When you drive through a “pure mobile home park” and then drive through a park with a lot of RV tenants you can feel the difference in overall quality. The overall value of a MHP with “Permanent RV” tenants mixed in with Mobile Home tenants is lower than a MHP which is completely filled with Mobile Homes. RV’s are not really permanent homes so MHP buyers and banks see RV occupancy as more risky than Mobile Home occupancy. The appraised value is lower, the interest rate that the bank charges can be higher and the pool of interested buyers is smaller. There are a number of MHPs in Oregon which have RV tenants who have been tenants in the same space for over 15 years, but even if you prove this to a bank, they can still be hesitant to lend on the park. Many buyers will simply not look at MHPs with a high percentage of RV tenants. One advantage of having RV tenants to fill spaces is that you can give them a 60 day no cause notice to move out. This can be beneficial for two reasons. Firstly, if the tenant turns out to be a problem tenant who does not adhere to the rules, it is easy to replace them with a good tenant. This also allows a MHP owner to temporarily fill spaces with RV tenants but replace them with Mobile Homes when they find one to put into that space. Of course, it is always a good idea to inform an RV tenant that this is your intention before they move in and expect to live there for years.
Not only does the park income rise when spaces are full, but the overall feeling of full occupancy is good for tenants, management and once full, parks with 100% full lots tend to stay that way for a very long time. Vacant spaces can make a Mobile Home Park feel old, neglected, and undesirable even if it is well maintained otherwise. Also, we all know that it is expensive to bring even a used Mobile Home into a park. The purchase of the house, moving expenses, set up, and final touch up will generally run at least $17,000 for a single wide and anywhere from $35,000 - $60,000+ for a double wide home. Other items to consider are the sales commissions for the Mobile Home Dealer and it can prove to be difficult to get both a house, and a tenant to both qualify for bank financing. Having the park buy and set up mobile homes can be a risk but may be worth it. There is really no calculation or standard that determines what the reduction in value of a MHP with RV tenants is but it certainly is the case that the demand is lower and lending is more difficult.
By using a good Mobile Home Dealer who can find used mobile homes to fill spaces, arrange them to be moved and set up and then sell them is a win-win situation. There are a number of highly reputable licensed dealers who can seamlessly fill vacant spaces and in the end the cost is usually worth it when you calculate the improvement made to the park. If you are thinking about selling your MHP, and even if you are not expecting to, it makes sense to improve your property for long term value.
On the other hand, simply having RV tenants pull their RV into a space has many short term benefits for both the tenant and the MHP. The screening criteria is still the same so the RV tenants make up a very good pool of possible tenants. All in all a pure MHP is more desirable but RV tenants can be as long term as Mobile Home tenants and with the trend heading in the direction of very small living spaces, RV living may be considered a luxury before long.
Kim Berry, Principal Broker
Rundle CRE - Mobile Home Brokers
5319 SW Westgate Dr. Suite 232
Portland, OR 97221