When you’re trying to buy an RV park, it seems like they are a scarce commodity. When you are trying to sell one you think they’re everywhere. The truth is somewhere in the middle. However, there are many outside observers who have a vested interest in convincing you of these polar opposites. So what’s the truth about RV park supply in the U.S., and what does it all mean?
A rough number on the actual supply
There are roughly 13,000 mobile home parks in the U.S., according to Wikipedia. How they gathered data, nobody knows, but it’s probably from those properties that have visibility on RV park lists such as Woodall’s Guide. That’s a fairly large number of properties by any measure, and would suggest that RV parks are not the rarest item on earth. But again, that’s based on relative terms. There are 54,200 hotels in the U.S., so they are much more rare than that, but there are also only 60 nuclear power plants in America, so compare to that RV parks are not in short supply. The bottom line is that it’s all about perception.
Who sets that perception of scarcity or oversupply?
Here are the players who will try to persuade you if an RV park is scarce or plentiful, and what their motive is:
- The Broker. This person will try to pretend that each and every RV park is a rare commodity that is more valuable than gold (even if it’s an abandoned tract in a swamp). They will tell you that the property is a steal at a 5% cap rate and that you’ll never find a better one (or maybe another one at all). Obviously, the motive is to get you to pay the asking price or as close as possible, or just to buy an undesirable property, period.
- The Seller. They will try to persuade you that the property is one-of-a-kind and that there is not a better one in the state/country/continent/universe. Even if it’s broken/empty/has a broken power system or similar drawback, the seller will try to convince you that you’ll never find a more attractive investment option. Once again, he’s just trying to sell you something.
- The Appraiser. He will not find the property that special or rare. He will find it just another RV park and may come in at a value slightly lower or higher than you are paying, but if there’s a single flaw in the mechanics of the deal he will point it out and say that makes it lesser in value than you thought. His motive is to simply avoid risk by giving it as low a value as he can so the bank won’t get mad at him if it fails, while trying to also come up with a price that is high enough to make the loan go through.
- The Banker. He will try to act like the RV park is not that great a deal and that he’s doing you a favor to do the loan in the first place. Of course, his motive is to try to negotiate better deal terms for the bank, such as a lower LTV, higher interest rate or shorter amortization period.
- The Broker Part II. The broker when you go to sell the RV park will try to convince you that the RV park is inferior to many others nearby, and that the price you are seeking is way too high. Even if this is the same broker you used to buy it – the same one that told you only a few years ago how rare and precious it was. The motive, of course, is to list it for as little as possible to make it easier to find a buyer. Remember that the broker only makes fractionally more on the last amount of the price (if an RV park sells fast for $500,000 or slow for $600,000, the broker only gets $3,000 different for waiting for months to find a buyer).
Don’t listen to any of these people. You should never look for guidance from anyone who has an ulterior motive. Only seek the advice of someone who has nothing to gain financially whether the RV park is bought or sold.
So is there decent supply or not?
Yes, there’s a decent supply of RV parks in the U.S. They are neither scarce or abundant – they are just right. If you want to find an RV park to buy, and you apply yourself, you can definitely find one. But you have to know what to look for and how to create the volume necessary to succeed.
If you want to learn the correct way to identify, evaluate, negotiate, perform due diligence on, renegotiate, finance, turn-around and operate RV parks then consider our RV park Investing Home Study Course. It’s 100% fact-based and written by one of the largest RV & mobile home park owners in the U.S. Best of all, we have nothing to sell you and will just tell you the truth and you can then formulate your own opinions.