Property Value Impact of Micro-RV Park (5 Sites)

[cpkleve]

Good Morning All,

I am looking for your professional comments/opinions on the following (see attached) 5 site Micro-RV park for traveling professionals, that we are wanting to add to our current property. This will be a very low traffic, passive RV Park with minimal noise, no alcohol permitted and only five RVs. Each RV has to be approved by the park owner(s) and the max stay, per County Regulations, is 6 Months with a single renewal term of an additional 6 Months. Our current property was appraised at $450k back in Dec 2022. In your professional opinions & experiences, how would our Kleveland Acres Micro-RV Park impact both our and adjacent property values?

Thanks & GOD Bless, Chad

 

[Terrel L. Shields]

As an cost - I'd say the additional expense might provide some marginal value but not much. The income is related to a Business Enterprise Value therefore, is "blue sky" not a real estate contribution (my opinion only) and the chances of finding a similar mini-RV park that has sold makes the valuation even more problematic. While here an RV park (long term rental) is quite profitable and usually full, only the income approach would indicate it adds much value. Which again leaves the question to be answered, "Will it add value in a transaction?"

The cost of a typical RV parking spot is pretty low, you have electrical, water, and sewer (septic?) and a pad (concrete or gravel) and not much else, maybe cable. You are talking a few thousand at most per site. Meanwhile income wise - annualized income at 10% cap rate is liable to exceed a quarter million ($2,500/mo x 12 x 90% for occupancy at 10% cap rate.) I doubt either cost nor sales would support such...assuming such sales would even exist.

 

[Mark K]

Its a sure bet that the neighbors won't like a miniature trailer park nearby.

The 'rules' are nice, if they're enforced. I'm sure you have all of these rules and will try to enforce them. However, when you sell who's to say that these rules won't change or not be enforced. What's to prevent these sites from becoming real long-term. Six months w/a 6 mo. renewal is permanent. So it has to be moved in 1 year. So lets move it to the next site over. Are you requesting a variance that will disappear when you sell the property or is this a rezoning that stays with the land? Trailer parks attract trailer people and they usually come with lots of 'baggage' and relatives. Alcohol prohibited? That's funny. Will there be a weekly trailer search?

Your good intentions for a decent small park can easily disappear when you do. And sure, we appraisers have heard the same story, just like when people buy houses..."This is our last home, we're going to be here forever". Forever, until they get divorced, transferred, ill, or dead.

If I was a neighbor, I'd be fighting tooth and nail to prevent any variance or rezoning, if that's what you're doing. Do your neighbors a favor and forget this idea. Its selfish on your part to put a trailer/rv park in a residential neighborhood. I'm sure it can be a good source of income for you, at your neighbors expense. If its already zoned for it...well, I suppose the neighbors should have checked this out prior to buying their house.

To answer your poll: Positive effect on your property, probably. Negative effect on the neighbors.

 

[sputnam]

I'm an appraiser. I'm sure I don't know anything about the impact on values in your scenario. That's why you hire an appraiser. To do the research and analysis to answer such questions.

 

[cpkleve]

As an cost - I'd say the additional expense might provide some marginal value but not much. The income is related to a Business Enterprise Value therefore, is "blue sky" not a real estate contribution (my opinion only) and the chances of finding a similar mini-RV park that has sold makes the valuation even more problematic. While here an RV park (long term rental) is quite profitable and usually full, only the income approach would indicate it adds much value. Which again leaves the question to be answered, "Will it add value in a transaction?"

The cost of a typical RV parking spot is pretty low, you have electrical, water, and sewer (septic?) and a pad (concrete or gravel) and not much else, maybe cable. You are talking a few thousand at most per site. Meanwhile income wise - annualized income at 10% cap rate is liable to exceed a quarter million ($2,500/mo x 12 x 90% for occupancy at 10% cap rate.) I doubt either cost nor sales would support such...assuming such sales would even exist.

Thanks for the reply, Terrel. If you were to appraise the property across the road from ours, would our having a Micro-RV park impact that valuation positively or negatively or not at all?

 

[Terrel L. Shields]

any variance or rezoning

We don't know how rural or developed it is.

ts selfish on your part to put a trailer/rv park in a residential neighborhood.

