Business schools, like Harvard, focus on analyzing models that deliver consistent profitability, long-term value, and alignment with broader economic trends. Although there isn't an RV park case study from Cambridge yet, it's safe to say that RV parks—as an investment—would capture their attention. Let's explore why.
Exceptional Returns on Investment
One of the primary metrics taught in business schools is the rate of return. RV parks stand out with their ability to generate consistently high returns. Most parks sell at capitalization rates of around 10% or more, yielding annual cash-on-cash returns exceeding 20% in many cases. These numbers demonstrate the potential to outperform traditional real estate investments like apartment complexes or retail spaces.
Built for Endurance, Not Obsolescence
Unlike industries vulnerable to technological shifts, RV parks are resilient. They serve as parking spaces for recreational vehicles, a need unlikely to vanish with innovation. Consider the industries that once thrived but have since disappeared (e.g., floppy disks, payphones). RV parks, by contrast, cater to fundamental lifestyle choices. As RV ownership grows—spurred by Baby Boomers and millennials alike—their relevance remains steadfast.
Financing Opportunities for Scalable Growth
RV parks' compatibility with bank financing enhances their appeal. Leverage—a cornerstone of real estate investment strategies—amplifies returns when used wisely. For instance, purchasing an RV park at a 10% cap rate with 20% down and a 6% interest loan can deliver cash-on-cash returns upwards of 24%. This scalability aligns perfectly with principles taught in advanced finance courses.
Riding the Wave of U.S. Megatrends
Business success often hinges on tapping into large-scale trends. RV parks intersect with the massive demographic shift of Baby Boomers retiring, many of whom adopt RV living to explore the country. This trend has expanded to younger generations, who use RVs for remote work and adventure tourism. Coupled with rising RV sales (up 15% annually), the RV park industry is poised to thrive for decades.
Conclusion
Business schools teach you to evaluate opportunities holistically. RV parks check every box: robust financial returns, resilience to disruption, scalability through financing, and alignment with long-term trends. For aspiring investors, the RV park model offers a blueprint for sustainable success in real estate.