The first quarter of 2017 is ending. We have a plaque on the wall that says “Time Kills Deals” and we keep that up there as a reminder that time is not your ally when it comes to business and investing – unless you are waiting for the market to correct. In the case of RV parks, time is of the essence. You can buy RV parks today with the largest “spread” (the difference between cap rate and interest rate) in a generation, and you can still buy them from the original mom & pop owners. That’s not to say that you should not also live by the old adage “think like a person of action and act like a person of thought” – you should never rush to buy an RV park without knowing what you’re doing. But if you have educated yourself on the correct way to evaluate an RV park and understand how to do the due diligence properly then what are you waiting for as far as looking at as many deals as you can to see if you can find just the right one? Even though the first quarter nearly is over, there are still three to go in 2017 – so get to work!
Memo From Frank & Dave
Are RVs The New Luxury Travel?
One reason that RVs and RV parks are booming right now is the fact that they are becoming the highest level of luxury travel. While flying once held allure, it’s the RV that now let’s you travel in style and privacy in a manner unparalleled by any other form of travel. So how did RVs and RV parks become the new luxury travel?
No lines or screening
When you fly today, it’s an excruciatingly awful experience. You have to get to the airport two hours ahead, and then stand in endless lines, coupled with removing your shoes, belt, jewelry and computer and then having the degrading risk of being selected for further searching. While this may be necessary to prevent another act of terrorism, it’s unpleasant all the same. And it has made RV travel a winner simply from the perspective of being able to just get in your RV and go. No lines. No screening. No discomfort.
You build your own schedule
When you travel by air – or even by cruise ship – you have no control over your schedule. Instead you have to adapt to what is offered to you. If you want to leave for Yellowstone at 3 PM, then that’s when you go – nobody tells you what to do. And if you want to stop at ten different sights along the way, then just pull over whenever you’re ready. In many cases, some of the best items on the road are those that you see on the way to your final destination. Flying above them is no fun and very wasteful, and so is sailing past them on a cruise ship. The RV and RV park gives you the freedom to do exactly what you desire to do.
The most luxury housing imaginable
It comes as no surprise that there are RVs on the road today that cost more than an airplane. Models in the price range of $500,000 to over $1 million abound. But even the $25,000 RV today looks fantastic. The level of design is unbeatable and clearly several notches above any accommodation you can find in a hotel or cruise ship stateroom. And it’s only getting better every day, as the manufacturers continue to produce a continually better product.
Always sleep in your own bed
One item that is no longer desirable – if it ever was – is sleeping in a hotel bed, or cruise ship bed. The question is: who slept there ahead of you? And even worse, are there bedbugs in that bed, or some other parasite? The beauty of the luxury of RV travel is that you know exactly every person who has ever slept in that bed – you. All your concerns are out the window, and you can also customize the bed, pillow and coverings to exactly suit your taste.
You bring all your favorite things with you – things that would never fit in a suitcase
When you travel by RV, you get to bring all your favorite items, such as books, hobby items, a complete wardrobe, fishing gear, golf clubs – literally everything you could ever want. The freedom to take all these items you love along is a true luxury, and something that no other form of travel provides.
A sense of community and social interaction
Modern travel is a very lonely business. There are few groups more acrimonious than the typical folks you meet on your plane. However, when you travel in an RV, you have a social club of like-minded individuals at every RV park you stop at. One of the great benefits offered by all RV parks is the camaraderie of RV owners that stop there. This sense of community is only found in RV travel.
Forget the Orient Express and the 747. The true luxury travel option today is the RV ad RV park. And that’s why the industry is booming in a modern world of discriminating consumers.
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Can You Find The RV In This Photo?
We saw this photo in an upscale magazine recently. It’s a picture of a garden at a stately residence in Los Angeles. What’s unusual is the Airstream RV tucked into the corner of the landscape. This RV probably serves as an office or guest room, or just a fun place to hang out. This is not the first time we’ve seen RVs placed in such positions – and it won’t be the last. The RV has attained such a high level of respect in American culture that it can be found nearly everywhere.
