It should come as no surprise that nobody is concerned about your financial security as much as you are. And recent events show that, more than ever, relying on others is the worst plan you can make. The stock market and housing markets are at all-time highs despite Covid, inflation, urban unrest and world instability. So how can you take your own destiny into your own control? The answer for many is by buying an RV park.
Why an RV park?
The first thing to know about an RV park is that it’s a very simple business model: you essentially rent land to those who own RVs to park on and enjoy the local area and park amenities. In a world or complicated products and services (always subject to the risk of new innovation) an RV park offers peace of mind. And it’s a win/win business model in which both the customer and RV park owner is happy with their relationship and you rarely suffer any stressful encounters. Most importantly, it’s a business that few people think of or understand so the competition is low and there are many mom-and-pop owners you can buy from. In many other real estate segments – such as apartments and single-family homes – the competition is fierce and the ability to make money is slim.
What makes it so better than other investment alternatives?
- High rates of return. RV parks have extremely high cap rates compared to most all other forms of real estate.
- Lower entry point. Mobile home parks come in all shapes and sizes and you can find an RV park to fit almost any budget.
- Asset-secured investment (your money is back-stopped by land and improvements value). Many investments have zero value if you fail, like a restaurant where all you have to show for your money are some tables and chairs. RV parks – in a worst case scenario – still has value in the land and improvements. Remember that stocks and bonds are just paper with zero value if they go bust.
- Inflation hedge (real estate is a top performer during inflation). There are only two investments that do well during times of inflation (just check any textbook) and those are 1) gold and silver and 2) real estate. We’re going into a period of higher inflation and staying on the right side of this eventuality is key.
- Ability to obtain seller financing or even SBA lending. Just as RV parks come in a number of sizes, there are also many options to finance RV parks. Seller financing is great, bank financing is always out there, and even SBA lending options are available.
- Limited supply of successful locations. Unlike apartments where you can build them virtually anywhere, RV parks only work in certain locations and those are finite. This gives you the edge on the supply side of the supply vs. demand formula.
- Huge demand by customers due to aging baby boomers, new millennials, and Covid nature. This the other part of the supply vs. demand formula. RV sales are incredibly high in the U.S. due to 10,000 baby boomers retiring per day, a growing number of millennials who enjoy the outdoors, and the new American fascination with nature after the pandemic.
What if I already have a successful career?
No problem. The majority of RV park owners in the U.S. do not self-manage. An on-site manager runs the business, and you get the profits. However, if you want to self-manage, owning an RV park has even greater dividends because they are typically located in beautiful areas and offer some extremely interesting and rewarding uses of your time. Some people think of an RV park as a single-family home that comes with a cool business model in the yard that pays huge cash flow distributions.