If you want to get into real estate investing, there are numerous options at your disposal. Although you can certainly consider buying a campground for your first investment, new investors will have to decide between two different types of parks: RV parks and mobile home parks. In some cases, these two types of grounds will be sold by the same brokers or exist within close ranges of each other. That can make this choice even more confusing. To clear up some of your questions, we’re comparing these two types of investments in today’s post.
RV Parks
- Greater Involvement: When buying a campground or RV park, you’ll need to come in with clear expectations about the level of interaction that will be expected of you. If you choose to invest in an RV park, you’ll have to be ready to show new visitors around the grounds, attend to common areas, and take care of camper needs on an ongoing basis. That means you’ll likely be busy with these duties throughout the day and may need help making sure operations run smoothly. You won’t be able to stay in your office for hours on-end. However, that can be a real plus for investors who love face-to-face interactions and want to create memorable experiences for guests.
- Need for Amenities: Because it’ll take more effort to retain RVers, you’ll need to make the offering and upkeep of amenities a priority. When you drive an RV, you have the freedom to stay for a week or less at any given facility and may not come back if the grounds aren’t to your liking. You’ll need to make it a point to stand out from the competition if you want to bring in new and repeat business. That may mean more work, but it can also mean a greater reward.
- Higher Profitability: Buying a campground or RV park has the potential to pay off — literally. There are more than 12,000 RV-related businesses operating throughout the U.S. with combined annual revenues of more than $37.5 billion. What’s more, RV parks come with higher capitalization rates than mobile home parks. That means the profitability and ROI will potentially be much greater. Ultimately, that makes purchasing an RV park a smarter investment in many cases.
Mobile Home Parks
- Hands-Off Management: If you’re seeking a more passive real estate investment, a mobile home park may check that box in ways an RV park cannot. Typically, the owner of a mobile home park will interact with residents only to collect rent or to deal with an issue. Compared to the responsibilities the owner of an RV park may face, that’s significantly less responsibility to take on. That said, you can’t completely check out and will still have to be available to residents on an as-needed basis.
- Long-Term Relationships: Mobile home residents are likely to stay put for significant lengths of time, especially because it can cost thousands of dollars to relocate to a new park. That can provide you with an opportunity to really get to know your residents, rather than interacting with a slew of new faces on a daily basis. You won’t have to deal with as many on-the-job responsibilities, but you will have an opportunity to have ongoing interactions with those who live in your mobile home park.
- More Competition: It’s important to note that there are typically more people looking to buy mobile home parks than there are those buying a campground or RV park. Some may think that means mobile home parks are the more desirable choice, hands-down. But it may mean that these grounds are less expensive or require less upkeep, both of which appeal to certain kinds of investors. In the end, however, more competition can drive up the price and lower the availability. You may not get your pick of park when you have your heart set on mobile home grounds.
Buying a campground or RV park can be an incredible opportunity for investment. That said, these aren’t the only real estate investment opportunities available to you. Before you opt for the most popular choice, be sure to determine your priorities, costs, and other considerations to ensure your investment aligns with your professional and financial goals.