More investors eyeing mobile home, RV parks as low-maintenance-cost alternative
News / Consumer


By Ed Egger - Inside Tucson Business - Published on Thursday, June 19, 2008

More than ever, investors seem to be looking at mobile home and recreational vehicle (RV) parks as a good place to put their money, especially in places like Arizona.

In fact, in reaction to this trend, CB Richard Ellis is adding a national group practice member to provide service to buyers and sellers in this real estate category.

"The U.S. market has 50,000 manufactured housing communities and 15,000 RV communities," said John Newman, senior vice president who will focus on acquisition and disposition of modular/manufactured home and RV communities in Arizona, Colorado, Nevada, New Mexico and Utah. "Those numbers in themselves caught our attention, because there hasn't really been any real representative for owners of those parks."

As of the 2000 Census, there were 193 total manufactured home and RV parks in the Tucson area, 88 of them in the City of Tucson, according to Anna Sanchez, principal planner with the City of Tucson's department of planning and design. She said most of these are mobile home parks, and the number includes both rental parks and parks where mobile home owners also own the land. Sanchez said she believes the number has increased since 2000.

As evidence of the increased interest among investors in these communities, Newman said in 2002 there were no real estate investment trusts (REITs) investing in mobile home and RV properties, but now there are 100 large institutional buyers. Even Warren Buffet recently bought Clayton Homes, a manufacturer of double-wides.

There are also foreign buyers. Newman said foreigners have in the past liked warehouse properties because of the low maintenance costs but more recently they've discovered mobile home and RV parks are much like warehouse properties for low demands.

Making these properties even more attractive to foreign investment now is the sinking value of the U.S. dollar. Because CB Richard Ellis is international, Newman said the company has been able to increase its share of foreign investors, especially from Canada and Australia.

"These parks are a really passive investment," Newman said, adding that operating expenses for apartment properties is typically about 50 percent, but it's about 40 percent for mobile home and RV parks.

There are generally two types of mobile home parks - those that are designed for people age 55 and older that are often in outlying areas of major cities and those that are second family-occupied parks inside cities.

Newman says there is growth in the 55+ parks.

Family-occupied parks, he said are "land banks" that eventually get converted to other uses but provide a good income stream while operating. He said Tucson has many of these types of parks, often with pre-1978 mobile home units in them.

RV parks offer a different picture, Newman said. With the skyrocketing price of diesel, RV owners these days are picking parks closer to metro areas and development of vacation RV parks has slowed.

Newman works out of CB Richard Ellis' Phoenix office. Previously, he was assigned by CB Richard Ellis as the town manager for Bagdad, a Freeport-McMoRan company-owned town of about 4,000 in Yavapai County.



source*