RV Park Investing 101

Discover why RV Park investing is worth your attention, how the RV Park business model works, steps for buying your first property, plus the 5 keys to successful RV Park investing. This comprehensive guide will provide everything you need to know about this lucrative and under-the-radar niche.

Why RV Park Investing Is Worth Your Attention

Mom and Pop Owned Parks: In the United States alone, there are over 8,000 RV Parks, 90% of which are owned by small, independent operators. This means you’re not up against industry giants and there are plenty of opportunities for you.

Less Competition: RV Park investing is a niche market that’s flying under the radar right now. It isn’t as saturated as other sectors of real estate, such as multifamily where competition is driving prices up and cash flow down. This means fewer competitors and the potential for greater cash flow and cash on cash returns.

Huge Market Demand: The recreation vehicle market is robust and growing. Valued at around $24 billion in 2024, it’s projected to reach $27 billion by 2028. Similarly, camping revenue is expected to hit $24 billion by 2028, proving this sector is not a small market but a thriving one.

Economic Drivers

1. Aging Baby Boomers: Baby boomers are a significant force driving RV Park business, from park visits to RV purchases.
2. Pandemic Impact: RV sales have spiked to record breaking levels since the pandemic, with first-time campers increasing fivefold.
3. Demand for Affordable Housing: Besides vacationers, people seeking affordable housing are also turning to RV Parks. RV Parks are meeting the growing demand for housing because it’s inexpensive, making this niche market even more appealing for investors.

RV Park Investing Business Model

Types of RV Parks

There are four main types of RV Parks for investors to consider:

Transient Park: This means that the stays are short term, often overnight or weekend stays.

Destination Park: This is a park that looks like a resort, with amenities that entice longer stays, such as lakes, pools, and fishing and boating activities.

Extended Stay Park: These RV Parks offer month-to-month or yearly rentals, and can serve as affordable housing.

Hybrid Park: The fourth park is any of the above parks with added RV storage facilities. For example, you have a transient park that offers short-term stays, but you also have storage units or spaces where they can store their RV for months at a time or even for the entire year.

Revenue Streams

• Rentals: Daily, weekly, or monthly rents are a primary source of income.
• Amenities: Pools, propane sales, Wi-Fi charges, and on-site stores provide additional revenue.
• Special Events: Hosting events like movie nights or barbecues can also be profitable.
• Retail: On-site stores selling supplies at a premium offer convenience for campers and high profit margins for the park.
• Affiliate Programs: Partnering with local businesses such as restaurants and touring agencies for referral fees can add additional income as well.

Operational Costs

While the potential revenue streams are attractive, operational costs should not be overlooked. They include:

1. Maintenance of Park Grounds and Infrastructure: Regular upkeep of the park, including road and facility repairs, upkeep of the campsites and grounds, and amenity maintenance.
2. Taxes, Insurance, and Utilities: Costs associated with park operations.
3. Staffing: Employing people for maintenance and customer service.
4. Marketing and Promotions: Marketing and promotions are essential for attracting guests, yet it’s often underestimated and can even be overlooked as a cost. Don’t skimp on marketing as it enables potential customers to find you and book with you.
5. Licenses and Permits: Necessary for legal operation.

How to Buy Your First RV Park

Step 1: Find a Park

Finding off-market deals offers the best opportunities for investors. In fact, one of the reasons our students are so successful is that we help them find off-market properties at the right price. Alternatively, websites like LoopNet, Crexi are good starting points for beginners to get a feel for the market. Additionally, there are more specialized websites like campgroundmarketplace.com, campgroundsforsale.com, parksandplaces.com, rvparkstar.com, and bizbuysell.com. So, you can begin your search on commercial real estate websites and specialized websites, but once you get more familiar with the market, you need to go direct to the seller and find off-market deals.

Step 2: Research

Once you have identified an RV Park you’re interested in buying, the next step is to conduct thorough research as part of your due diligence. This critical phase in the acquisition process can determine your success or failure.

1. Market Demand: Understand the local need for RV Parks in the area by assessing demand, competition, amenities, and occupancy. These are key factors to consider when buying your first RV Park.
2. Demographics: Know your potential customers.
3. Proximity to Attractions: Ensure the park is close to popular spots and attractions and that is has easy highway access.
4. Climate: Investigate weather conditions and seasonality. Is the park seasonal or can it stay open all year?
5. Local Regulations: Check zoning laws to see if expansion is possible. Just because the park has the potential to expand doesn’t mean it’s possible, so be sure to look into local regulations.

Bonus Tip: A quick short-cut to research an RV Park property is rvparkiq.com, a ‘market analysis platform’ where you can put in the address of a potential investment and order a report with a lot of this information. It’s a great shortcut to see if the property you found makes sense to buy.

Step 3: Evaluate

The next step is to evaluate whether you have a good deal. The methodologies for evaluating an RV Park closely resemble those used for multifamily and other commercial properties. Key metrics include:

• Cash Flow Metrics: Calculating cash flow, cash on cash returns, and cap rate to ensure positive income after expenses and evaluate the return on your initial investment. These are the basic calculations you need to make in order to move forward.
• NOI (Net Operating Income): As the NOI goes up, property value increases, making it vital for cash flow and lender evaluations. In fact, your RV Park value is dependent upon your NOI, which includes the appraisal, if you want to do a cash out refinance, or a future sale. Calculating the NOI is extremely crucial because that’s where the cash flow and future value is made.

For further study on how to evaluate a deal and calculate key metrics, check out these trainings:

Commercial Real Estate Deal Start to Finish 

18 Commercial Real Estate Terms You Must Know 

Step 4: Finance

The final step in purchasing your first RV Park is to secure financing. There are three primary ways to finance your RV park:

Conventional Bank Loans: As a beginner, local banks familiar with the area are your best bet for securing a loan.

SBA Loans: Another option is SBA Loans. For qualifying properties, some SBA loans require only a 10% down payment.

Creative Financing: This is our favorite option for financing because every investor is different, and every deal is unique. Creative financing techniques give you more flexible options, including seller financing where the seller becomes the bank for you, second mortgages from sellers, or master leases where you can design the terms yourself so long as the owner agrees. We have a ton of resources on creative financing for you, plus examples of student deals using a variety of financing methods on our Real Deals page.

5 Keys to Successful RV Park Investing

Incorporate these 5 things into your RV Park investing and you will be set for success!

Buy Existing Parks: Avoid starting from scratch, as it requires more time and capital. Established parks generate immediate income and involve fewer risks.

Proximity to Highways: Parks should ideally be within five miles of major highways for easier access.

Year-Round Operation: Ensure continuous cash flow by buying parks that operate throughout the year.

Water Features: Close proximity to lakes, rivers, or oceans is key as it can boost rent and occupancy rates.

Strong Online Presence: A strong digital footprint is essential for attracting guests. When one of our students brings us an RV Park to evaluate, one of the first things I do is search it online. If I have trouble finding it, I know that there is potential income they’re missing out on that we can get. Having a strong online presence is essential because marketing is king. Marketing involves having a well-optimized website, active social media presence, and listings on RV forums and review sites. This will ensure the park is easily found online with great reviews and high visibility on Google, Yelp, RV forums, social media platforms, and travel publications.

Questions or Comments? Text PETER to 833-942-4516.

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