The Top Three Reasons You Should Consider Investing in RV Parks
RV Park investing is not a very well-known class of real estate, so few people realize how lucrative they are to operate. Since more and more Americans are buying RVs, RV parks will continue to see increased reservations and profits in the coming years. This article will examine three reasons why you should take a deeper look at investing in an RV Park.
First, RV Parks have significant momentum in both sales of RVs, and the number of people staying at RV parks. RV sales hit a record high in 2020, amid the pandemic, but there was not a corresponding increase in RV Parks, since the economic climate was so uncertain in 2020 and 2021. Especially during recessions, people “downsize” their vacations from a flight to Europe, down to a camping trip to a location destination. For this reason, RV owners will continue to take family vacations in their RVs. In fact, the number of people who are open to living in their RV full-time is rising. The reasons vary, from wanting to travel the US, an uncertain economic situation, or because of a job loss. The rise of remote work is here to stay, as many companies are transitioning to full-time remote working. Campground industry giant Kampgrounds of America (KOA) reports that RV parks across the country are seeing record numbers of new campers.
To be clear, this increase in interest is not a temporary spike caused by COVID. The number of RV purchases has been, on net, growing substantially since 1980, as the graph below shows. There was a significant drop in purchases during the 2008 recession, but there was not a corresponding drop in actual stays in RV Parks. During the recession, many people chose not to vacation overseas due to budgetary concerns. In comparison, a short drive in their RV to a nearby national park was far more affordable, and millions of Americans made this decision.
The second reason that you should consider investing in RV Parks is their superior returns, compared to most real estate investments. RV Parks have a long track record of excellent return on investment rates. Since RV parks have such minimal infrastructure and facilities to maintain, they have far higher return on investment numbers compared to other investment property types. Most sources confirm that you can expect a return on your RV Park of between 10-20%. This is a far greater return than you can typically expect from a single family home rental. And as stated above, Americans continue to buy RVs at high rates, ensuring a large customer base. By buying an RV Park, you are ensuring that you are purchasing a share in a growing market.
The third reason you should consider investing in RV Parks is the diversity of their income. These sources of revenue only limited by the creativity of the operator. The most obvious source is the revenue from lodging fees. Additionally, RV parks can bring in additional income from the sale of food, drinks, and other services. They can also be used to host events and activities, which bring in additional revenue. If the RV spots are ”Condo-ized” and sold separately, this can result in a large financial windfall to the owner for each individual spot sold. Or, if a steady stream of income is preferred, long-term rentals can be the focus, which provides a steady source of income, as RV spots typically require little maintenance and upkeep. Rates range from $750-1,150 per month in Western Montana. With all of these sources of income available to a park owner, the only thing holding a part owner back from increasing income is their creativity.
But amenities are crucial to achieving these superior returns. When looking for an existing Park, ensure that it has amenities that match surrounding parks. For example, in many areas of the US, visitors to your park will expect a swimming pool. Other common amenities include sports facilities, gyms, and dog parks. Wi-fi is considered essential in this age of remote work. If you are purchasing parks, then these are amenities to look for. Otherwise, you may spend significant capital putting in these amenities. Or, if you plan on building an RV Park from scratch, you can put these in from the very beginning. This is a asset with a huge amount of variables, so make sure you are educated about the varied income sources, or are working with an operator who does.
If you are interested in learning more about the benefits of RV Parks, as well as the RV Parks that the Upslope Group is making offers on, shoot us an email at Keith@UpslopeGroup.com