Mobile Home Park Appraisal

Mobile Home Park Appraisal

Mobile home park appraisals are provided by commercial real estate appraisers, and the best and most experienced of those will hold an MAI designation from the Appraisal Institute. Commecial real estate appraisers have many concerns that need to be taken into consideration before providing an opinion of value for a particular mobile home park.  The most important considerations are typically from the income approach, and focus on the net operating income, (gross income - expenses = net operating income).  With the NOI determined, the typical process involves capitalizing the NOI into a value estimate.   That said, the sales comparision and cost approach can be appropriate valuation methods, depending on the property. 

Mobile Home Park History

Mobile home parks or manufactured housing sites became common in the US during World War II. Because of the resource requirements of the war effort, housing had to be built as cheaply as possible. Manufactured homes were constructed with low cost materials, and because of that, were considered cheap by the general public. Because these housing units were built in a factory, they could usually be produced cheaply by taking advantage of standardization that comes with assembly line construction, and economies of scale. Over the decades factory built housing quality has improved dramatically, and is now on par or better than traditional site built construction.

In 2018, the median sales price of a site built home in the US was $225,700. Comparatively, the average price of a manufacture home was $87,100. Manufactured home buyers usually spend 20% less on housing that site built construction. But there is a major downside to manufactured homes - they don't come with land. Buyers still need to purchase land in an area zoned for manufactured homes, and build the necessary site improvements to be able to place the unit on the property. Or, they can move their unit to a mobile home park and rent a pad, which comes with the benefit of the shared amenities in the park.

Difference between Mobile Home (vs) RV  

Mobile homes and RV's share factory construction. The distinction between the two is the RV's are movable, and they are for temporary or seasonal use. RV's are expected to be moved. This is different from a mobile home, (although the word "mobile" is unfortunate), because although technically mobile, the cost to move a mobile home is high. Often mobile homes have skirting, attached awnings or carports, and attached stick built additions, making moving them difficult and expensive.

The US Department of Housing and Urban Development (HUD) has specifically outlined their definition of a manfactured home in 1974, and that definition is as follows:  Manufactured home means a structure, transportable in one or more sections, which in the traveling mode is 8 body feet or more in width or 40 body feet or more in length or which when erected on-site is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained in the structure...The term does not include any self-propelled recreational vehicle.

Mobile Home Park (vs) RV Park

According to estimates, there are 38,000 mobile home parks in the US. Most parks are in the southern states, were land is inexpensive and the weather is warm. Florida has the largest number of parks, while New York and New Jersey have the least. When a mobile home owner wants to move, they usually sell their unit rather than trying to relocate it. There is high cost in moving, and finding a new site for the unit makes relocation unlikely.

Mobile home parks can be built for seniors, with rules that residents must be 55 or older.  Tenants of mobile home park usually own their units, but in many cases, the park owner owns some or all  of the units.  

Types of Mobile Home Parks

There are three major types of park ownership.  Those are:    

• A rental park, where an owner rents a space to tenants
• A resident owned park. The homeowner buys a space or purchases a share in the corporation that owns the property, like a cooperative.
  
• A rental park, where the owner owns all the the mobile homes, avoiding efforts at rent control.

Mobile home parks, especially rental parks, are similar to apartment complexes or cooperatives, while RV parks are more similar to lodging facilities, such as motels.  Mobile home parks have permanent tenants, whereas RV parks have much more transient residency.

Senior Parks 

Senior parks can be created by setting rules requiring all residents to be of a certain age. Alternatively, rules can be created to allow younger residents, provided at least one of the residents is a senior. Senior parks are thought to have the best income stability, as most residents are retired and living on a fixed income. These seniors also care for their properties better, as they have more time to maintain and improve their homes and grounds. Senior parks also often have higher quality amenities, with wide roads, ample street lighting and well maintained interior roads.

In senior parks, landscape is often good, with amenities including recreation buildings, clubhouses with kitchens, laundry, and assembly areas, with a pool and restrooms. Collection loss is less common for senior parks as compared to family parks.

However, tenants of age-restricted often are resistant to increasing rents, and can be vocal about park maintenance, with both maintenance and management expenses typically higher at a senior park as a percentage of collected income.

Seasonal Parks

Seasonal parks are found in vacation destinations or are used as summer homes. This is a concept similar to the combination extended-stay/destination RV park, although in seasonal mobile home communities the homes are not moved but simply occupied only during certain periods of the year.

Types of RV Parks

• An overnight park is often located along or adjacent to highways or freeways. A typical stay is one or two nights, and the travelers is going somewhere else. Locations are important for the success of these parks. Overnight stays generate the highest rates, but also increase management and maintenance costs.
  
• An extended stay park is similar to a mobile home park where tenants stay for an extended period of time. Zoning ordinances and use permits may impact the length of a stay. Location often determines the demand by season. As an example, extended stay parks in central Arizona are going to be much busier in the winter, and near vacant during the summer.
  
• A Destination Park offers a range of amenities and services. the Destination Park is unlike an overnight park, where travelers stay briefly on their way to somewhere else. At a Destination Park, the park is the attraction. Destination parks are resort like, with swimming pools, basketball courts, spas, children's playgrounds, and the like. Some live entertainment may be offered. Destination parks generate their income on a seasonal basis, and may close during certain times of the year.