Two popular options in the real estate market are RV and mobile home parks, but despite sharing some similarities, they have distinct differences that investors should be aware of. In this article, we will explore the major differences between RV and mobile home parks to help investors make informed decisions about which type of property to invest in.
Features of RV and Mobile Home Parks
A RV park is a type of property that is designed to accommodate recreational vehicles (RVs) for short-term stays, typically ranging from a few days to a few weeks. RV parks typically have large open spaces with electrical hookups, water and sewer connections, and waste disposal stations. Some RV parks also offer additional amenities like swimming pools, shuffleboard courts, public showers and bathrooms, and laundry facilities.
A mobile home park, also known as a manufactured housing community, is a type of property where residents own their homes but rent the land on which the home sits. These properties are designed for long term residency, with the majority of tenants staying for several years or longer. Mobile home parks are typically composed of individual lots that can accommodate a single or double-wide mobile home, with space for a driveway and a small yard.
While both RV and mobile home parks provide housing options, they serve different types of residents with different needs and expectations. RV parks cater to those who want a temporary place to stay while traveling or vacationing, while mobile home parks cater to those who want a permanent place to live.
Target Market Differences
The target market for RV parks are typically vacationers or travelers who are looking for a temporary place to park their RVs while exploring a certain area or attending events. This may include retirees who travel extensively, families on summer vacations, or individuals who are on road trips.
Mobile home parks cater to individuals or families who are looking for a long term housing solution that is affordable, low maintenance, and often located in a community with other like minded individuals. The residents of mobile home parks are usually individuals who may not be able to afford traditional single-family homes but want to own their own home and have some sense of stability and community. This may include retirees, low-income families, or individuals who prefer the low maintenance and cost-effectiveness of mobile home living.
The difference in target market means that investors in RV parks will have to adapt their marketing and management strategies to attract short-term visitors, while mobile home park investors will focus on long-term residents who want a stable and affordable housing solution. Additionally, the revenue streams for each type of property will differ, with RV parks generating income from nightly or weekly rental rates, while mobile home parks generate income from monthly lot rentals and possibly some home sales.
Rental Rate Structure Differences
One of the main differences between RV and mobile home parks is the rental structure. In RV parks, tenants typically rent a space on a short-term basis, usually by the day, week, or month. These spaces come equipped with utilities such as gas, water, electricity, and sewage hookups, and sometimes include cable and internet as well. Rates can vary depending on location and the amenities offered by the park. I should also mention that transient rental taxes are imposed on short term RV tenants and can be included in the rental rate.
Mobile home parks rent spaces to tenants who own their own homes. Residents pay rent monthly for the space on which their home is located. Mobile home parks provide some services to each home, but often the residents pay for their own gas, electricity, water, and sewer. Additionally, residents are responsible for their own maintenance, repairs, and annual taxes. Rental rates in mobile home parks are typically lower than in RV parks because residents stay for longer periods of time and less utilities are provided, but they also tend to be more stable and reliable with long-term residents.
In both RV and mobile home parks, owners can generate additional revenue by offering additional services such as laundry facilities, storage, and entertainment options. However, the rental structures themselves are very different, and it’s important for investors to understand these differences before deciding which type of property to invest in.
Tenant Turnover and Management Differences
In RV parks, tenant turnover is typically higher than in mobile home parks. This is because guests stay for short periods of time, ranging from a few days to a few weeks, and then move on to their next destination. This frequent turnover can create additional management requirements, as new guests need to be checked in and out, and the RV sites need to be cleaned and prepared for the next guest.
Mobile home parks typically have long-term residents that stay year round. These residents own their homes but rent the land on which they are located. It costs thousands of dollars to move a mobile home from one destination to another, therefore the homes do not leave the park often. If the resident wishes to leave, most of the time they will sell their home to a new owner. This creates a more stable community and as a result, resident turnover is typically lower in mobile home parks.
In RV parks, the management team needs to be able to handle frequent turnover and provide quality customer service to ensure guests have a positive experience. This may include checking guests in and out, providing information about local attractions and amenities, and ensuring the facilities are clean and well-maintained. Good reviews can be crucial with maintaining a healthy RV park, opposed to mobile home parks where your business model revolves around providing a solution to affordable housing.
In mobile home parks, management requirements are focused more on maintaining a stable and welcoming community for long-term residents. This may include managing rental agreements, ensuring tenants comply with community rules and regulations, and overseeing the maintenance and repair of infrastructure such as roads and utilities. Mobile home park managers also need to ensure that new residents meet the park’s screening criteria and are a good fit for the community.
Maintenance and Repair Differences
Maintenance and repairs are an important aspect of any real estate investment, as they can significantly impact the profitability and value of the property. In RV parks, maintenance and repair typically involves the upkeep of things such as the RV pads, electrical hookups, water and sewage systems, recreational and public facilities, and other amenities that cater to short-term visitors. The frequency of maintenance and repairs can vary depending on the level of usage and the quality of the facilities.
