How to Winterize an RV Park To Double Its Income
Many RV Park owners shut down their operations during the winter, especially in Northern states like Montana. Operators assume that since the snow is flying, RV owners have all traveled gone South for the winter. But this is an outdated misconception, that has been proven wrong by many operators across Northern States. This article will detail the benefits of staying open year round, and the specific steps necessary to do it.
Staying open year-round as an RV park owner can bring several benefits, including:
Increased Revenue: By staying open year-round, RV park owners can attract more customers who prefer to travel during off-seasons or want to enjoy extended stays. This can lead to increased revenue throughout the year, rather than relying solely on the summer season.
Diversification: By staying open year-round, RV park owners can diversify their customer base and attract travelers who may not be able to visit during the peak season. This can help to mitigate any revenue loss during the winter season and create a more stable business.
Competitive Advantage: Staying open year-round can give RV park owners a competitive advantage over other parks that may only be open seasonally. This can attract more customers who are looking for a place to stay during the winter season, as well as those who prefer a year-round park.
Reduced Seasonal Costs: By staying open year-round, RV park owners can spread out their maintenance and operational costs throughout the year. This can help to reduce the financial burden of preparing the park for a seasonal opening and closing.
Potential for Year-Round Living: The ability to use the spots year round is very valuable to a potential renter or buyer, because it means that spot can now be used as housing, and not just a vacation destination. An RV spot that can be used 12 months of the year will be far more valuable than one that can be used only 8 months, as being available during the winter opens up an entirely new market of buyers, to those who need reasonably priced housing, which is an obvious need in most parts of America right now.
But the next question is how to actually stay open year round, as staying open all winter long presents issues that must be addressed. Ideally these are addressed during the building of the park, as that gives far more flexibility. Some of these options may not be feasible for an existing park, but they should be explored if that’s what it will take to keep the park open year round. There steps below should be taken to ensure that the spots remain usable year round.
Extra standard outlets at the RV hookup are useful for powering heat tape for the water line. Some tiny houses, and especially park models will not have an internal sewage tank. Typically, RVs flush their tanks all at once, and this negates the need to use heat tape on the sewer lines. But if the tiny houses or park models do not have sewage tanks, then the sewer lines will need to have heat tape.
The same principle applies to water tanks, which will need to be heat taped on RVs that have one. But some park models will not have a water tank, requiring heat tape all along the supply lines to keep the water flowing.
During the installation of the water lines for a new park, it would be helpful to have the water lines sleeved to cut down on costs when a burst water line inevitably needs to be replaced. If the water lines are buried three feet deep, they should be deep enough to withstand a hard freeze.
The water spigot will need to be wrapped with heat tape, and ideally wrapped with insulation as well.
These steps might sound overbearing, but keep in mind these steps would have a significant effect on the income of a property. There are four KOA RV Parks in Montana that are open year round, so this is clearly a problem that has been figured out. I’ll detail three of those parks below, to give a better sense of how each park is dealing with this issue, and the winter rates they are able to charge as a result.
Helena North KOA charges $775 per month plus electricity, and has full utilities throughout the winter. They require tenants to use the spigot to fill up their water tank during winter, then disconnect to avoid the spigot freezing. They said that their “stand pipes” are heat taped. From their experience, sewer lines freeze only if you allow water to stay in the line. At their park, they require tenants to fill their tanks with water and shut off the spigot. Then, they recommend disconnecting the sewer line after emptying the tanks.
Missoula KOA offers winter RV spots. They charge $895 during the winter, and $1,695 during June-August. They also use heat tape on their water spigots.
Canyon Lake Ferry KOA outside of Helena has winter spots, and said that none of the 25 winter campers had any issues last winter, except for a few that had their own internal lines freeze from their heat tape not working. They have campers turn off water lines during deep freezes and that works. They do not guarantee water when the temperature drops below 32 degrees. They heat tape and insulate the spigots but that doesn't always help in the winter. They charge $750 per month per spot year round.
As the numbers above show, these parks are earning significant income during the winter months. While income during summer months is higher, debt payments have to be made all the way through the winter, so it’s in the owners best interest to earn income during those months. In addition, the presence of year round residents helps fill spots during the beginning and end of the summer season. Many parks open in April, and on their first day of opening, it would be very unusual for them to be completely full. But if it was full all winter, then they would still have many residents staying on from the colder winter months.
Parks use a variety of methods to ensure that the utilities continue working during the winter. All of them use heat tape on their water spigots, which is easy to install. It is beneficial to have extra outlets at the RV utility stand to allow for heat tape to be plugged in there. Many parks require tenants to use the spigot to fill up their water tank during winter, then disconnect to avoid the spigot freezing. Occasionally the internal water lines on an RV can freeze, but as long as they are heat taped, this won’t be an issue. As far as sewer goes, they usually only freeze if residents allow liquid to stay in the line. Many parks recommend disconnecting the sewer line in between tank emptying.
RV Parks are primarily valued by their income, in a fairly straightforward way. The formula is structured as Net Operating Income, divided by Cap Rate. Cap Rates for RV Parks are typically between 7-12%. So if a park is empty for half of the year, it’s value is essentially cut in half. So if you are buying a park with aging infrastructure, that does not allow for winter operations, it is usually worth closing down the park and replacing the lines if that’s what it takes. Doubling the value of a $2 million park raises its value to $4 million, and replacing the water lines is almost certainly less expensive than that. However, this requires a large capital infusion into the park, which many aging owners are not willing to make. But that’s where the opportunity lies, and any buyer willing to make large investments into a park like this will be richly rewarded.
The Upslope Group is focused on exactly these kind of investments. We are building RV Parks that are a win-win-win solution for our investors, our communities, and our residents. These lots can be occupied by Tiny Homes, Park Models, or RVs, giving our buyers a variety of options. Better yet, we can choose to sell or rent the lots, to match the current demand in the market.
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