RV Park Investing Newsletter

Yogi Bear’s Jellystone Park brand celebrated its 50th anniversary recently, having been formed in 1969. It has been one of the nation’s most successful RV franchises for a number of reasons. But the #1 source of its success is simply its focus on family fun. Not only do people like the Yogi mascot, but they also enjoy amenities such as pools, water slides, splashgrounds, jumping pillows, mini golf and pedal carts. In a world that is often filled with stress and conflict, Yogi Bear’s has focused on an escape from the real world for its guests, and they take fun seriously. One of the great things about owning an RV park is that you also get to share in the fun of making people happy – it’s truly a win/win business model that can prosper in the absence of the harsh realities of the real world.

Congratulations to Yogi Bear’s Jellystone Park for hitting the half-century mark!

You can’t buy an RV park until you have a signed contract – and you can’t get that until you’ve arrived at an agreeable price. That often requires the old-fashioned skill known as “negotiation”. So how do you successfully negotiate the price of an RV park? Here are five important tips.

Embrace the necessity of win/win deal making

You are absolutely not going to “steal” a good RV park. The goal should not be to buy the property for a penny on the dollar but instead at a fair price based on current net income and that leaves you plenty of opportunity to increase that net income with better management. The only kind of RV parks you can “steal” are those that have terrible locations or other problems that cause the seller to have to sell the property in a panic and in the absence of buyers. There is rarely profit in those type of transactions. Your goal is to engage in win/win deal making, in which both the buyer and seller are happy with the conclusion. This is the same type of style that Warren Buffett has long advocated.

Understand that it’s not all about the money (bonding is more important)

The price you will pay for the RV park is more based on how much the seller likes you than the dollars and cents. That’s why bonding is essential – the mystical magic that happens when a seller likes the buyer and wants to help them get a good deal. Maybe it’s because you remind the seller of somebody in their life they liked a lot or maybe just because you remind them of a more youthful version of themselves. How do you establish bonding? By spending time with the seller either in person or over the phone. Our favorite way to start the bonding process? Ask the seller how they came to own the RV park. That answer may take hours and will get you off on the right foot.

Start low so you can negotiate higher

It’s a basic rule of negotiation that you start low and then end up paying higher. That means that you always have to start offering lower than your actual target price. Never initially offer the price you want to pay – it’s virtually guaranteed that you’ll never hit it. If you want to pay $300,000, then start at $250,000 and let the seller “beat you up” to $300,000 – that makes them feel successful.

Have a handle on the price before you begin

You should never enter into negotiation until you have run numbers and have a firm handle on what the target is. When you say “what do you want for the RV park” you need to know if that answer is low, high or on-target. How can you negotiate until you know the goal? Don’t think the whole point is to get the seller to just name a price. Your reaction to that price is an important part of the process and if you don’t show shock with the pricing it will be hard to negotiate it down later.

Be a good listener

A lot of negotiation is based on listening and not talking. Don’t be quick to respond and don’t think about your response until you hear what the seller has to say. Many good RV parks deals have been the result of the buyer listening and producing a creative deal that meets both party’s goals, such as swapping a higher price for more generous seller financing at a lower interest rate. Be a team player and be collaborative.

Conclusion

Negotiation is sort of an art form. It takes practice and a unique skill set. These tips will get you off on the right foot.

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Many RV parks began as the back portion of a motel property. In the 1940s, most RV parks had a modern “motel court” in front and the RVs pulled around an parked in the rear. However, real estate can often be unfair and although RV parks can easily be updated for the new century, motels do not have that caspability. What caused the RV park component to leave the motel in the dust? Why can you bring back to life an RV park but you can’t an old motel?

RV parks are all about land and not structures – lower capital required

RV park owners have a simple asset: land and maybe a few buildings. This means that the most important ingredient is not owned by the park owner: the individual RV units. Here’s an interesting way to look at it. If you have a 100 space RV park that is 100% occupied that night, you’ve got roughly $5 million in inventory on your property that you don’t have one penny invested in. All those pretty motorhomes and fifth-wheelers are not your responsibility. So the simple fact that the RV park owner only is responsible for land and not structures is what really separates the RV park and motel business model.

RV parks have no obsolete designs

Another key issue is that RV parks have not obsolete design elements – which is completely untrue of motels. In today’s world, if you have a motel with exterior access doors, you will not be able to attract decent customers at all. But RV parks have no such limitations. An RV park from 1939 has just as much allure as one built in 2019 – assuming it has been updated over time. Every time you drive by one of these old sketchy motels, be thankful that you are not stock with that terrible obstacle to improvement.

New RV park construction is minimal and competition is therefore lower

Of course, another huge difference between RV parks and motels is the near absence of new competition. It’s hard to make sense of trying to bring an old motel back to life when they might just build a new one across the street. RV park owners, on the other hand, can invest that capital safe in the knowledge that there will not be another RV park going up nearby and injuring the supply/demand equation.

Conclusion

Although they often started out together, RV park owners have a huge business model advantage on motels (and most other real estate sectors). This allows you to freely bring old RV parks back to life when other niches don’t have that privilege.

