Investing in RV parks has become an increasingly popular approach for investors seeking stable cash flow and long-term appreciation potential. As the RV industry continues to grow and baby boomers hit retirement age, RV parks are seeing strong demand and high occupancy rates. However, successfully investing in RV parks requires understanding key factors like location, competition, amenities, operations and financing. This article will provide an overview of RV park investment fundamentals and strategies to help assess investment opportunities.
Understand RV park investment basics and business model
The RV park business model is based on generating revenue from both short-term and long-term guests. Short-term guests staying for a few nights pay higher daily/weekly rates while long-term guests pay affordable monthly rates to park their RV long-term. The reliable income streams and mix of short and long-term guests make RV parks a stable investment option. Investors can expect average capitalization rates of 7% to 10%.
Assess location and local RV travel patterns
A key factor is proximity to major highways, tourist destinations and attractions that draw RV travelers. Growing suburban areas near major metro regions can also make good locations. Understanding historical occupancy rates and seasonal customer demand patterns at various parks can inform investment decisions.
Evaluate existing or develop new RV park
Investors can choose to invest in existing parks with historical performance data or develop new RV parks. While new parks require more upfront capital and time to stabilize, they allow investors to add amenities and design sites to best meet customer preferences. Conducting market studies and researching development costs and timelines is key.
Understand operations, financing and risks
While RV parks have passive ownership potential, investors should have a management plan whether self-managing or hiring a professional management company. Financing options like commercial loans, SBA loans and equity partners should be explored. Finally, investors should assess risks like seasonality, reputation management and maintaining competitive amenities.
In summary, RV park investments can provide stable cash flow but require assessing key factors like location, competition, operations and financing options. With proper underwriting and management, RV parks represent an attractive investment sector given strong industry tailwinds.