RV Parks, good investment? Part 2

[Will G.]

Hi all,
I wanted to post an update to my investigation into the asset class of RV Parks. So here are some random thoughts on the subject. It seems that most owners will sell if the Opportunnity arises, because the active management role seems to take quite a toll on people who own these Parks. I spoke to a couple who owned a park near Yellowstone which was very busy for five months of the year, and they got burned out very quickly although the park itself was a big moneymaker. I have also visited a few Parks that were mainly made up of long-term tenants, which seems to be the ideal situation. One in particular which was located near a sun city type of retirement community really defined what I would consider to be the perfect situation. This was a nice park around 70 spaces, well taken care of, all of the tenant's RVS were in good condition and the entire park presented well. There were also no vacancies and a waiting list to get in. The owner was absentee and the park was managed by a resident.
Apparently the industry standard is approximately eight and ½ times the net for a purchase price, with premier destination Parks commanding up to 11 times the net.
Every one is now betting on higher oil prices which will provide a headwind to this industry, especially the roadside stopover type Parks and those that are away from attractions and amenities. I certainly feel hesitant about investing now because higher gas prices will eat into most Parks profits, which will in theory lower the potential sale price of these assets. Most all of the owners I've spoken to insist that they need more cabins as opposed to more RV sites,as folks Taking vacations and camping instead of perhaps staying in hotels, so providing an option in between tent camping and a full blown hotel room seems to be a growing trend. Many of these Parks also operate with a mobile home component, especially those in Florida, and the mobile home park industry is having trouble with bank financing on new or used mobile homes. Having a base of Mobil Homes that are not owned seems like a good thing although when you look at reviews people who are there a short time complain about this aspect.
I guess that's enough for now ,comments are appreciated