RV Parks..... good investment?

[Will G.]

Hi all,
I am embaking on a new path after many years building residential and would like to get some feedback on rv park investing.I am talking about destination type parks, typically not mixed with mobile homes. Many of the deals I have seen carry cap rates of 11 or 12 percent, but they require on site management (like a full time job). A few of these deals are palatable because they only operate 6 months out of the year. Is this a good return considering the active management role? Is there any chance that the commercial market troubles will drag down the values of these type of properties? Any insight as to how a tepid economy might challange these investments would be appreciated. Thanks

[Joe Lee]

I grew up in an RV Park in Colorado, which was owned by my parents. It was not a destination, but rather an "over night" campground with 47 full hookup (water, electric, sewer) sites and another 40-50 tent spots. Since it was a seasonal operation it also had an attached mobile home park with 25-30 spaces.

It definitely paid the bills, was profitable, and allowed my parents to raise 8 kids along the way. It was also a tremendous amount of work, required constant attention, and killed my Dad's "dream" of RV Park ownership. I realize there are much more hands off ways of investing in these properties, but most of the parks I am aware of (my Dad was the president of the Colorado Campground Owners Assoc for a while) involved owner/operators. Finding a good manager is like any business, difficult, and this type of lifestyle takes a unique individual.

I have amazing memories and had a lot of fun growing up there, but I also got to see, first hand, the problems they don't tell you in the brochure.

1) it is a full time, 24/7 operation. If you aren't going to manage, you need to have an on site manager ready for doorbell rings at 2 am. You wouldn't believe the issues that come up in the middle of the night.

2) the operation is normally seasonal, even at a destination park. I suppose this could be different in warmer climates, but not many people are looking to camp in Colorado in January. Anything seasonal obviously takes special financial considerations as most of the bills come in year round.

3) managing a campground is NOT like camping for a living. We had that dream, turns out we were naive. As a matter of fact, if you're not careful, it will completely ruin your desire to ever camp again.

My view is obviously biased, but it is accurate based on my 10+ years of experience. Knowing what I know, I will never invest in a campground personally. I would, however invest in a mobile home park of the numbers were right. That side of the business was low hassle / high return for my father.

Hope some of my insight helps. Good luck in your venture!