RV Park Investing Newsletter

Some people do not understand the amount of scientific thought that goes into the RV park business. To many investors, it would appear that an RV park is nothing more than a bunch of roads in a big field, and a sign stuck in front. But the truth is that every part of an RV park has been groomed over time for maximum occupancy and operational efficiency, and the numbers have been scrutinized by both appraisers and lenders for decades. While some mom & pop owners refuse to follow best industry practices on marketing and operations, that does not mean that the playbook has not been established. And the industry is large enough that it has commissioned a great deal of research, with many of these findings discussed in articles below. So if you don’t realize the amount of thought that goes into the RV park business, please read on.

To be a successful RV park owner, it’s imperative that you really understand your customer. The good news is that there has been exhaustive industry study over the years, and here are the facts regarding who the customers are in the average American RV park.

Three main segments of RV owners

Studies have found that there are three main niches of RV customers:

• Active family adventurers. Median household income of $105,000 and age of 43
• Nature lovers. Median household income of $97,000 and age of 44
• Kid-free adventurers. Median income of $93,000 and age of 47

These three groups represent 40% of all U.S. households. The great news for the industry is that all of these groups are young and have high disposable incomes. There is a common misconception that the majority of RV owners are Baby Boomers, but the reality is that the demographic is much more youthful and, as a result, will be occupying RV park spaces for decades.

RV buyers priorities

Studies have determined that there are three key reasons that RV buyers make their purchase. These are:

• Travel with family. Most RV owners have bonding time with their family as their #1 priority.
• Eat healthy. Outdoor cooking is a huge attraction to all RV owners (and those that don’t own RVs, as well).
• Outdoor activities. RV owners love the great outdoors – and all that it has to offer.

Top aspects that RVs offer

Based on research, these are the key reasons that people buy RVs and stay in RV parks:

• Home away from home. An RV gives stability when you travel, as you don’t have to pack suitcases and everything you need is right there. It literally is a home that you can move around.
• Unique freedom. The simple fact that you can just get up and go at a moment’s notice is a very powerful feeling for RV owners.
• Connecting with nature. The desire to be surrounded by nature is very compelling for RV owners.

What these studies say about what a successful RV park should offer

Based on the facts, a good RV park should offer its customers:

• Plenty of activities that allow for family bonding. These could include a number of sports and games, from volleyball to cards.
• Areas that allow for communing with nature, including outdoor seating areas and trails. If customers enjoy nature, you should give them every possible outlet for this experience, however minor. You could even enhance this, in certain instances, but installing bird feeders and other items to attract more “nature”.
• Plentiful areas that allow for outdoor cooking. This amenity scored extremely high. The moral is that you should have enough outdoor cooking potential for every customer every day. The best RV parks have outdoor grills on every lot.
• Simple and efficient checking-in, so that the feeling of freedom and spontaneity reigns. If the customer loves the concept of ease and freedom, don’t disappoint them with a lengthy and slow check-in process when they arrive.

Conclusion

Studying your customers is a great way to get the upper hand on the competition, and to know what you can do with your RV park to improve customer satisfaction. And don’t forget that positive word-of-mouth advertising is the best marketing there is.

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One of our favorite sayings is “time kills deals”. But what does that mean? And how does that apply to buying an RV park in 2018?

A sense of urgency

The first interpretation of “time kills deals” is the concept of “sense of urgency”. You should always be in a hurry to tie up that deal, or get that loan, or run that ad – and every other thing you can do to improve your investment. A good investor never sees time as an ally, but instead as a terrible enemy. And you should always fight a enemy.

A reminder to never procrastinate

There is an old adage that you should never put off until tomorrow what you can do today. The opposite of that thought is called “procrastination”. It is a poor concept when you are trying to put a deal together. The industry has hundreds of stories of buyers who had the chance to sign up an RV park on a Friday, but put it off because they wanted to go out to dinner and a movie instead. Then, when they call to tie it up on Monday, the park has already been signed up with a different buyer. Don’t let that be you.

A continual acknowledgment that “time is money”

Every minute that you wait effectively costs you money. If an RV park get $30 per night, and you don’t put that ad in that publication for 10 days for no other reason than not pushing the matter, you effective lost $300 if the ad would have only brought in one customer. On a more macro scale, the RV park that could have been purchased on March 1 but you delay to March 10 – and it makes $500 per day – just cost you $5,000. You get the point.

Conclusion

“Time kills deals” is a very important theme in RV park purchasing and operations. Time is never your friend and the sooner you realize that, the better.

A recent study on RV owners has some interesting statistics regarding what they buy and what they think of their purchase.

