Investing in an RV Park

[Joe Dardano]

Hello Investors: I'm looking at investing in an RV Park. Any pitfalls I should look out for? I see the Profit and Loss statement on one I am interested in, and largest expense is utilities. I would be an out of state owner. Please advise as ROI seems good.

Joe

[Austin Neal]

Joe, be careful buying out of state if you have limited experience. You'll need to buy a park large enough to support some quality staff. You'd be wise to keep existing staff if they are competent. Expect to travel there fairly often during the first several months until your processes are established. 

In my experience, park expenses aren't as lean as some people try to project. Depending on park size, an expense ratio might run 35-50%, with 50% being a conservative assumption for underwriting. Be careful buying a park with low stated expenses. 

Additionally, utilities can be a major pitfall. Water wells can be hell, so I'd recommend buying a park on city water if possible. Septic is less of a problem, but city sewer is also a bonus. 

As with all investments, make sure you are buying it obviously cheap with a large margin of safety.