I came across a RV park opportunity, and just wanted to get a few opinions on my thought process here. This would be my first RV park and real estate purchase.
The Details
- Property is on 20 acres in the country.
- There are currently 22 full hookup lots (water, electric, and sewage) and a duplex stick built house.
- Original RV park was started in 2008. Additional 12 RV hookup spots were added in 2019
- The RV park is made up of a mix of monthly rentals for temporary workers and daily rate customers.
- I credit the 2020 increase in expense rate to a decrease in demand from the temporary workers’ industry. That industry isn’t projected to exceed 2020 levels until 2022. This definitely adds more risk to the opportunity.
- I figure over half of the value in the property is in the land and duplex, but I figured the cap rate based off of overall purchase price.
- The expenses do not include a RV park manager. According to the current owner, he easily runs the park, and his own side business, in addition to working a full time job.
- I would not mind stepping in and helping out from time to time with the management of the park, but I wouldn’t want to be distracted from my high paying main income.
The Numbers
2019:
- Income 63% monthly rentals, 37% daily rentals
- Expense Rate 52%
- Cap rate: 23%
2020:
- Income 35% monthly rentals, 65% daily rentals
- Expense Rate 60%
- Cap rate: 13%
How would you recommend figuring out a budget for an RV park manager? Would this be a full time or part time role? Would it work to offer free lot rent and a stipend as compensation for an RV park manager? Any thoughts or feedback on numbers would be very appreciated!
