RV Park Mastery: Episode 21

Options For Greater Income Stability

With the demand for RV parks so strong, many owners are taking advantage of the unparalleled demand to create new streams of income – some of which offer superior stability. In this RV Park Mastery podcast we’re going to explore the best of these ideas and how any RV park owner can create a strong stream of income with some creative methods to harness the demand for all-things RV.

Episode 21: Options For Greater Income Stability Transcript

In Conrad Hilton's biography, The Man Who Bought The Waldorf, he talks about trying to maximize the income of every hotel he owns. He looked at ways to make income from every chair. He even, during the peak times in hotel occupancy, during World War II, would rent out each chair in the lobby by the night when the hotel was sold out. And many smart RV park owners are also thinking right now, with RV park occupancy high, and demand so strong, what additional things can I do to create greater income, and particularly more stable, continual income? This is Frank Rolfe, the RV Park Mastery podcast. We're going to talk about the different options that are out there for smart owners, creative owners, to harness, to increase their occupancy and their cashflow.

The first one, which is not a new idea, but it's one that every RV park owner needs to consider, are park models. These are individual units that are designed to be rented by the night, just like a hotel room. Park models are typically not large, 400 square feet and under. They're not inexpensive, they could definitely, usually, cost $30,000 or more per unit. But the big thing about a park model is, it taps you into a new customer base, because these are people that do not have RVs. These are people who do not want to camp in a tent. What their desire is, to enjoy the RV park and its many amenities, but to do it without having the burden of carrying around a tent or a fifth wheel, or go out and buy a motor home. Now often, you'll find a lot of demand for park models in areas where people have family reunions and other group activities, because this appeals to people who want to participate, but they don't have an RV.

And right now the occupancy in park models is extremely high. You have many people who have fled urban markets because of the pandemic, they're just looking for something new, a new place to live, new chapter in their lives. And those park models give them that entree into the outdoors and RV park living. In fact, some people will now use park models as a stepping stone to buying an RV, to make sure they really enjoy that experience. Now, the next one is a less expensive option, but offers you the same concept. And that's called glamping, which stands for glamor camping. What you do is you buy an old travel trailer, typically from the 60s, but sometimes even the 50s, sometimes even earlier. Might be an Airstream, doesn't have to be. And what you do is, you buy it, but you don't set it up to be moved, it's there to be permanent.

And then you really get out your Martha Stewart creativity on the inside, and make it something special. The beauty of glamping, as opposed to park models, is the price point, because you can build a glamping unit at a fraction of the cost of the park model. You can buy a suitable old travel trailer for a few thousand dollars, and if you're handy, and if you're good at design, you can really make something very attractive, for a very low amount of money. And there are people who actually prefer travel, they would actually choose that glamping trailer over that park model. They like the kitschy style, they like the unusual nature of it. So, there's another option to capture that overnight traveler who shows up in their car, they don't have an RV, don't have any tent, not there to camp, they're there to glamp.

Now this next option is a different departure, and that's the tiny home. We've all seen them on HGTV, relatively attractive, some are amazingly attractive, and these are tiny residences, typically 400 square feet and under, and it gives people an additional type of housing model. And this is for full-time living, this is not for part-time living, so this would be the person's actual dwelling. The good news is they're attractive, the bad news is though, they're not your typical overnight RV customer. And as a result, it will change your community to some degree, but possibly for the better. You see, tiny homes, since there'll be there year-round are going to pay you rent year-round. I've toured some RV parks, and we have some RV parks where we have put a special focus on filling certain sections with tiny homes. In an ideal world, you'd have enough tiny homes, enough residual, monthly income to cover your basic necessities, perhaps your mortgage, without worrying day-to-day if anyone's going to ever show up. Because you'll know exactly when you start each day, how much income you will have.

Also, those tiny homes can actually produce a very interesting and charming character for your property. Typically, people in the tiny homes care deeply about their neighborhood, have a lot of pride of ownership, and give kind of an unusual, charming character to any RV park. It also allows you to use areas that you typically could not for RVs, maybe because of access, because again, these are not moved, these are permanent by nature. In that same vein, you have the idea of extended stay. Now, how is extended stay different than tiny homes? Extended stay would mean where you attract people who are going to retire into their RV, whether it's a fifth wheel, motor home, travel trailer, it doesn't matter, but they're not going to be moving it around. They're there for the duration, they plan on staying there for, perhaps, the balance of their lifetime.

Now there's 10,000 baby boomers a day retiring in America. And most of those, as part of their retirement, they're selling their home, investing in an RV, and they plan on retiring and living full-time in that RV. And you can set aside a section, well, it doesn't have to be a section, it could just be in the general populace of your RV park. But these customers, again, bring lots of positive attributes. Perhaps foremost, stable income, because they're there every single day, they're going to pay you monthly, some might even pay you annually. And once again, that stable income base will give you great comfort every month when it comes time to pay your mortgage, because you've already got that built-in revenue source every month. Therefore, everything else otherwise, nightly, weekly, that's gravy, because you have all your basic essentials covered with these extended stay units.

Another positive is again, it gives the community extra charm, having people that love the area so much that they're devoting the rest of their life to staying there. Those people can kind of be unofficial ambassadors and tour guides for your other residents. They also display lots of pride of ownership, typically, so they're really an asset, never, never a liability. Now, extended stay is also a big booming market because there are so many Americans retiring, and so many Americans learning they really love RV park living. And they also just don't love traveling constantly in between RV parks, they like to have one set place to go. And that ties directly into that demand stream. The bottom line is, smart RV park owners are aware right now that RV parks are hot, and it's looking they'll stay that way. I can't really see anything on the horizon, a single mega-trend, that will harm RV park occupancy, I actually just see it continuing to increase.

That's because the industry has done such a great job of public relations, and got so lucky that what was at one time, nonexistent, and now the largest segment of the population likes RV parks, and that's the millennials. Used to be all about baby boomers, which used to be the largest segment of the US population, now that's been changed to the millennials. But millennials, perhaps, bigger fans than the baby boomers were. So, the industry is very well positioned and because it is so well-positioned, every RV park owner needs to think, how can they maximize the construction of their business model? How can they take, and perhaps set aside, certain sections to create continual income, through extended stay or tiny homes? And how can they take other areas and provide a whole new product line, a whole new business model of nightly rental for those who don't have RVs, in the forms of glamping and park models.

So, I urge every RV park owner to really look at their business. Do you have any section that is not income producing to its fullest? Think like Conrad Hilton, in those chairs in the lobby. It's those kinds of thoughts that not only create you the best income base, but also give people the most happiness, because there's so many people out there wanting to experience the RV park model. This is Frank Rolfe with the RV Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.