Taking chances with the hope of making money is known as “calculated risk”, while doing so with zero hope of making money is simply “reckless”. In this RV Park Mastery podcast we’re going to unlock what these “reckless behaviors” are for RV Park owners and how to eliminate them.
Episode 127: Avoiding Reckless Behavior Transcript
Like the turtle, you can't really get anywhere without sticking your neck out. There's a risk in advancement, but you have what I would call sensible levels of risk and risk taking, risk-taking where there's an end goal and you take a calculated risk to achieve some degree of success or profitability. But there's also risk created by simply being reckless. And reckless behavior has harmed many an RV park owner over the years. This is Frank Rolfe with the RV Park Mastery Podcast. We're going to explore the different types of reckless behavior that some RV park owners engage in and how to avoid that. The first one are safety hazards. Now, I've seen many an RV park owner, for example, that has a dead tree, and what they do is they remove the dead tree, but they delay in filling the hole. Maybe it's because they self manage, don't know where to get the dirt, don't have time, the truck broke down. But every day that hole is open, you know what can happen? Someone can step in that fall and break their leg and sue you. And if you look around many RV parks, you'll see quite a few examples of safety hazards right in plain view that nobody is mitigating.
For example, if you have a sidewalk going to your office, going to the pool, and it's uneven because maybe tree roots have gotten in and pushed it up on one end. Let's say there's maybe a 1 inch gap between one slab of concrete and the next. That's a very definite tripping hazard. So go through every inch of your RV park, number one, and look for these very obvious signs of potential risk and mitigate them, cure them, put them to bed almost immediately. The next item are dead trees and dead tree limbs. The way insurance works is, if a tree falls or a limb falls, yet it was healthy, it has green leaves on it, that's considered an act of God. But if a dead tree or dead tree limb falls and strikes an RV or strikes a person, that will be deemed not an act of God, but true liability because you did not follow the simple code of removing all dead trees and dead tree limbs. So get to work on that. Look around your RV park. What do you see that's dead? This should be green right now, but in fact it's brown. Have all of that removed.
Some owners say, "Well, but it's such an expense. I only do it every other year or every few years." You can't do that. If one tree limb were to fall and strike an RV and do $15,000 of damages to it, it's going to impact your insurance mightily. You might even lose your insurance if the insurance carrier believes that you're not really manager or owner material because you're not removing such easy, low-hanging fruit liability issues. Next, lock up all your storage areas, your office, even your electrical boxes. They are meant to be secured. You should never have property that you own that is sitting out there just blowing in the wind, waiting for that one mischievous bad apple to go in and take your stuff. So if you want to avoid recklessness, just follow security and good practices in that. In the same token, be sure and secure all of your vacant park models and cabins. Don't allow people to just randomly walk in somewhere if they like to. Again, this is your property, and I'll agree that most people in RV parks are good-natured, nice people, but you never know when you'll get a bad apple in there.
You cannot give people access to the insides of your property. Next, don't keep your original records at the RV park office. Now, if you self-manage, perhaps that's okay. But for those people who are not self managing, who are relying on a third party third-party manager, you can't leave all your precious financial documents sitting there in the office. Let's say you fire the manager and they want to screw you over, what do they do? They'll take those records and destroy them. What if the office burns down? There goes your records. Instead, remove all the original records at closing and put that in a safer place. Perhaps a storage unit near your house, maybe a climate-controlled storage unit, maybe even just in your house, in a file cabinet. But get them off property. The risk to them under your control at your house or a climate-controlled storage unit is a fraction of the risk of having them there in the office. There's no reason you need to leave them there. Next on the list, make sure that you renew your permit and license way license way ahead. Some RV parks do not have any annual permitting or licenses, but others do.
And if you do have one, whether it's state, county, or city, make sure you know exactly when it expires and start working on the renewal way ahead of expiration. You would never want to go in the day before it expires only to be told, "Oh, I'm sorry, you missed a deadline. Don't you realize 365 days from last year happened to be yesterday? And I'm sorry, but you've lost your permit or license." Instead, start the procedure well ahead of time. That way, if there are any questions they need in order to approve your permit or license, you have plenty of time to get them whatever information they need and still get the job done. So you'd never have a lapse. You should never allow any lapse in your permit or license. It's also very, very reckless behavior to attempt to renew your loan less than about a year ahead of when it becomes due. You would not believe how many calls I get from people who call me up and say, "Hey, I've got to renew my RV park loan." And I'll say,"Okay, when does it come up?" And they'll say, "Next week, Monday." Things like that.
Here's the reality of it all, you never really know if the bank will renew your loan until you ask. And they don't know immediately either. They're going to have to run it through a committee in all likelihood. And if they come back and say, "No, I can't renew your loan, you've got to give yourself time to find a replacement lender, build a package, tell the story, go before a committee, and even if you're approved, then they're going to have to have time to draw up the documentation and then get all the bells and whistles signed off on internally at the bank. And that process could easily take months. But even then, if you started just a few months before your loan is due, what if you can't get the loan at all? If you start about a year ahead and you see that you cannot get the loan for whatever reason, then it still gives you time to try and sell the property or enact some type of plan B. But when you cut it too tight, when you basically throw care to the wind and have extreme recklessness under the assumption you can get it renewed at the same lender, then what's going to happen is you might lose the property.
I've seen it happen to people before. I've seen properties that were perfectly fine, hitting all their numbers and all their budgets and producing exactly the correct amount of cash flow, and they still lost it because they did what's called a term default. That means you made all your payments, but you didn't get it replaced in time. You did not pay off the bank in full when you were supposed to. What a sad ending to all that work that could have been successful simply because you did not start trying to get the loan renewed far enough and ahead. Finally, and this is a horrible item for some owners and totally reckless behavior. They don't have the correct insurance or in the correct insurance amount. You can easily call up someone like Mobile Insurance over in Houston, Kurt Kelly over there, and say, "Okay, Kurt, here on here in my RV park, here are the basics. What kind of insurance do I need and in what amount?" And he can get it for you. But in today's world, there's all kinds of additional insurance you may need but may be unaware of. Such things as cybercrime insurance. You've got to make sure you have yourself insured in every possible arena.
We are in a very litigious country in America. We have more attorneys than all the other countries in the world combined. What a sad commentary on our society. So as a result, you have to go in every day under the assumption that you've got some degree of risk of someone suing you. And when people sue you and you have lots of insurance and all the correct insurance covered, you pay nothing. Perhaps just a deductible. But there's no worse feeling than having something happen in your RV park, going to the carrier and have them say, "Oh, I'm sorry, you don't actually have insurance for that. Or you have way too little insurance." Some mom and pops run their RV parks carrying nothing but the absolute minimum required by law or by what they believe to be their common sense. A $50 or $100,000 insurance policy in a 2025 America is virtually worthless. So you definitely need to get out there and make sure that you are completely covered. The bottom line to it is, it's not that hard to eliminate reckless behavior. All that risk that you take, which causes you nothing but anguish and worry, that can all be resolved. You can dispel all of that, but you have to put some effort in to get it done. This is Frank Rolfe with the RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.