Update On The Impact Of Covid-19 On RV Park Investing

The Covid-19 pandemic has been the key news story of 2020, having thrust the U.S. economy into a tailspin with self-quarantine mandates and reduced or closed non-essential businesses. And, in many ways, it has created a new narrative on many industries, either for the good or the bad. Assuming that these type of situations may occur again even once the Covid-19 issue is solved has changed many business models permanently, and it’s important to look at the long-term impact the pandemic has had on the RV park industry in particular.

Positive Impact

Covid-19 has brought about the following positive factors:

  • Classification as an “essential” service. RV parks were allowed to operate without issue during the pandemic, being viewed as an “essential” service in the form of housing. In fact, many people used RV parks as outdoor quarantine areas far away from the urban unrest. This is extremely important, as being marked as a “non-essential” industry at this point means basically zero confidence going forward.
  • Higher occupancy. The pandemic has actually increased RV park use and length of stays, as the outdoors has been viewed as one of the few “safe” zones during Covid-19. This has created more demand for RV park usage, and thus higher occupancy.
  • Greater demand for RVs in general. The nation’s sudden and renewed interest in the great outdoors has also created more demand for RV travel from those who had never tried it before – and many are finding they like it. All across America, people are learning about how great RV parks are and their many opportunities for safe relaxation and bonding time.
  • Maintaining low interest rates. The sudden spike in U.S. unemployment and financial hard times has created an environment of continued low interest rates, which is a huge benefit to those who buy RV parks with debt (which is just about everyone).
  • Reduction in fuel prices. Decline in the demand of oil as a result of the pandemic has reduced gasoline and diesel prices at the pump, which is positive for RV usage. The lower the gas price, the more affordable it is to drive your RV around.

Negative Impact

Covid-19 has also created some negative issues for RV park buyers and owners:

  • Reduction in the number of CMBS lenders. This only really applies if you’re looking at an RV park over $1.5 million in price. Most CMBS (commercial mortgage backed securities) debt creators have pulled back on making new loans for the moment, and this has resulted in a reduction in options for the larger RV park purchases. As always, most RV park loans are either seller financed or traditional bank debt.
  • Some RV park activities cannot be used with social distancing. While most outdoor activities do not require a mask, there are some that simply can’t be “social-distanced” such as square dancing. However, these are not a very big part of the entire RV amenity package that customers can participate in.

Conclusion

RV parks have fared very well during the Covid-19. The strengths definitely outpace the weaknesses concerning a national pandemic and the impact on RV parks. Our general thought is that the focus on outdoor activities and social distancing will introduce many more customers to this business model.

Frank Rolfe has been an active investor in RV parks for nearly two decades. As a result of his large collection of RV and mobile home parks, he has amassed a virtual reference book of knowledge on what makes for a successful RV park investment, as well as the potential pitfalls that destroy many investors.