RV Park Investing Newsletter

In October 1871, the great Chicago fire leveled 3.5 square miles and left 90,000 people homeless. Around 150 years later, Hurricanes Harvey and Irma have created similar hardship in Texas and Florida. You can’t watch the news today without photos of what happens when your property is flooded. At these times, it makes the RV park business model seem safer, as we’re not about brick-and-mortar real estate, which is the victim of these type of disasters. An RV park is effectively a parking lot, and that’s the line of business you want to be in when bad things happen. Our residents can quickly retreat if a disaster happens and, if there is an issue, it goes under their personal property insurance. In addition, FEMA and other groups utilize RV lots as a first-responder placement of units to house those that are left homeless, or the contractors that put things back together again. In a crazy world, RVs have become a stabilizing factor.

There is no question that the best RV parks in America are “destination” ones. These are the parks that serve customers who are travelling to a specific sight or activity, and staying for a prolonged period of time to enjoy it. From Disneyland to Mount Rushmore, destination RV parks are hot. But some people are concerned that they missed out on these properties – that they are too late to the game to get the best buys – and are focused on finding the next destination in its infancy, where they can buy at the bottom and ride demand, pricing and occupancy up. So where are tomorrow’s destination RV parks?

What makes for a true “destination”?

Webster’s defines “destination” as being “a place that people will make a special trip to visit”. These can include amusement parks, natural wonders, historic sites, national parks, lakes and rivers, and other unusually compelling features. And these are not just day-trip spots, but areas that require several days or weeks to fully soak-in and enjoy. By definition, a true “destination” would be something special enough that you can see an RV owner staying there for at least a week.

What are tomorrow’s hot “destinations”?

So then the question is: what are the next hot destinations in America? And how can you locate them? You should focus on monitoring Google for mentions of new amusement parks and casinos being built, as well as historic sites that are just being considered by the National Park Service. In addition, you could stay on top of scenic areas that are receiving new highways (this can be found from State Departments of Transportation. Branson, Missouri , for example, could have been detected by monitoring all of the theaters that were opening up, as well as new highway expansion to allow tourists to get there more easily. The proposed Ste. Genevieve National Park, also in Missouri, is pending in Congress right now. There are probably 100 sites to monitor. A quick Google search under “new amusement parks being built” popped up this article about the Park at OWA being built in Foley, Alabama. Is this a destination RV park opportunity? Maybe so.

How can you buy them in advance?

If you are confident that there is a major move about to happen at a destination location, then the next step would be to quickly make a complete list of the RV parks in that market, and contact the owners to see if they would want to sell. The trick would be to do it before the new development becomes widely known. Often, mom & pop owners will not be that fluent on what’s going on around them, and you can buy these properties for far less than they will be worth when the destination opens. Speed is of the essence in this type of opportunity.

Other considerations

That being said, you have to be a real risk taker to buy something based on the future potential which might or might not happen. As a result, a smart buyer will think through the worst case scenario of what would happen if the development never happened or was delayed. You would want to really drill down on the facts during due diligence to map out the proposed opening date and what the potential roadblocks could be. Speculation is not something that most RV park owners are good at, and this is not an industry that should be corrupted with blind risk.

Conclusion

Is there a business opportunity in determining the U.S. destinations of the future, and buying or building RV parks there ahead of the pack? Certainly. You should keep your eyes and ears open for those opportunities at all times.

Our Home Study Course is not like anything you have ever listened to or read before. We do not fill it with a bunch of fluff on how your are going to make a million bucks with no money down. We tell you the whole story... the good, the bad, and the sometimes ugly.

Click Here for more information.

Mae West was a stage icon when Hollywood decided that she was perfect for movie roles. The only problem was that she already had a stage career in New York, and they needed more than just money to entice her to get into film. Included in Paramount’s offer to Mae West: A 1931 Chevrolet “House Car”. West hated flying, so traveling about in a house car had a certain appeal. The House Car came with a professional driver, allowing her to relax and enjoy the scenery. The most striking feature of this RV was the observation platform on the back – just like a railroad car of that era. This allowed the star to breath in the outdoor air or greet fans, both while on the road and when it was parked. It also featured a kitchen, which was unusual for that era. You can imagine her standing on the back, waving at fans, while she drove around California. I’ve never seen anything like it.

