Timing is everything. Just asked anyone who bought Apple stock for $5 a share, or sold their house in 2006. One of the most important aspects to investing is simply timing. So why is the timing right for buying RV parks right now – the best it’s ever been? There are many reasons.
The importance of megatrends
America is like a giant engine with many huge gears on it, and all successful investments need to be on the right side of those gears or run the risk of being crushed. The term for these giant rotors are “megatrends” – and the RV industry has many that are in perfect alignment. One is the aging of the Baby Boomers (those born between 1946 and 1964) who are retiring at the rate of 10,000 per day. On the list of many of these folks is buying an RV and travelling America. Another megatrend is the rise of the Millennials (those in their 20s and 30s) who are taking to RV travel due to its simplicity and family bonding potential. Then you have the reduction in gasoline prices (RVs have big fuel tanks) and the low level of bank interest rates. Add to those the better designs, gas mileage and price points of modern RVs. Can you get more positive megatrends than that in one sector? Doubtful.
The biological clock of mom & pop sellers
Well, let’s add on one more. And it’s huge. Every day, the biological clock is advancing for the mom & pop owners of RV parks from coast to coast. This means that they are becoming more motivated to sell, as they have health issues and just a general loss of interest in the business. And since they have no debt, they can get extremely aggressive on price and even carry the financing. All of the great buys we have ever made have come from mom & pop sellers, and once they have been replaced with new corporate owners, the opportunity is gone forever.
Attractive interest rates
Let’s not forget about the interest rate environment we’re in –which is the lowest in American history. Beginning with “quantitative easing” after the 2007 Great Recession began, interest rates have plunged to levels never before seen and, even though they rebounded slightly, they are still lower than the rates seen by your grandparents. These low rates will not last forever, and by locking them in now on an RV park, will allow you to pay if off faster and with a larger monthly security cushion.
There have never been so many possible financing sources for RV parks. There is seller financing, bank financing and CMBS “conduit” financing. There are also more creative concepts like “master lease with option” and “wraps”. You can tap into your IRA using a Self-Directed IRA (SDIRA) conversion, which costs about $500 through a company like Equity Trust. The bottom line is that it is easier to finance an RV park than at any other time in history – but nobody knows how long that window of opportunity will last.
If you’re thinking about buying an RV park, be advised that the timing has never been better. At the same time, none of us know how long these megatrends will be so favorable, so there is definitely time urgency about your search.