M.J. Vukovich is one of the top capital consultants in the industry. His specialty is to help you obtain bank or CMBS debt for your RV park. He charges roughly 1% of the loan for this service, and frequently pays for himself with lower interest rates and better deal terms than you can obtain. He’s paid only on successful completion of the loan.

For a free consultation, contact MJ at (612) 335-7740 and let him tell you what he can do for your property, or email him at [email protected].

On July 2, 1971, the Ocean Lakes Family Campground opened for business. It was the culmination of a dream by Mary and Nelson Jackson to open an RV park and it had 30 campsites and one bathhouse. Nelson Jackson had just turned 50 at the time. He could not believe the demand for his new creation in Myrtle Beach, as the demand was so large that he could not clear new campsites fast enough, filling everything he could build as fast as the water was turned on. He knew he had a winner on his hands. But he had no idea just how big an idea it would become.

Today, Ocean Lakes features 859 campsites and 2,560 annual lease sites. It’s located on 310 oceanfront acres with almost one mile of beachfront, five bathhouses and over 360 employees during the prime season. On an average day, Ocean Lakes has up to 35,000 guests. Despite its prime location, Nelson Jackson was adamant that the land should not be re-developed. “We could do a lot of things with 310 oceanfront acres in Myrtle Beach, and we’ve had many lucrative offers, but we believe that everyone – the butcher, the baker, and the candlestick maker – should have the privilege of enjoying God’s beautiful ocean” said Nelson Jackson when he was 88. Both Mary and Nelson Jackson passed away in 2010, after successfully creating and growing the largest RV park in the U.S.

Bringing customers in the door is the goal of all RV park owners. To accomplish this, you have to have a solid advertising and marketing plan that hits RV owners who are going out on the road and delivers your message in a successful and cost-effective method. So what are the best places to advertise your RV park?

On-line

One huge change in the RV park industry – perhaps the biggest over the past half-century – is the advent of on-line marketing. The internet has only been around for a few decades and already it has done a virtual coup over all other forms of media. Any successful RV park needs a mastery of the following:

• You must show up in any Google search of “RV park in ___________”. This is the #1 way that most customers find an RV park to stay at. Exclusion from this marketing arena is a catastrophe.
• You must have an attractive, professional-grade website to sell on-line traffic on the benefits of your RV park over the competition. Examples are all around you – simply Google up the largest RV parks in the U.S. and that’s your template.
• You need to immediately form a social media presence and build on that daily through regular posts and comments.
• You need to start aggressively soliciting positive reviews for your property. To do this offer a gift card, free night, discount or other item.

Signage

Now back to the old-fashioned methods that everyone knows well. Here is what you need in the form of signage to be in the game.

• A great sign out in front that is large and legible and professional-quality. You need to see the word RV from a long distance away so you can hit the exit and not miss the property. This sign also needs to be brightly illuminated at night.
• A sign or two along the main-travelled road way letting them know that you are located ahead. This can either be a billboard that you rent, or a sign that you build and own yourself. We have even seen creative methods to get this done, such as painting the words “RV EXIT #__” on the side of an 18-wheeler parked perpendicular to the highway, as well as on the roof of a barn.
• The logo for your RV park on the highway’s informational logo signs that are located at nearly all exits these days.
• You also need great signage once you get into the RV park to help affirm your customer’s selection of your RV park to spend the night. We prefer white vinyl posts and caps as the mainstay of all internal signage, along with new professional signs such as “office” and “speed limit”.

Other traditional methods

RV park owners have been using a series of other forms of advertising for decades to great success. You need to also take advantage of these:

• Inclusion in guide books such as Woodall’s Directory.
• Membership in RV clubs such as Good Sam’s.
• Flyers in the information racks at all tourism centers.
• Flyers at all city event coordinator’s offices, such as annual fairs, etc. This includes the local Chamber of Commerce.

Conclusion

If you can properly advertise in all of the above venues, then you will be putting forth an extremely efficient and successful marketing campaign on par with the biggest portfolio owners. None of these methods is expensive and the rewards are vast.

During the race to walk on the moon, NASA built four Mobile Quarantine Facilities to house returning astronauts and prevent the potential diseases that might be encountered in space from spreading to the general public. NASA decided that the ideal housing concept was the Airstream trailer, which they converted to offer living and sleeping accommodations, along with a kitchen and bathroom. One important addition was a special filter system so the air inside the Airstream was purified before it left the unit. With Apollo 11 having successfully walked on the moon, astronauts Armstrong, Aldrin and Collins were placed in the Mobile Quarantine Facility for 88 hours while they were evaluate by a team of physicians. What was really impressive is the way the astronauts got back to the U.S. after splashdown in the ocean. They were placed immediately in the Airstream on the deck of the U.S.S. Hornet naval vessel, and from there flown inside the cargo hold of a giant C-141 plane, and then taken by truck to the Johnson Space Center – all while still inside. That would probably qualify as the longest distance ever taken to spend time in an RV – about 500,000 miles!