This is the 1935 Bowlus Road Chief, which was the style catalyst for the Airstream trailer. It was designed by Hawley Bowlus, who was a famous sailplane builder at that time. He was also known for his work as the Superintendent of Construction on Charles Lindbergh's aircraft, the Spirit of St. Louis. He knew Lindbergh from giving both he and his wife gliding lessons.gave gliding lessons to both Charles and Anne Morrow Lindbergh.

This RV was constructed in the same manner as a sailplane, only with aluminum stretched over the frame as opposed to fabric. In 1934, Wally Byam (the creator of the Airstream brand) was involved as a salesman for Road Chief trailers. Bowlus continued to produce the Road Chief until September 1936. At that time, Byam took over construction of this design, and moved the door to the side of the trailer, as opposed to the front or “nose” – and the Airstream was born. It’s interesting to note that, of the 400 trailer manufacturers going into the Great Depression, only Airstream did not go bankrupt during this period, despite an extremely high price tag of around $1,200 (which is $21,000 in today’s dollars).

This is the RV owned by Charles Lindbergh, the most famous American of his time. It was custom built in 1939 using plans drawn by the engineer of the Sir Francis Drake Hotel in California. One interesting feature of this trailer is that it has an axle at each end, to allow it more even weight distribution and balance when it was parked. It utilizes the same riveted aluminum “skin” as the units built by his friend, Hawley Bowlus. Note the attention to detail in the interior carpentry, which is of the same quality as a modern custom home. It’s also interesting to note that this travel trailer looks very similar to the Spirit of St. Louis, which is where Lindbergh made his name with the first transatlantic flight.

What do you get when you add a motor and steering wheel to the Lindbergh custom trailer? The 1937 Hunt Aerocar. This is one of the most unusual RVs ever built. The inventor and builder was the 1930s Hollywood cinematographer and director, Roy Hunt. Hunt was responsible for such hits as Beau Geste and Flying Down to Rio. His creativity was in full gear when he built the Aerocar. He built at least two of these RVs, one named “the star” and the other “the turtle”. A motorized vehicle in this design was at least several decades ahead of its time.

While the American RV industry is extremely creative today, and is bringing out continually better designs, these early pioneers really blazed a trail that was off the beaten path. To see these RVs – and many more – consider visiting the RV Hall of Fame and Museum in Elkhart, Indiana.

While it’s fun to play the claw game at Walmart – particular with your kids – it’s a terrible way to choose an RV park. Risking 50 cents is one thing, but risking your investment dollars is never a smart strategy. So how can you buy RV parks with more thought and strategy than the claw game?

Define your criteria

What part of America do you want to invest in? The Northeast, the Northwest, the Southeast, the Southwest, or Midwest or the Great Plains? How much capital do you have to invest? Multiply that times five and that’s roughly the deal size you are looking for. Do you want an “overnighter” or a “destination” property? These are the questions that you need to clarify before you even begin to look at deals.

Pour as many deals as you can into your filter

Finding the right RV park is all about the sheer volume of deals you evaluate. It’s strictly a numbers business after you have determined your criteria or “filter”. Just like a gold miner puts dirt in a pan so that heavy gold will fall to the bottom, the more dirt the miner sifts through, the more gold they find. You should ramp up your search with a combination of broker listings, cold calls, direct mail and even dropping by RV parks you are interested in and striking up a conversation with the owner.

Know how to evaluate an RV park properly

You can’t buy an RV park successfully if you don’t know how to price it. Study up so that you can arrive at a ballpark price on any RV park in seconds based on standard industry ratios for revenue and expenses. While RV parks have some of the most attractive cap rates in the U.S., that power will be lost if you can’t calculate the true net income in a fast-enough fashion to talk intelligently with an owner who says “what would you give me for it?”

Conduct exemplary due diligence

Benjamin Franklin once said “diligence is the mother of good luck” – and that was as true in 1776 as it is today. The best way to protect your investment is to do thorough and intelligent due diligence, which means to confirm the revenue and expenses, and to make certain the viability of the location, infrastructure and permit. When you do terrific due diligence, you mitigate any risk of not hitting your budgets.

