance them, turn them around and operate them. The big differences are that RV parks are typically amenity rich which requires more overhead, can be seasonal in nature (but not always), require a nearby destination to work well (as opposed to employers), and use values that are typically 2 points higher in cap rate. The same loan brokers that do MH also do RV, as do the insurance companies.
We own both, and the only benefit of an RV park is that -- if you find the right one -- you can ramp up revenue faster because it costs you nothing to fill a vacant lot. If mom and pop did poor marketing and you bring in professional-grade internet SEO and other methods you could theoretically double your revenue in one year without any additional cap-x. You could never do that with a mobile home park unless you can double the rents in one year (which would be world record). To fill a vacant mobile home park lot typically requires bringing in a home and selling it, while filling a vacant RV park lot simply means somebody pulls in their motorhome or travel trailer.
Think of RV parks more like owning a restaurant (and the hands-on management that entails) while owning a mobile home park is more like owning a parking lot that rents spaces out monthly and is much more passive in management.
Some people just prefer one business model over the other.
Hi, Frank, if the seller only has one year of income and expense data, how can we figure out the right number to purchase? I am new to the RV park, What are the regular expenses per month?
I have owned a lot of them and the first thing you need to determine is what type of park you are buying. As one of the other guys pointed out if it is a recreational park it operates a lot like a hotel and weather, time of year, ect need to be factored in but if it is long term park it is a lot like a MHP. I have some that are a mix but I like the long term parks better.
There are around 1m people living in an RV full time and only about 600k long term pads in the US. Many of your recreational campgrounds are owned by the government (either state or local) and almost all of them do not allow you to stay more than 21 days so if you are running a long term park there is a very high demand in many states.
Below is a sample P&L (it is a real P&L from one of our parks) that will give you an idea of overhead. Some parks bill for actual power use and have a separate power meter for each pad. Some just have one meter and they pay the power and if you go that route the utility cost is very high.
Mark - how many pads is this if you don't mind me asking. If you're trying to project how much a bank will value your RV park for a refinance out of the construction loan to develop it, what should you take into account? Thanks! - Real Estate Broker · Chattanooga , TN · Member since 2008 · 46 posts · 25 votes3y
Quote from @Kyle Robarts:
Quote from @Mark Lawson:
Quote from @Annie Chen:
Quote from @Frank Rolfe:
RV parks are evaluated more like a regular business than most other real estate sectors. Take the last three years' Profit and Loss statements and average them together. Compare to the tax returns for some degree of confirmation. Apply a cap rate roughly 2 points higher than mobile home parks. In diligence, compare the prior annual revenue to the reality of electrical usage (come up with a constant of power cost per day per occupied space and then take the actual power bill and see roughly how many occupied units you have).
Much of RV park and mobile home park is 100% overlap: how to find them, negotiate them, do diligence on them, renegotiate them, finance them, turn them around and operate them. The big differences are that RV parks are typically amenity rich which requires more overhead, can be seasonal in nature (but not always), require a nearby destination to work well (as opposed to employers), and use values that are typically 2 points higher in cap rate. The same loan brokers that do MH also do RV, as do the insurance companies.
We own both, and the only benefit of an RV park is that -- if you find the right one -- you can ramp up revenue faster because it costs you nothing to fill a vacant lot. If mom and pop did poor marketing and you bring in professional-grade internet SEO and other methods you could theoretically double your revenue in one year without any additional cap-x. You could never do that with a mobile home park unless you can double the rents in one year (which would be world record). To fill a vacant mobile home park lot typically requires bringing in a home and selling it, while filling a vacant RV park lot simply means somebody pulls in their motorhome or travel trailer.
Think of RV parks more like owning a restaurant (and the hands-on management that entails) while owning a mobile home park is more like owning a parking lot that rents spaces out monthly and is much more passive in management.
Some people just prefer one business model over the other.
Hi, Frank, if the seller only has one year of income and expense data, how can we figure out the right number to purchase? I am new to the RV park, What are the regular expenses per month?
I have owned a lot of them and the first thing you need to determine is what type of park you are buying. As one of the other guys pointed out if it is a recreational park it operates a lot like a hotel and weather, time of year, ect need to be factored in but if it is long term park it is a lot like a MHP. I have some that are a mix but I like the long term parks better.
There are around 1m people living in an RV full time and only about 600k long term pads in the US. Many of your recreational campgrounds are owned by the government (either state or local) and almost all of them do not allow you to stay more than 21 days so if you are running a long term park there is a very high demand in many states.
Below is a sample P&L (it is a real P&L from one of our parks) that will give you an idea of overhead. Some parks bill for actual power use and have a separate power meter for each pad. Some just have one meter and they pay the power and if you go that route the utility cost is very high.
Mark - how many pads is this if you don't mind me asking. If you're trying to project how much a bank will value your RV park for a refinance out of the construction loan to develop it, what should you take into account? Thanks!Sorry I had not logged in for a while but that park was 27 pads. If you need data for a valuation you can find a lot of it at www.blackwatersouth.com/stats.pdf
- Member since 2024 · 3 posts · 0 votes2y
@Jack Martin How to evaluate a location btw? Are there any tools or resources that you can direct us to?
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