There has been a disconnect in financial markets between values and making money. Michael Burry, the “Big Short” investor, recently noted that "This morning there were still 218 primary stock listings in the United States with a market cap over $1 billion and EBITDA less than NEGATIVE $100 million," he posted on Twitter. "29 of them had market caps over $10 billion, totaling $655 billion.". In addition to his concern about the fact that Wall Street is valuing worthless companies (based on actual net income) at billions of dollars, the results are already in based on the market’s performance. Over the past year, the Dow Jones, the Nasdaq and the S&P 500 are all down over 20%. And if you factor in the rate of inflation, that number jumps to nearly 30% in real dollars. That’s a terrible performance. And one that no RV park could ever possibly match.
The big differences between RV Parks and Wall Street
The reasons that RV Parks are better investments than anything Wall Street has to offer are pretty straightforward and include:
- RV Park values are 100% tied to actual income creation. RV Parks are bought and sold based solely on income, at cap rates that range from around 8% to 12% and more. You would never buy an RV Park that did not have positive cash flow after the mortgage, and certainly never buy a property with a negative income stream unless you know precisely how to fix it. This is the exact opposite of how Wall Street works, in which companies with zero income or worse can be valued at a billion dollars or more.
- RV Parks offer sensible leverage and stocks do not. You can typically buy an RV Park with somewhere from 10% to 20% down payment and a bank provides the rest. When you buy an RV Park you get to buy a property that is 5 to 10 times larger than you can afford to buy with cash. However, stocks are an all-cash situation – because lenders have no confidence that the stock you buy will be worth that same amount in the future.
- Scarcity of RV Park supply keeps values high. On Wall Street companies are a dime a dozen with more being created every day. The number of RV Parks in the U.S. is limited, and this positive supply/demand relationship always keeps RV Parks valuable to protect your investment.
- RV Parks provide cash dividends as well as equity building. Most stocks offer no dividends at all – no regular cash payment quarterly or annually. The only way you make money with these stocks is to pray that they go up in value rather than down (like they have for the past year).
- RV Parks provide protection from inflation and stagflation. Look at any economics textbook and you’ll see that the worst performers in inflation and stagflation are stocks and the best are precious metals and income-producing real estate. That’s because inflation ravages the stock market with lower consumer buying coupled with margins being squeezed. RV Parks have no such issues.
- RV Parks are on the right side of all U.S. Megatrends. The term “Megatrend” was coined in 1982 by an author describing trends that are so significant that they shape the American economy. And RV Parks are on the correct side of all known U.S. Megatrends including 1) 10,000 Baby Boomers retiring each day 2) Millennials loving the outdoors and 3) Covid-19 spurring more Americans to find alternative to hotel travel and to seek outdoor settings. This posture makes RV Parks in the right position to enjoy even higher occupancy rates and prices.
- All experts are bullish on RV Parks. Sam Zell is known as the “grave dancer” and is the only human to ever be the largest owner of apartments, office buildings and RV Parks. While he sold a majority of his apartments and office buildings in recent years, he has not sold one single RV Park as he expects their values and income to get higher in the future. Meanwhile, virtually every world economist (including the one quoted above) predict a major U.S. stock market crash over the next twelve months (which means apparently that a 20% stock price drop is only the beginning).
- RV Parks give the option to “live” in your investment. You can’t pitch a tent on Wall Street, but you can live luxuriously and for free in your RV Park if you so choose. Many RV Parks come with the owner’s house as part of the deal.
For these reasons, RV Parks are infinitely better than Wall Street stocks.
Conclusion
The U.S. is entering a terrifying period as an investor. Stocks have already crashed 20% and are looking at more – and bigger – declines. Meanwhile, RV Parks hold their values, offer cash income from day of purchase, and are on the right side of every U.S. Megatrend. The choice is yours. For more information on how to identify, evaluate, negotiate, perform due diligence on, re-negotiate, finance, turn-around and operate RV Parks consider the RV Park Investing Home Study Course!