Obtain sensible financing

Few people can buy a RV park without financing – and even if you can, it’s a bad idea. To hit high levels of return, you need to always use sensible leverage, which we define as around 80% loan-to-value. The key component to a successful RV park investment is in finding a solid loan product that has reasonable terms that you can meet, and has a long enough length to allow you to be comfortable that you have plenty of time to replace the loan when it comes due. If you can obtain non-recourse debt with a ten-year fixed interest rate (which is standard with CMBS “conduit” debt) or even longer (which can happen with seller financing), then you can’t go wrong.

Know the correct way to operate and maximize net income

While buying and financing an RV park properly on the front end is essential, it won’t do you any good if you can’t operate the asset and maximize its profitability. The good news is that RV parks have been around for nearly a century, and the template for successful operation was perfected decades ago. Like all good businesses, the correct formula is to maximize marketing and occupancy while keeping expenses as low as possible – while at the same time providing a terrific product that customers appreciate.

Conclusion

Buying an RV park should never be a matter of random luck or lack of scientific approach, like playing a claw machine. It should be deliberate, well-thought-out and based on time-proven principals. You can risk quarters in arcade machines with abandon, but it’s never acceptable to risk your investment dollars like that.

Winnebago Industries first traded on the New York Stock Exchange on September 9, 1970. If you had purchased 100 shares of stock at that time for $1,250, it would have grown to 64,000 shares due to stock splits. By 2005, those 64,000 shares would be worth nearly $2 million. That’s one of the best investment opportunities of all time. Of course, the reason that Winnebago was so successful was their introduction in 1966 of a motor home that cost roughly half of what the competition was charging. As a result, Winnebago dominated the motor home market, and even their name became synonymous with the motor home, in the same way that Xerox became the name for any copier. There’s an old expression that “to hit the bullseye you have to aim for the middle” which is what Winnebago did by finding ways to produce quality products at a low cost.

I drove through the Pikes Peak RV park in Colorado recently, and thought to myself “this is just about the perfect RV park to own”. It scores highly in almost every category. So what makes this such a great property?

Location

The RV park is located on the main road into Manitou Springs, Colorado, a scenic town that is a favorite with tourists. It’s near the base of Pikes Peak and other famous attractions. And a huge draw is that the park is within walking distance of the entire town and rows of shops and restaurants. Despite its location in the heart of town, it’s still in a quiet setting with a gurgling creek in front. It has the best of both worlds.

Visibility

This RV park has frontage on the main street into Manitou Springs and, with its prominent sign out front, you cannot possibly drive into the city and not see the RV park. If it was a block farther back, it would be extremely hard to describe how to get there, and many potential customers might not know that it exists. But as it stands, it is perfectly located to reach RV traffic.

Drive-up appeal

This property has outstanding drive-up appeal. You enter through an ivy-covered wall and look directly onto a well-decorated, immaculate building with hanging flowers. The pavement is perfect and neatly striped. Your first impression is “wow, this place is really nice” – and that’s a sentiment that carries over into the entire experience for the customer.

Cleanliness

As you can see from the photos, the property is immaculately clean. There is not one piece or debris on the ground, or unpainted surface. Clearly, the owner spends a large amount of time and focus to keep the property looking clean and orderly. With such structure, it immediately sends the message to the visitor that the property is well managed.

Amenities

Even though this park is well-located for some amazing local attractions, it also features all the amenities that residents need and enjoy, such as a store, laundry, showers, hiking and biking trail access – even a picnic table on each lot. In addition, it has a transit stop right out in front, so you can jump on public transportation to take you anywhere you want to go.

Occupancy

The RV park was completely full when I drove in, and I imagine it stays that way throughout the year (although it is closed for several months during the winter when the weather is too extreme). It has a limitation of a two weeks stay, to allow all of its customers the opportunity to enjoy the experience each year – that’s how popular it is.

Customer satisfaction

If you look at on-line reviews, you’ll see that this property scores extremely high. And why shouldn’t it, given all the things that it does right. I can imagine that many customers make reservations for the following year before they depart. Like any business, customer retention and satisfaction is essential, and word-of-mouth is more powerful than any other form of marketing.

Conclusion

This would be a terrific asset to own. And it’s a good example of the type of RV park you should be looking at buying or, if you already own an RV park, a good role model to emulate.