Unlocking the Secrets of Mobile Home & RV Park Financing | Expert Insights with Mark Ilslley of CBRE

David Moore: Hello, David Moore, Equity Advantage and Mark Ilslley of CBRE, and we’re talking all things mobile home parks and we’re going to talk a little bit about RV parks but you made a comment last segment talking about what you actually own and in those parks, the owner owns the dirt for the most part and for… Practically speaking, it’s sort of land lease situation which… For those of you out there, if you’re interested in exchanging into or out of a mobile home park, you’ve got to understand what you’re doing and even if you own the houses themselves, unless it’s attached to the ground and deeded as real property, it’s going to be personal property. So, anything, any money through an exchange that’s earmarked for the personal property is going to be taxable as book. So, you just want to make sure people out there are aware of that.

The same thing is going to happen when you’re going away on the sales. So, with that said, if somebody is going to come in and buy something, are there things… How’s the financing work? Is it problematic in today’s world? What’s sort of the best practices going in these things? What should people be looking for and looking out for?

Mark Ilslley: Well, historically, they’re… And the reason why mobile home parks, manufactured home communities, RV parks were specialty is because of the financing. A lot of the traditional financing resources especially institutional ones didn’t really understand them. The lending was more for community banks, federal credit unions, et cetera until institutions started getting into it. And it’s still kind of the case. We have had some federal credit unions that were very aggressive with mobile home park lending until the industry started to move and then they came out of the market real quick. So, buying mobile home parks of certain sizes and certain types, ages, for example, and where the average age of the units in place will also add to the creditworthiness or the risk and so, some lenders will loan and some won’t. So, we’ve had a changeover in the last few months.

David Moore: And Mark, with your position, first Vice President of Capital Markets at CBRE, you’re not… I mean, we’re talking to him from Oregon but you’re really not geographically limited. You work what kind of scope as far as the whole country?

Mark Ilslley: Yeah, it’s primarily driven by relationships with CBRE and I would say we have sold a mixture of mobile home and RV parks. We had a portfolio in Canada that we represented. We had properties down in Texas that I was working on, Montana, just all over and it’s driven by relationship through CBRE primarily.

David Moore: So, you mentioned some mobile home, RV parks, if you look on YouTube, you’re going to see even new. Well, should I own a campground? Can you sort of differentiate for the audience the difference where you see the lines between those different products?

Mark Ilslley: Well, in my career, manufactured housing or mobile home parks had a certain zoning, RV parks had a different zoning. Sometimes, the RV parks were zoned RV because they’re was a way to provide recreation attached to the RV parks but the RV parks would operate only seasonally and some of them in Oregon were placed near rivers that would ebb and flow and so, those tenants would have to leave the parks during a certain season because of a potential flood. So, you were able to use those properties for that use seasonally. But RV parks have changed now, it’s not just recreation anymore.

We’ve seen a kind of a sea change, especially in some of the development of new RV parks where they’re building them not for the weekend warriors or people to come in for long weekends or for a one-week vacation. There is a demographic of people who are living in their RVs and I termed that a nomadic residence five years ago who are living in their RVs because they can’t afford to live in other unit types even manufactured housing or mobile homes. And so, we are seeing people living in RV parks now full time.

David Moore: I saw a segment, a news segment on a guy that had converted a box van into his home and he was a college student. It was just he couldn’t afford to live the student housing, everything else, come on, he was living in the box van.

Mark Ilslley: Right.

David Moore: That’s pretty crazy.

Mark Ilslley: That’s interesting how he could do that.

David Moore: Yeah, and he picked the box van because it just looked like a delivery van and he didn’t want to worry about theft and everything else with a little motor home or something.

Mark Ilslley: I met a lady who’s lived in her small RV, it was a Mercedes RV, probably cost her $110,000 brand new. She’s been living in it for two years and she drives from one to another and she’s a nurse.

David Moore: Wow.

Mark Ilslley: She’s been living in it and she said, “Look, the only reason I live in this is that when I go home, I go home to sleep because I’m on 12 hours and I’m off 12 hours. And so, I picked my contracts and I may go work somewhere for a period of time and then move.” And it’s an interesting lifestyle for her to do that. She’s in her 60s.

David Moore: Wow.

Mark Ilslley: So, she gets to go all over the country and make good money doing it because contract nursing pays better than if you’re there full time, apparently.

David Moore: Interesting.

Mark Ilslley: Yeah.

David Moore: Interesting. So, on the mobile home parks, you’ve got manufactured housing too but you’ve got… You talked about double-wides earlier. If you look at the classical single or the double, how has that whole industry changed in recent years? Are the houses like a house you’re going to live in? Are they… What are they like as far as a regular home?

Mark Ilslley: Well, interesting enough, 20 years ago or more, they were manufacturing a lot more mobile homes or manufacturing homes than they are today. And that’s because communities and states do not allow the development of manufactured home communities like they used to. So, you need less inventory. Now, the Southeast, there is more and more mobile home park development there. But here along the West Coast, there are very few mobile home parks that have been allowed to be developed in the last 10, 15 years. So, manufacturing of those units has dropped.

But, manufactured housing has become more expensive, not as much as housing and as multifamily, but it all comes down to… Part of it comes down to the cost to manufacture and having people who know how to build manufactured homes and then the availability of dirt or spaces. And even in the South, if you have a single-wide, the price per land for that site for that single-wide in the higher density is cheaper than it is if you were to do a double-wide or if you were to do a double-wide or triple wide with garages. So, it depends on how you want to build those. And these are now built different than they were before. They used to be built with… Some of them two by three siding. Now, it’s two by six or two by four.

David Moore: Wow. So, it’s built like a regular house, two by six.

Mark Ilslley: You build just like a regular house and you have all the energy issues that are in there, the insulation and the roofing, you have pitched roofs now instead of flat roofs. There’s lots of different changes but that adds to the cost.

David Moore: Yeah.

Mark Ilslley: And so, it depends on the community you want to develop. So, one of our clients, Sun Communities, they’ve been looking for property in Oregon for several years and they want to build 50 acres or more, haven’t been able to find anything.

David Moore: Wow. Wow. Thank you.

Mark Ilslley: Yeah.

David Moore: All right, David Moore, Mark Ilslley, we’ll be right back with you. Don’t go away.