In less than 45 days the United States will hold a Presidential election, as well as many other federal and state offices. Elections are always a time of concern: how will the winner impact RV park investments? In this RV park mastery podcase, we discuss the real facts behind the issues that could impact RV parks, and what the best and worst case might hold on these various items. Whether you are a Republican or Democrat, this podcast will shine light on what you need to know regardless of who wins in November.
Episode 10: The Impact of The Presidential Election on RV Parks Transcript
On November 3rd, Americans will go to the polls. They will cast their ballots for the candidates of their choice, both in the presidential and other elections. So the big question though is, how will that impact the RV park investing industry? This is Frank Rolfe of the RV Park Mastery podcast. We're going to be talking about the ramifications of the 2020 elections and what it might mean to your RV park investment.
Let's start off with the economy. On the economy side, of course, a large portion of RV users do so in retirement. So our industry, unlike others, is not really that focused on the economy in general. Obviously we like it to be going well because we're getting a lot more users today who are what are called millennials, basically younger people, and they probably, to go out on the road with their RV, they need to feel good about life and feel good about their earnings, but the majority of RV park residents are going to be baby boomers, of which there's 10,000 per day retiring and in which there's already a very, very large segment that are in retirement now.
So, I don't think the economy is the key figure. I also am not sure the stock market is the key figure. Obviously, we want it to remain stable. We want it to go higher. We want people to feel good about things. That gives them more feeling of assurance to go out and vacation, but again, I'm not sure that is going to really be felt in the wallet of RV park owners because right now, just as things stand and we've been in a terrible recessionary period under COVID, nevertheless RV park occupancy has been very strong, so I'm not really sure that the economy or the stock market are the really big issues.
This next issue is a very, very big issue. This is capital gains tax. Now, we have a real crossroads here because both parties have completely different plans on this. Republicans want to keep taxes as they are. Democrats apparently want to increase particularly the capital gains tax. Now, why that's a big deal is, if you increase capital gains tax, then that means when someone goes to sell their RV park, if you're a buyer, it'll be more painful to them because they'll have to pay more in tax, so that'll mean prices might be a little higher or people might just refuse to sell.
And additionally, if you buy your RV park under the assumption of low capital gains tax, and then it goes up, that's also going to harm you, so definitely from a capital gains perspective, that is a big election issue to watch. Another one is property tax itself. You've probably read recently that California is proposing a new proposition that would basically allow property tax in many cases to increase many fold. I didn't even realize till I read the article, but California property tax has been held at a very low level with only, I believe, 2% per year increases.
It's something they did back in the day to try and protect people, so California properties were going up so fast in value that the taxes would overwhelm the owners. They want to leave it still that way on the residential, but they want to increase it on the commercial, which would include RV parks. It seems very unfair to me, and maybe not that wise, and I'm not sure if there'll be other areas also trying to increase property tax. If property tax were to go up, that would be very bad for all real estate, including RV parks, so that's another big election issue that we need to watch.
Another one are gas prices. Clearly, when gas prices are low, people are more prone to use their RV because it costs less to pay at the pump, so therefore they can take it back on the road for much longer periods of time, and that's really, really good for RV park owners. So we were hoping that whoever we select as a leader will be good about keeping gas prices low. We think that's an important election issue. We also think that the end of COVID-19 and the quarantine is an important issue, but we see it falling both ways.
RV parks have been doing extremely well with this national focus on quarantine. It's an outdoor activity. It's an outdoor lifestyle, gives you lots of privacy, lots of space, so it's been doing famously well during COVID-19. I am not sure it will harm it when they quarantine is ultimately lifted, but at the same time, one positive is, it has been putting a big focus on outdoor activities and that's going to do definitely help the industry over the long-term. Even though COVID-19 is a horrible thing, is doing terrible to the economy and nearly 200,000 people, if not more, have died from it here in the U.S., it has changed the way Americans think particularly about travel.
And to be honest with you, the longer the COVID quarantine measures are in place, the more damage you will have to the arch enemy of the RV park industry, which is the lodging industry. Just now, many headlines are different. Hotels, large hotels closing. I read even that the Palmer House Hotel in Chicago, it's second largest hotel, is in jeopardy of being foreclosed on and closed, so as more damage is done by virtue of COVID-19 to the lodging industry, some of which cannot be reversed, over time it's going to probably improve the prospects for RV parks because we are that alternative part of the lodging industry.
