Real Estate Investing on Wheels - RV and Mobile Home Parks

Vacation Real Estate
The vacation/resort home buyer. Jim Kimmons

 There is a real estate investment niche that can be really profitable, but it doesn't get a lot of attention.  Actually, this article is about two different sides of the niche, mobile home parks versus RV parks.  There are distinct differences, but both can be great investments.  Consider that the largest investor in the mobile industry is Warren Buffett.  

Mobile Home Parks

This side of the niche is the investment in parks for the more permanently parked mobile homes.

 These are factory fabricated homes, too large to move down the roads without special trucks and permits.  They are purchased as permanent residences for the most part.  Then they are moved to a park that has developed spaces with electricity, natural gas, sewer, water and often cable TV hookups.

Many are never moved again.  So, we're talking about a park that is pretty much the rental of lot space for a permanent residence.  The cost to develop a park is in the land, roads and utility infrastructure.  The mobile home owners set up their own utility accounts and very little management is required for this type of park.  Around the country, in non-tourist areas, rents for a space run anywhere from $100 to $500+ per month.  Tenants pay all of their own repair and utility expenses.

Some park owners also purchase mobile homes and place them for sale or for rent, but the bulk of the income is from owners who bring in their units.

 Some parks do more than just provide a space, becoming more like communities.  They have common areas, perhaps swimming pools, and create a neighborhood atmosphere.  This is especially popular with retirees.

RV (Recreational Vehicle) Parks

Now we're talking about a business with a bit of a hotel type of management.

 RV enthusiasts may want a place for a night, a week, or several months.  The same utilities, other are installed, except the RVs carry their own propane, so no natural gas.  The sewer hookups are set up for easy connection and specific RV hoses and connectors.  The RV owners do all connecting, pretty much taking care of themselves once they're pulled into the space.

The best parks will have laundry and restroom/shower facilities, as many RVs have no laundry, and some smaller ones make using a nice shower appealing.  There can also be swimming pools, hot tubs and other common areas.  Most RV owners are either vacationing or living in their RVs to travel for enjoyment.  So, they expect more in the way of amenities, and shop the Internet to check out features and prices.

As for space rent, it's all over the board.  Generally, in non-tourist areas, rates can run between:

  • $30 and $50 nightly
  • $150 and $350 weekly
  • $350 and $600 monthly

However, get near a popular tourist spot or beach area in Florida, and you could end up paying $1,000 per month or more to park your unit.  And, for monthly stays you may be required to pay for electricity as well.  Nightly and weekly guests do not pay for electricity or any utilities.

 So, this is an extra cost for management.

Many parks offer free space and full hookups to people to stay for extended periods, sometimes years, to manage the park.  They may also get an hourly wage, depending on park, location and number of hours worked.

Why These Are Growing in Popularity

There are two factors that are contributing to growth in the mobile home and RV industries.

  1. Lower cost of permanent housing - Whether it is a younger first time home buyer or a retiree on a fixed income, the home and space together can be considerably less expensive on a monthly basis.  This is helping mobile home parks to book good income.
  2. For RVs, it's Baby Boomers - Sure, vacationers are a major factor, but baby boomers who want to be mobile in their retirement are moving permanently into RVs.  They tend to winter in the south and summer in mountain or other northern vacation areas.

    Constructing a new park of either type is getting more difficult and expensive due to land costs and local ordinances.  In fact, it's impossible in many areas to get a permit for a new park.  However, buying an existing park can mean immediate cash flow and long term great ROI.