One of the unique attributes of owning an RV park is the opportunity to self-manage. Many owners fine this to be their #1 attraction to the idea of buying an RV park: the ability to live in a beautiful setting far away from the city, with the chance to work both indoors and outdoors, with a myriad of entertaining roles and the freedom to spend time as they wish. So how would buying and living in an RV park work? Here is a basic overview.
Figure out your budget
Most RV parks require 20% or so as a down payment. So take your capital to invest and multiply by five. In certain cases you can get by with multiplying by ten if seller financing is available. In rare cases you can pull off zero down – we have done twelve deals like that to date. But the realistic case is 20% down.
Figure out your favorite geography
America is a big country and there are RV parks throughout. Do you like the mountains or the beach? Do you like the east or the west? Are there any specific states you prefer over all others? If you look at the U.S. map and grab a highlighter, you can probably figure this plan out in thirty minutes. But don’t forget that you’re going to be there year-round, so a far northern RV park is going to also mean some pretty serious winters, so think twelve months and not just six.
Ramp up your volume
The quality of the RV park deal you buy will be very reliant on the number of properties you look at (not in person, but via computer). As a result, you need to build as large a deal funnel as possible, including the following methods:
- On-line listings on Loopnet.com, RVParkStore.com, and others.
- Talking to RV park brokers (you can find this list on-line, too).
- Direct mail to RV parks in the areas that you are interested in.
- Cold-calling to this same list to find owners who want to sell.
Don’t be afraid to sign deals up
When a deal looks interesting to you – and meets all your criteria – don’t be afraid to sign it up under contract. You should never be concerned over signing up a contract, as that’s not a scary moment. All that does is to start the clock on due diligence and other studies. But make sure any contract you sign has the following items:
- A due-diligence provision that allows you to cancel.
- A financing contingency that allows you to cancel.
- A small earnest money of roughly 1%.
- No “buyer specific-performance”.
Do exceptional due diligence
The main difference between those who are successful with their RV park investment and those that do not meet expectations is the quality of their due diligence. Ben Franklin once said “diligence is the mother of good luck” and that’s 100% true. If you put in the effort on the front end, it will pay huge dividends in the performance of your property.
Obtain necessary financing
Financing an RV park is not something that the average bank does on a regular basis. However, you don’t have to go it alone, and most banks are receptive to the idea if properly presented. Here are the three basic forms of financing for RV parks:
- Seller financing.
- Local bank financing (typically up to $750,000 note size).
- National bank and CMBS debt (over $750,000 note size).
It should be noted that you can utilize a loan broker (also known as “capital consultant”) on any RV park deal. Typically the arrangement is Cloverleaf Capital up to $750,000 note size, and Security Mortgage Group for over $750,000. These type of brokers cost only 1% of the loan amount (payable at closing) and pay for themselves many times over.
Move in and leave the city behind
After closing, the next step is to make your move to your new home and business. Most RV parks have an owner’s house that comes with it. If you have selected it well, this would be a moment of supreme satisfaction – trading in your boring life in the city for a new, more exciting life in the country. There is a decompression that comes from working for others and then working for yourself. Being your own boss is a great experience, and living in a beautiful terrain is incredibly rewarding as a high-quality of life.
Focus on the key drivers to profitability
After closing on your deal and moving in, there’s still much to do to make owning an RV park a success. You will need to hit your budgets, produce a great experience for your guests, and handle a successful marketing program and maintenance regimen. Many RV parks have the same playbook which is basically to utilize new internet methods of marketing while bringing old systems back to life.
Conclusion
Owning an RV park can be a very gratifying experience and moving to the country and being your own boss may be more important now than ever before. Isn’t it about time you considered a lifestyle more in-line with the new America?
For more information on RV park investing, including how to identify, evaluate, negotiate, perform due diligence on, re-negotiate, finance, turn-around and operate an RV park, consider our RV Park Investor’s Home Study Course. It’s been the bible of the industry for over a decade, and has set hundred of RV park owners on the right course for success.