RV Park Investing Newsletter

Thanksgiving is a special time of the year, in which we gather with family and friends and discuss all that we are thankful for. For those who own RV parks, this year’s list of thanks will include the strong growth in RV sales and occupancy, the 10,000 Baby Boomers per day retiring and exploring the benefits of buying an RV, the low interest rate environment which makes loans on RV parks so attractive, and the low cost of gasoline that fuels even more RV traffic. We would like to expand that list and thank each and every member of our extended “RV Park family”. Thanks for reading this newsletter, and keeping the discussion alive of all RV park owners about this great industry! We appreciate you and hope to keep the discussions alive for years to come!

RVs do float – but they’re not designed to. Floodplain and RVs do not get along well. So if you’re looking at buying an RV park that has “flood plain” shown on the survey, it cannot be taken lightly. Flood plain destroy your ability to obtain a loan, find a future buyer, and create huge liability for you with your customers. So here’s what you need to do when faced with flood plain.

What part of the park is actually affected?

The first question is “where exactly is the flood plain?” Not all flood plain is created equally. If you’re talking about the risk of flooding on the basketball court, then no big deal. If you’re talking the entrance, the clubhouse, or a bunch of lots, then that’s a huge deal. Flood plain is a science and you should be able to delineate the exact location of the flood threat. Do that, and see what’s really impacted.

How far would it go under water?

Are you talking 6 inches or 6 feet? That’s a huge difference, and something you need to know. We’ve seen flood plain issues that are laughable – water depth at flood stage would not even get up to your hubcap. While all flooding is a serious issue, we’re in the RV park business, and not the single-family home or apartment sector. When water is a foot deep in a typical RV park, there is no lasting damage, except greener grass when it recedes.

Is there a way to mitigate it?

You would be surprised at how many flood issues can be resolved quickly and easily with a little practical thought and capital. You can sometimes build a berm to remove the flood hazard, or some other man-made manner of mitigation. So before you get scared of the deal because flood plain has been detected, see if there is not a way to get rid of it altogether.

When’s the last time it actually flooded?

Let’s be honest, the Corp. of Engineers is just like any other governmental body – they are frequently wrong and take CYA to a new level. If you are buying a property in a flood plain designation and you talk to the city, the owner, and the neighbors and it has not flooded in 100 years, then the risk is probably miniscule. Some areas have naturally evolved over time such that the risk of flooding really no longer exists in the real world.

Have a plan if flooding happened

Every property owner – whether they have flood plain or net – needs to have an emergency plan in place if a problem should ever occur. If you know exactly where your risk of flooding is, and how deep it might be, you know what to expect in a worst-case scenario. If the back corner of the property is the danger zone, and it’s been raining a lot with more to come, then you might be smart not to put any RVs in that back corner. If you had to put them there because you were full, you would want to pay special attention to see if the flooding was showing any signs of beginning, and then get them out of there ASAP. You would never want to go into a major rainstorm without a plan.

The secret truth about flooding

One thing we have learned after 20 years in the business is that you don’t have to be in a flood plain to flood, and that you can be in a flood plain and never flood. A few years ago Interstate 55 south of St. Louis flooded and stopped traffic for hours. Of course, the Interstate was not in the flood plain. But here’s what happened: a heavy rain floated up a metal dumpster that was behind a shopping center next to a creek that was filled with debris and brush and not flowing properly. The dumpster floated downstream and then wedged itself over the intake of the 6’ culvert pipe that drains the water under the freeway, building a small lake that then went over the top of the highway. The moral is that flooding occurs all the time in areas that are not shown to be flood risks. So just because you don’t have flood plain designation, don’t think you can’t flood. Talk to the city and neighbors and see what the history of flooding is. Be particularly concerned if your RV park backs up to a river, creek or lake.

Conclusion

Flood plain designation on an RV park is never a good thing, but it does not always have to be a deal killer. Explore it scientifically, and make an educated decision based on the facts.

The other day someone said to me “since you’re in the RV park business, can you tell me the secret to buying a cheap Airstream?” I get that question pretty frequently. The truth is that this iconic brand has become a game changer, attracting people to RVs that normally would not give them a second glance. So what makes the Airstream so hot?

Classic brand

The Airstream is to RVs what Chris Craft is to yachts. It has an amazing history, with its trademark shape tying back to Hawley Bowlus, who was the man who built Charles Lindbergh’s airplace “The Spirit of St. Louis” which was the first to fly across the Atlantic in 1927. The first Airstream was built in the early 1936 and cost $1,200, which was a huge amount of money at the time (the same as some houses cost from that period). The Airstream has always been considered the best of RVs, and holds its value more than any other brand.

Timeless design

Virtually any American can recognize an Airstream due to its unique shape and shiny aluminum construction. Those first models from 1936 look much the same as new ones coming off the assembly line. Since the models have never really changed, it makes the Airstream appear to be one of those timeless designs that you just can’t improve on, as well as to help them hold their value.

Durability

Another reason that Airstreams hold their value so well is that they are really well built. A 1966 model will have no leaks, no rust, and still be in great shape. Some of this is due to the remarkable use of aluminum, and the other is that owners keep these RVs in immaculate condition, and make all necessary repairs immediately without letting them fester into bigger problems.

Tremendous public relations

Airstream has the best public relations in the industry. In the early 1950s, Airstream company founder Wally Byam began leading groups of owners on travels to many portions of the world, which brought awareness of the brand to many potential buyers. Photos taken of the trailers in front of many famous tourist sites were common. These clever promotions formed a mystique which surrounded Airstreams and persists to this day. The CEO of Zappos, Tony Hsieh, currently lives in an Airstream in Las Vegas, despite his $800 million net worth. You will find Airstreams in every major luxury publication from Town & Country to the Neiman Marcus Christmas Catalog.

Conclusion

So how do you find a cheap Airstream? You don’t. So you can quit asking me.

I saw this RV mug in an expensive store that sells European gifts. It’s amazing that the RV has become such a part of American culture that a company from Germany would manufacture such a mug for the U.S. market. Awareness of the American love of the RV appears to be well known throughout the world.

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The RV park has been around since the 1920s. Unfortunately, few photos exist from that era, so we don’t really know what they looked like exactly. But one thing that was in abundance in the RV parks of the 1920’s is the same asset that you will find today: fun. You always see smiles in photos of RV parks, no matter if that photo is from the 1920’s all the way up to today.