Mobile home parks require maintenance and repairs on a broader scale. The infrastructure of the park, including roads, sidewalks, landscape, and utilities must be maintained to ensure the safety and comfort of residents. Additionally, the homes themselves may require maintenance and repairs, including roofing, painting, plumbing, and electrical work.
While maintenance and repair costs can be a significant expense for both RV and mobile home parks, there are some differences in terms of the financial impact. RV parks may see more frequent turnover and usage, which can lead to higher wear and tear on facilities and higher maintenance costs. However, these costs may be offset by the higher rental fees charged to short-term visitors. Mobile home parks may see lower turnover rates and maintenance costs. Therefore, the rent charged to long-term residents can provide a more stable and consistent revenue stream.
Evictions are an unfortunate but sometimes necessary aspect of real estate investing. In both mobile home and RV parks, the process of evicting a tenant can be complex and time-consuming, with legal requirements and potential liabilities to consider.
However, there are some differences in the eviction process for mobile home residents and short-term RV tenants. In a mobile home park, residents own their homes but rent the land on which they are located. This means that evicting a mobile home resident requires the landlord to follow specific legal procedures and provide sufficient notice, as they are effectively evicting the homeowner from their property. This can be a lengthy and challenging process, requiring legal expertise and careful documentation to ensure compliance with state and local laws. I always would recommend you contact a real estate attorney with any legal questions.
The eviction process for short-term RV tenants is typically less complex. Since RV tenants are renting only the physical space and not a permanent residence, the eviction process can be more straightforward. In many cases, landlords can simply give notice to vacate and request that the tenant leave the premises within a day or two. However, there are still legal requirements and potential liabilities to consider.
For example, in Florida if the RV has been on site for less than six months then the park owner may issue an eviction notice and the guest must leave immediately. If they refuse to leave, they become guilty of a second-degree misdemeanor and law enforcement may aid in their removal. However, if they have been there longer than six months the park owner must carry out a normal eviction procedure through the court system. Each state may be a little different so take a look at the landlord tenant rules in your area for further education.
Cost Comparison: RV and Mobile Home Parks
The price of RV parks can vary based on factors such as the size, quality, location, and park amenities. Smaller RV parks may sell at higher cap rates than larger ones. This is due to the larger parks being more desirable to bigger, more aggressive investors. RV parks that have higher ratings from reputable sources may command a higher price due to their reputation for quality. Additionally, RV parks that offer amenities and services typically associated with vacation destinations, such as swimming pools, playgrounds, and scenic locations, may be priced higher than those that cater to extended-stay or seasonal guests.
Mobile home parks typically sell at lower cap rates than comparable RV parks, maybe due to ease of management and greater competition, but they are valued using many of the same metrics including the park’s size, quality, location, and amenities. One additional thing to consider is the type of park. Age restricted 55 and over parks may sell at lower cap rates than all-age family parks due to the ease of management and income predictability.
When comparing the cost to buy RV and mobile home parks, it’s important to consider the potential revenue streams and costs associated with each type of investment. While RV parks may sell at higher cap rates, they often require more ongoing maintenance and management due to the higher turnover of short-term tenants. One thing to note is the revenue potential of an RV park may be limited by seasonal fluctuations in demand and competition from other parks in the area. Ultimately, the decision to invest in an RV or mobile home park should be based on a careful evaluation of the potential costs, benefits, as well as the local market conditions and demand for affordable housing or vacation rentals.
Final Thoughts: Mobile Home and RV Parks
RV and mobile home parks are two popular options in the real estate market. While they share some similarities, they have distinct differences that investors should be aware of. RV parks are designed to accommodate short-term stays for recreational vehicles and cater to vacationers or travelers who are looking for a temporary place to stay while exploring a certain area or attending events. In contrast, mobile home parks are designed for long-term residency and cater to individuals or families who are looking for a permanent, affordable, and low-maintenance housing solution.
The target market differences mean that investors in RV parks will have to adapt their marketing and management strategies to attract short-term visitors, while mobile home park investors will focus on long-term residents who want a stable and affordable housing solution. Additionally, the revenue streams for each type of property will differ, with RV parks generating income from nightly or weekly rental rates, while mobile home parks generate income on a monthly basis from lot rentals.
Tenant turnover is typically higher in RV parks than in mobile home parks because guests stay for short periods of time, ranging from a few days to a few weeks, while mobile home park residents can stay for years at a time. In RV parks, the management team needs to be able to handle this frequent turnover and provide quality customer service to ensure the satisfaction of the guests. Hopefully this article has cleared up any confusion regarding RV and mobile home parks!