• 52% buy a used RV and 48% buy a new one. This is actually a very impressive number, since the sale of new RVs is currently the highest in U.S. history, that means the total number of units sold is much higher.
• 23% buy a motorhome. Many people would think the number would be much higher. But this explains why the median age of RV park users is much younger than many expected – because they do not have as large a budget to spend on their RV.
• 68% are repeat buyers. This is a very good sign, as it means that people like the experience so much that they choose to buy a new unit when the old one wears out. It also means that people are continually upgrading.
• 88% rate RV experience as good to excellent. This is an incredibly high rate of satisfaction – I’m not sure what other product has that level of allegiance.

The bottom line is that RV users are extremely happy with the total experience – and that includes RV parks.

The concept of luck in life has been debated for over two-hundred years. The brightest minds realized that luck is proportional to effort and thought. Here is a discussion of three quotes regarding luck from some of the biggest names in American history.

I am a great believer in luck, and I find the harder I work, the more I have of it” – Thomas Jefferson

Jefferson was completely right. The harder you work at finding the right RV park – and at maximizing its net income – the “luckier” you are at hitting your financial goals. It should be noted that Jefferson was one of the richest people in America in 1776, and he made that luck through working an estimated 14 hours a day.

“Diligence is the mother of good luck” – Ben Franklin

Franklin never bought an RV park, but he would have been great at it. He’s 100% correct that performing great due diligence on an RV park is an essential part of mitigating risk and increasing your odds of hitting or exceeding your budget for net income. Those who are devoted to doing superior due diligence on an RV park always seem to have the most “luck”.

“Luck is a dividend of sweat. The more you sweat, the luckier you get” – Ray Kroc

Ray Kroc was the founder of McDonalds – the most successful fast food chain in American history. Some people think that his success was simply a matter of good luck – being in the right place at the right time. But that’s clearly not true, as there were many similar chains that started at the same time. Kroc’s success was actually the result of hard work. That’s why he was so devoted to spreading the word that the best way to get “lucky” is to work hard.

Conclusion

If you want to get “lucky” in buying RV parks, the best step is to work really hard and do really great due diligence. Those simple methods pay the largest dividends. Pure “luck” is for gamblers. You should never gamble your investment dollars. You should always make the odds in your favor.

If you are looking at buying an RV park in 2018, there is a methodology that greatly improves your odds of finding the right property in the shortest amount of time. Here are the steps you should take:

#1: Create a sorter

Identify and distill the exact characteristics of the ideal RV park. What investment size? What geographic location? What type of cap rate? How will it be financed? Types of amenities? Make a complete list, but leave out the trivial items that are not deal “makers” or “killers”. The sum of these crucial criteria is your “sorter” which means that it’s what your trying to find deals to fit.

#2: Put as much raw material as you can through that sorter

The key to finding as RV park to buy is volume of deals. How do you find them? A combination of several avenues: 1) on-line listings at RVparkstore.com or Loopnet.com 2) talking with a lot of RV park brokers 3) direct mail pieces to RV park owners and 4) cold calling RV park owners. The more raw deals you put through your sorter, the more potential candidates that will pop out. This is the same theorem as was used in gold mining in the American west.

#3: Look at every deal as a deal “maker” instead of a deal “killer”

It’s easy to be pessimistic and dismiss every deal that comes your way as being not up to snuff. But that’s not the correct way to find deals. A good buyer looks at every deal and says “how could I make this work?” Sometimes the simple discipline of challenging your brain to figure out how to solve each deal will unlock potential. For example, maybe an RV park with bad records can be solved with seller financing. Or maybe the deal with declining occupancy can result in a lower price while you unlock the true demand with better marketing.

#4: Be persistent and never give up

The final ingredient to these first three steps is to add persistence. That means never stopping looking at deals and bouncing them around. Never stopping calling on deals you’ve already identified as good ones. Never getting depressed or losing interest. Remember the story of the starlet who jumped off the Hollywood sign because she thought she’d never get a part, and then they found a letter from a studio announcing that she’d received the part in a movie in her mailbox while they were settling her estate. If she’d only waited a few more days! It has been our experience that those with persistence virtually always find the right deal, regardless of their criteria.

Conclusion

Finding the right RV park to buy is scientific. Follow these time-proven steps and you should be looking at decent RV park deals in a very short period of time.

Here are some findings from a recent study on RV park usage by owners of recreational vehicles:

• Average 5 trips per year. That’s a really high number compared to what most people would expect. But it also ties back to the fact that many people savor the freedom of using their RV whenever they want, so it makes sense that they would just get up and go frequently.
• Average 14 days per year. If you assume that the average RV rent is $25 per night, and there are 8.9 million RVs in the U.S., then that’s $25 x 14 x 8.9 million = $3,115,000,000 in RV park revenue per year.
• Average 3,000 miles per year. If you divide this through, it means that the RV trip is 600 miles roundtrip, which means that RV users are going fairly long distances to their destination.

The bottom line is that RVs get frequent use, travel long distances, and inject roughly $3 billion per year into the pockets of RV park owners.