The Power Of Bonding In Buying RV Parks
When people ask us “how do I get a great deal on an RV park?” the answer must also include the concept of “bonding” with the seller. With bonding, magical things can happen. So what is bonding and how does it impact the negotiations on buying an RV park?
The power of the seller liking you and wanting to help you
Bonding begins with the simple fact that humans have an innate need to help each other. We live in a world of personal interaction, and it’s a very powerful force. When you help someone, it makes you feel good. So it’s only natural that a seller would want to help the buyer simply because they like to help people – it’s basic human nature. If you are a nice person and are respectful to the seller they will, in turn, want to help you to achieve your goals, just as they had help along the way from others.
The power of representing more than just money
When you have had a great life and are nearing the end of your journey, there is more to life than money. When a seller likes you, you represent more than just a buyer – someone with just some money that wants to buy your property. Instead, you offer a higher purpose than just someone to collect a check from. Many buyers fail to realize that often the buyer that is selected is not the one with the highest offer but the one they like the most.
The necessity of win/win deal making
Often those that get the best relationship with the seller are those that are advocates of win/win deal making. “Win/win” means that both the buyer and seller are happy with the outcome. This is the reverse of “win/lose” in which either the seller or buyer feel cheated by the final price or terms. When you approach all deals with a “win/win” mandate, you have a much greater chance of the seller liking you and wanting to help you.
The neat things that can happen through bonding
We have seen many amazing outcomes from bonding over the years. They frequently include:
- Seller financing. This allows you to escape the entire bank application and related costs. The interest rate is normally lower than the prevailing bank rates, the term longer, and these loans are typically non-recourse. In a nutshell, this is the best loan instrument you can possibly obtain.
- Zero down, or a low amount down. When people talk about “zero-down deals” they typically begin with bonding. But even when the down is not zero but still 10% or so, it’s the result of bonding with the seller.
- A very low price. Sellers will sometimes let a property go for far less than it’s worth just to make sure that you succeed with it.
- Longer diligence periods – even years sometimes. In cases where the RV park is not operating consistently well, the seller will sometimes give you a much longer period to turn it around before taking on the risk of a mortgage. Some of these deals are called “master lease with option to purchase” which means that the buyer has a specified number of years to get the property up to working condition before the closing.
You must never underestimate the power of bonding in getting a good deal on an RV park. It’s a force that transcends simple economics and takes your profitability to the next level.
Why Trump’s Infrastructure Renewal Push Is Good For The RV Park Industry
The St. Louis arch turned 50, and it was about time for a complete overhaul of the National Park that is located beneath it. They built new bridges, parks, parking, a museum complex – virtually the entire infrastructure was renovated or replaced, at a cost of over $300 million. While these projects create jobs they also have a bigger impact – they make travel safer and better, and create more destinations for RV travelers. Indeed, Trump’s plan to go on a large-scale U.S. infrastructure renovation program is good for the RV park industry in several ways.
RVs get from point A to point B on the road. So having roads that are in better condition will make for a happier motoring public and RV owners who want to hit the road more often. It will also improve safety, as many roads have insufficient shoulders and other outdated features that need enhancement. The improvement of the interstate highway system alone should greatly improve the quality of life for RV owners.
Many American bridges are in extremely poor repair. Some of the bridges in some states – such as Illinois – are downright scary. Having these vital links in a safe and sturdy condition is obviously good for RV owners, as well as the rest of the motoring public.
More improvements to parks and recreational areas
Just like the arch in St. Louis, many American parks and recreational areas need a facelift. While the details of Trump’s infrastructure plans have not been revealed, there is discussion that it will include many national sites that are wearing out rapidly. This will be great for RV park owners who not only rely on destination items of interest, but also better venues that make RV owners stay even longer in their properties.
Regardless of whether you’re Democrat or Republican, the proposed infrastructure revitalization plan will be good for the RV park industry.