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102: The Rising Craze: Why RV and Mobile Home Parks Are Booming
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In this episode of the Property Prophets Podcast, host Travis Wells delves into the booming world of RV and mobile home parks. While this sector has always been popular, it’s currently experiencing a significant surge. Travis highlights that many investors focus on residential properties, making that market highly saturated, whereas RV parks and mobile home parks present untapped opportunities.
Travis explains that brokers frequently contact park owners, trying to negotiate lower prices. However, he emphasizes the importance of understanding how commercial assets trade based on a cap rate, which is essentially all expenses less the mortgage. For example, if a park makes $50,000 a year and trades at a 10 cap, it can be resold for $500,000. Travis warns against falling for brokers' rosy pro forma projections and advises buying based on actual numbers.
He shares a recent experience where he evaluated an RV park that could be a great investment for someone willing to spend on marketing and improvements. However, for Travis, a 3% return and a long wait for profit weren’t worth it. His key advice is to go directly to the owners for the best deals, looking up expired listings and getting accurate, current figures from the owners.
Travis provides a practical example: if a park brings in $10,000 a month and the owner wants $2 million, dividing that by 1.5 gives a ballpark figure of $666,000 if the owner is willing to hold paper. For cash deals, he starts at $500,000. It's all about ensuring the numbers make sense financially.
Travis recently locked up a mobile home park with zero interest. The property includes five units with room for more and city water. He secured it for $100,000 with $0 down, $500 earnest money, and $1,400 a month for 48 months. By the end of the term, he would have paid $67,000, with just $33,000 remaining on the note. Renting out the units would generate solid cash flow or present a prime opportunity to flip.
He also discusses the importance of utilities, city water, and sewer, noting how these add significant value. Larger parks with 100+ units and city utilities can attract private equity and substantial investments.
This episode is packed with insights on evaluating and securing deals, emphasizing value-add opportunities, negotiating terms, and ensuring every investment makes financial sense from the start.
Listeners are encouraged to tune in to transform their investment strategies. The full episode is available on all major podcast platforms. Don’t miss these invaluable insights that could redefine your real estate journey!
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