Dependable income is always desirable, yet many RV Park owners are missing out on some proven methods to make cash - flow something you can count on each month. In this RV Park Mastery podcast we’re going to explore some methods of fine - tuning your occupancy to make sure that fixed costs and mortgages can be covered with ease.
Episode 141: How To Create A More Stable Revenue Stream Transcript
The average length of stay with the typical RV park, the average customer is there for 14 days. But your mortgage requires 365 days a year of tenancy. So what do we do to fill in the gaps between the tenants arriving and departing? And the answer is there are some methods you can use to get more stable revenue streams at your RV park. This is Frank Rolfe with the RV Park Mastery Podcast. We're going to talk about creating more stable revenue bases within the traditional RV park. Now, that 14-day period that I mentioned, that is the US norm. But in the relative to the RV park industry, known as the mobile home park, it's 365 days. In fact, in the typical mobile home park, the average tenant is there for 14 years.
So the first thing to think about when you're trying to create a more stable tenant base in an RV park is how can we bridge the gap between the recreational user, henceforth the word recreational park or RV park, and make it more into affordable housing, or a more permanent resident who looks at that RV park not as a stopping over spot, but as someplace they can live for a lifetime.
Now, we own some RV parks down on the Texas-Mexican border. And what we've been doing with those is bringing in a whole lot of what are called park models. These are structures that were built for RV parks. And basically, there's something that's for those that attracts people who will live there full-time because they're larger than an RV, they have more square footage than an RV, they're built more solid than an RV. And as a result, with a lot of customers, they are felt to be superior to the RV for long-term living.
And the pitch is then if you bring in the park model into a park that has a lot of customers who come from afar, maybe one that's more of a destination, maybe something that's more extended stay. And down in South Texas, people come in from Canada and northern states to spend the entire winter there. What you're doing is you're allowing people to now have an additional choice. They can bring that fifth wheel all the way down from Pennsylvania for the winter, or they could just get in their car and drive down and stay in that park model.
And we found many people when given the option, said, well, you what I mean, I can sell my RV, I can buy the park model for cash because I really didn't like driving this thing that far, didn't really like having to pay the insurance on it and the taxes on that. So I see this as a very good solution. And that's why park models and many RV parks can be a real winner. Because some customers are going to elect to live in those park models all the time. Sometimes it starts off just as a temporary thing. Maybe people say, well, I'm just going to go down to South Texas for the winter and come back when it's the summer. But after a while they think, you know what? What if I just sold my house up north and just lived in this RV park full-time? I have so many friends here and yeah, it may get hot in the summer, but I'll just turn the air conditioning down. I'm still going to save a fortune doing that.
Now, on the topic of bringing in park models, another option in some RV parks, if you don't want to dabble in park models, which can tend to be more expensive, is you could try and bring in fifth wheels, place them on lots, preferably with pop-outs, skirt them and sell them as housing units for people who don't own an RV, you want to have the RV park experience full-time. Both young and old Americans are looking for new types of affordable living that often, if you make it there for them, they can see it, but they have trouble connecting the dots to do it themselves. They would never have the gumption to go out and buy a travel trailer to bring into the RV park, to set up and skirt. They would never do the steps, but they will do the end result. So bringing in RVs and setting them up for full-time living can, again, offer you a more dedicated, continual income stream.
Let's not forget about tiny homes, because in all of America, the only place you can typically put tiny homes is inside RV parks. They can't go in mobile home parks. They don't have the all-important HUD seal that's been required since 1976. And I see all the time when I'm out driving RV parks that have now dedicated portions of the RV park just to tiny homes. There's one that I drive by in Indiana where it's grown to be about half of the entire property is a community of tiny homes.
And once again, that tiny home customer won't be there for just 14 days, they'll be there for the full 365 days. Also, don't forget that the people who are in your RV park for only 14 days, they could be there longer. If you can enhance all the different activities, all the different things to do while they're in residency, they may say, well, you know what? I had a lot of fun. I don't want it to end. I think I will go longer.
Now, many people who have RVs, younger generation people, millennials and Gen Z's, they have to go back to work, but many retired people, baby boomers, they don't. They could stay longer. They could basically stay forever if they like. But somewhere between 14 days and forever is a good number two position. So giving people more reasons to stay, that can also help expand the continuity of your revenue stream. And if you have an RV park, it's also important you reach out to people who are there on work assignments that are going to be long standing. If they're building a new Walmart or a new factory, go to the Chamber of Commerce and find out things that are going in and find out how you can reach out to the people who are doing the hiring or the building of these facilities and reach out and see if people there want to rent spots to be in their RV there for a long time.
I'm not advocating that you have to convert your RV park to what is called a man camp, like they do in some sections of North Dakota and places with a lot of oil field activity. But there's no question that there are skilled employees who often have to go and camp out for quite some time in certain areas. And if you can find out what they emanate from, what plants hire them, what activities bring them, then that could definitely help you out as well. The bottom line to it is that anything you can do to get a customer in for longer than the US average of 14 days is going to definitely benefit you. There's no better feeling than when you have to write that mortgage check, always knowing that the money is in the bank. Stable streams of income are very much a positive in RV parks as they are in all other things. But too often RV park owners get stuck in this rut where they only think about short term because perhaps that's what mom and pop had always done. And to buy in the RV park, that's what they're also going to settle for. But that's a mind adjustment that really needs to be made.
I would much rather have 50% of my occupancy being year round and the other 50 being for those moving in and out periodically to a park which has 80% of the comings and goings, the transient nature of RVs, and only 20% stable. So every time you get a customer who stays longer than the short periods of time, you are the ultimate winner. And don't forget that when you go to refinance or sell that property, you will get a whole lot greater support and demand from the banking and the buying world by having that additional hedge to a temporary income. There's every reason in a modern America, the demand is there for people to live longer periods of times in RV parks, if not permanently. That is right on the right side of all us megatrends.
So keep an open mind to start thinking about methods you can use to maybe start enhancing your full time income. Because if putting out just a little extra effort in that regard can pay some huge benefits. This is Frank Rolfe with the RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.