Again, we don't know how residential it is. We have a new one 2 miles out of a town, county regulated. It is on one end of what was a 120 acre farm. They are cutting the farm up and making "estate" lots. The RV park is 11 acres, bare open ground and was full within days of opening. The estate lots are selling for about $150k and a house sold there for $759k. Two more under construction. They don't seem to mind. It is vacant land on the other side and is near a creek. The hillside south is wooded.

BTW I could not get the photos to open so I cannot see any pix.

 

[Terrel L. Shields]

If you were to appraise the property across the road from ours, would our having a Micro-RV park impact that valuation positively or negatively or not at all?

It would certainly be a negative with rare exception...at least in the minds of the owners in a suburban or rurban environment. Out away from other houses, not so much.

 

[cpkleve]

Its a sure bet that the neighbors won't like a miniature trailer park nearby.

The 'rules' are nice, if they're enforced. I'm sure you have all of these rules and will try to enforce them. However, when you sell who's to say that these rules won't change or not be enforced. What's to prevent these sites from becoming real long-term. Six months w/a 6 mo. renewal is permanent. So it has to be moved in 1 year. So lets move it to the next site over. Are you requesting a variance that will disappear when you sell the property or is this a rezoning that stays with the land? Trailer parks attract trailer people and they usually come with lots of 'baggage' and relatives. Alcohol prohibited? That's funny. Will there be a weekly trailer search?

Your good intentions for a decent small park can easily disappear when you do. And sure, we appraisers have heard the same story, just like when people buy houses..."This is our last home, we're going to be here forever". Forever, until they get divorced, transferred, ill, or dead.

If I was a neighbor, I'd be fighting tooth and nail to prevent any variance or rezoning, if that's what you're doing. Do your neighbors a favor and forget this idea. Its selfish on your part to put a trailer/rv park in a residential neighborhood. I'm sure it can be a good source of income for you, at your neighbors expense. If its already zoned for it...well, I suppose the neighbors should have checked this out prior to buying their house.

To answer your poll: Positive effect on your property, probably. Negative effect on the neighbors.

Thanks for the reply Mark. To answer a few of the questions, the Zoning is A-R (Agricultural-Residential), which is required, therefore no re-zoning. The County has a 28 page RV Park Ordinance outlined with specific enforceable rules, such as length of stay, park design, setbacks, etc. The county ordinance does not permit one to move from one site another to 'extend the stay' past one year. This is not a variance request but a special hearing has to be had to approve the 'special exception' we are requesting. To stay that trailer parks attract trailer people is true. However this is not a trailer park nor will it become one. Thanks again for your input.

 

[cpkleve]

Good Morning All,

I am looking for your professional comments/opinions on the following (see attached) 5 site Micro-RV park for traveling professionals, that we are wanting to add to our current property. This will be a very low traffic, passive RV Park with minimal noise, no alcohol permitted and only five RVs. Each RV has to be approved by the park owner(s) and the max stay, per County Regulations, is 6 Months with a single renewal term of an additional 6 Months. Our current property was appraised at $450k back in Dec 2022. In your professional opinions & experiences, how would our Kleveland Acres Micro-RV Park impact both our and adjacent property values?

Thanks & GOD Bless, Chad

We don't know how rural or developed it is.

Again, we don't know how residential it is. We have a new one 2 miles out of a town, county regulated. It is on one end of what was a 120 acre farm. They are cutting the farm up and making "estate" lots. The RV park is 11 acres, bare open ground and was full within days of opening. The estate lots are selling for about $150k and a house sold there for $759k. Two more under construction. They don't seem to mind. It is vacant land on the other side and is near a creek. The hillside south is wooded.

BTW I could not get the photos to open so I cannot see any pix.

Terrel, I am also unable to get to the images? Not sure what happened? If you can't see the images I can understand the questioning by others. The images show an aerial view of the property, planned location, etc... Not sure who can help with loading them 'again'.

 

[Terrel L. Shields]

Not sure who can help

Me neither. The forum is awful quirky. There are 3 ways to get a photo into the post. All must be small <1000kb. You can copy and paste (sometimes) you can use the "attach file" below and sometimes that works with you being able to click upper left and attach as thumbnail or full size. OR you can go to the top line to the left of the smiley face and click it to load a photo. Sometimes nothing works. The forum is buggier than a roach hotel.