RV Parks as an Investment

In the ultra-modern world of the high-tech revolution, the rise of e-commerce, and the growing presence of post-millennials, the old-school pastime of RV touring happens to be booming. In fact, the sales of recreational vehicles are at a genuinely never-before-seen record levels, and buyers are getting younger.

Last year, 430,000 recreational vehicles of all kinds were sold, according to the RV Industry Association which was an increase of 15% over the year before. Sales have been rising year after year following a one-year decline in 2009, during the financial crisis.

Recreational parks have all the ingredients to be a successful investment. From a financial perspective, returns can generate anywhere from 10%-20% (RVU), making them one of the highest yielding investments in real estate. Also, the attractive characteristic of RV parks is that most of them are owned by smaller, mom and pop kind of owners with little or no debt, providing you with the opportunity to buy at a low-interest rate. This opportunity compounds the yield you can make on your money thanks to leverage. Leverage, as long as the interest rate on the loan is lower than the cap rate of the deal, will give you an even higher return. Even even if RV parks are selling at the same return level as other forms of real estate, they would still beat the competition due to seller carry. RV parks offer what is known as a seller financing, which is another advantage you can add to the list when considering this niche.  

Many sellers are motivated to bypass the bank and lend you the money as they also profit from charging the interest rate. Another appealing reason is a favorable tax return. Sellers only pay taxes as they receive the money, meaning they are earning the money that would otherwise go to the IRS from day one. Lastly, there is the control factor. When they carry the financing, they do not face the risk of bank barreling with their money. That is obviously a huge stress reliever. The benefits for the buyers are that they do not have to worry about the attorney and legal fees, third party reports, building a loan package, or any other thing that would require extra time and money. 

Apart from the sizable return on investment and seller financing, RV parks are becoming increasingly popular due to the technology revolution. Smartphones, 4G data connections and so forth - have also helped drive the trend. It's made driving around the country for weeks at a time a much less daunting prospect.

Another factor is that young people are placing importance on experiences rather than things. For millennials and post-millennials, vacationing in luxurious hotels and fancy stays is of no greater value than mixing with the crowd and participating in the outdoor activities. They would certainly prefer traveling over a mortgage. Add to that the statistic that baby boomers are retiring at the rate of 10,000 per day (Pew Research Center), and you can see why investing in RV parks is such a logical and smart move.