So I'm not really sure that COVID-19, and whoever will make it end faster is definitely going to be a huge issue for RV park owners. Obviously, as an individual I'd love to see COVID-19 end immediately, but from an RV park perspective, I'm not sure that's really one of the big issues to watch. It kind of falls in both directions. Now, another one that's a big one is urban decline because as many people have been leaving the big cities due to COVID-19 and basically just urban unrest, many of them have decided not to return to suburbia or exurbia, but instead just to get in their RV and live in that full-time.
It's been a trend that's been going on in America for a long time to begin with, but recently with so many people telecommuting from home and learning they don't really have to be a within minutes of walking to shopping and the theater and the arts since most of that's closed, they therefore realize, "Well, I can live and have a much higher quality of life at a fraction of the cost in an RV park," so as a result, you're going to see a lot of people as part of this entire decline of the urban metro areas that are going to instead move into RV parks, and that will be in its favor.
Now, Zillow calls this the great reshuffling, people leaving urban core markets cities to move out to suburbs and exurbs. Exurbs are the next line beyond suburb, but RV parks really are kind of a part of exurb, and there are more people every year who are going into RV parks full-time than ever before. Many of them, in fact, even younger. You've seen the trend in tiny homes. Lots of people, millennials, really enjoy the idea of living small. They find a higher quality of life possible when they have less of a focus on materialism, and I think you're going to see that trend continue with all of these issues we're having in big cities.
So on that political front, basically the urban decline, which I don't think can really be reversed at this point, I think a lot of people have learned new things about living. They've learned about the idea that they can office from home. They've learned that perhaps they didn't really miss many of the city's offerings that much and now they prefer just back to basics, friends and family, safer, more quiet, rural settings, and again, that's really, really good for the RV park industry.
The big one that people don't think about though, which I think is a huge political issue for RV park owners, are going to be all of these large infrastructure projects. I think it's true of both Republicans and Democrats that both see a future way to employ the people who have been laid off under COVID-19, comes in the form of big infrastructure projects, things such as rebuilding bridges, rebuilding roads, and of course what people don't much think about, but RV park owners do, is those kinds of projects, those kinds of focus are extremely good for RV parks.
When you talk about building a large project, look at the Soo Lock project up in northern, northern Michigan as an example. This is a replacement of the locks they have that allow Canada goods to reach the northern United States, and it's like the Panama Canal up there. They're finally rebuilding one of the locks. They're actually building a new lock because the older ones are starting to fail. They're nearly a century old. It's a giant mammoth project. We're talking, I believe, 2000 workers on a project that may span up to a decade to complete.
Now, where will those 2000 workers live? Well, there's not a lot of housing in northern Michigan, so of course, what are you going to see? You'll see people living in RV parks for very long periods of time. Many workers in the United States use RVs as their go-to housing form when they're on the road, so as these projects get underway, you're talking thousands and thousands of people who will be living full-time in RV parks during all of these many projects, and it's really going to impact all over the United States. These projects are spread from coast to coast, so we see this is a huge, huge boon to the RV park industry.
Now, people are not going to necessarily be living in their RV in an upscale destination RV park, but not all our RV parks are upscale destination properties. This could be a absolute godsend, a lifeline to many of those weaker RV parks with a little more distant locations and more over-nighter traffic to finally get some good, solid high levels of occupancy that go on for long periods of time, so we see that as a huge benefit to the industry, and I think it falls in both camps. I've seen both Republicans and Democrats saying that they believe infrastructure projects are a big part about getting America back on its feet and keeping it on its feet because these are all things that ultimately do have to be replaced and fixed.
So what's the bottom line? Well, I don't want to get political because I don't feel that's my spot to be. I'm an RV park owner. I'm not in any way a politician. I don't work for any party, so I'll let you identify which candidates you think might get you in the right spot on those many issues. That's up to you to decide. Look at the candidates, look what people stand for, and make your own decision come November 3rd, but the big issue is, I think the RV park industry will fair pretty well no matter what happens. I think we are in a great position.
Many other industries are not. The election could hold their fate, their future in its hands, but RV parks based on the way we are constructed, the way that we have turned out over the decades, and by virtue of the benefit of the mega trans really sits in a good position going into the selection, maybe the best it ever has. So overall, I think we'll all be okay in the RV park industry, regardless of what happens on November 3rd, but I just want you to be aware of the many issues to consider as it may make some impact in the way you cast your ballot. This is Frank Rolfe with the RV Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.