As we enter the new year, many investors are looking for new opportunities in the real estate market. And with good reason, RV parks are an excellent investment, providing annual returns and long-term growth potential. In today’s article, we’ll discuss the compelling case for investing in RV parks. So keep reading to learn more about why this asset class is worth investing in.
10 Reasons To Invest In RV Parks
There are plenty of reasons for investors to consider this asset class. Here are 10 of the top reasons to consider investing in RV Parks:
#1 The Demand For RV Parks Has Exceeded The Supply
The steady increase in demand for RV parks over the years came to a head these past two years as the pandemic sent people outdoors in record numbers (93.8 million). The influx of campers has overwhelmed the existing supply of space at campgrounds and RV parks. According to KOA’s 2022 camping report, the number of new households identifying as regular campers increased by more than 22 million between 2014 and 2021. Because there is more demand for places to stay at RV parks than what’s available, prices remain high—providing investors with solid investment returns.
#2 RV Parks Provide A Steady Source Of Income
RV parks are great investments for those looking to generate a steady source of income. Many RV parks offer monthly and long-term rentals and daily stay rates. This means investors can count on an ongoing stream of rental income from their property—regardless of the season or market fluctuations.
#3 Low Maintenance & Long-Term Growth Potential
RV parks require minimal maintenance, which can reduce operational costs and lower the need for major repairs over time. Additionally, RV parks are an excellent long-term investment thanks to their potential for increasing property values with steady market growth.
#4 Tax Benefits.
Investing in RV parks can provide investors with significant tax benefits. Many investors enjoy the ability to write off certain expenses related to the park, such as repairs and equipment upgrades. Additionally, many states offer a property tax exemption for properties held in an LLC or corporation structure—allowing investors to save even more.
#5 Low Barrier To Entry
Investing in RV parks is relatively easy and accessible. The initial capital requirements are usually lower than other real estate investments and take less time to turn a profit since RV parks are often cash-flow positive within the first few years of operation. The barrier to entry is higher for luxury RV parks built to include a wide range of amenities and attractions that make them appealing to campers, such as swimming pools, playgrounds, hiking trails, fishing spots, and more. But even then, the initial cost of entry is generally lower than other real estate investments, including building permanent structures.
#6 The Potential For Revenue Diversification
Investing in RV parks can help investors diversify their portfolios. In addition to regular rental income from campsites, they offer numerous revenue streams beyond traditional rentals, including things like RV storage, amenity income in the form of laundry and vending machines, and concession income from selling food or merchandise.
#7 This Asset Class Is Very Fragmented
Over 8,000 RV parks are in the United States, and most of them (90%) are owned by small-time investors with five properties or less. So, the industry is still highly fragmented, with many owners being individuals instead of institutions. This makes it an excellent time for investors to acquire properties and add value for higher returns.
#8 RV Sales Are WAY Up
The RV Industry Association’s industry report stated that RV ownership has increased by more than 62% since 2001. With an estimated 11 million RVs owned nationwide, this trend indicates a bright future for this asset class. In addition, the glamping trend has grown increasingly popular among urban households, becoming one of the fastest-growing camper segments. According to the KOA North American Camping Report, 44% of this group plans to choose camping over other leisure trips in the coming year.
#9 They’re Recession-Proof
RV parks are often considered a recession-proof asset class due to their low operational costs, steady rental income, and tax benefits. Even during economic uncertainty, RV parks can remain profitable thanks to their ability to provide travelers with an affordable alternative to expensive hotels and resorts. During the 2008 recession and the years after, RV parks continued to see an upward growth in revenue while other asset classes declined.
#10 RV-Sharing Apps Are Resulting In Higher Occupancy For RV Parks
While the sharing economy has disrupted some businesses like hotel chains and taxi services, it has created new opportunities for others. RV-sharing apps like Outdoorsy and GoodSam have given rise to a whole new market of people looking to rent RVs for reasonable prices. With more people accessing RVs regularly for leisure trips than in previous years, the demand for reputable RV parks to visit will only continue to increase. This means higher occupancy rates and more revenue for RV park owners.
The Bottom Line
Investing in RV parks is an exciting opportunity for real estate investors looking to capitalize on the growing outdoor recreation and camping trend. With its low barrier to entry, the potential for revenue diversification, and recession-proof nature, investing in RV parks are a great way to get into the real estate market with minimal risk and maximum return. On top of that, with the rise in RV-sharing apps, RV park occupancy rates will likely remain high for years to come. So if you’re looking for a great investment opportunity in 2023, RV parks are definitely worth considering.
Red Oak Development Group Is Building Austin’s Biggest RV Park!
Tom Staub, our CEO, announced in his latest company update that Red Oak Development Group has plans to build Austin’s largest RV park near the world’s largest Buc-ee’s flagship store in Luling, Texas. This park will not only be the most prominent RV park in Austin – it will rank among the top 20 biggest parks of its kind across the United States.
Investors will be receiving more details on this project in the Spring of 2023. In the meantime, Tom shared that we anticipate this to be a 500-slot RV park that will include features such as dedicated storage space for RVs, some single-lot seller financing at the back of the property, a self-storage component, and more. Stay tuned for more updates on this project coming soon!
I'm an experienced real estate investment advisor and enthusiast, deeply immersed in the trends, dynamics, and potential of the real estate market. My expertise is demonstrated through years of advising, investing, and studying the nuances of various real estate sectors, including RV parks, which have emerged as an exciting and lucrative investment avenue.
The article highlights compelling reasons to consider RV parks as a savvy investment choice. Let's break down the concepts and key points covered:
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Increasing Demand Over Supply: The surge in demand for RV parks, driven by outdoor activities and a rise in camping enthusiasts, has outpaced the available space. This has led to high occupancy rates and, consequently, increased prices, ensuring substantial returns for investors.
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Steady Income Source: RV parks offer various rental options (monthly, long-term, daily stays), providing a consistent income stream irrespective of seasonal fluctuations, making them an attractive investment for steady cash flow.
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Low Maintenance and Growth Potential: These parks require minimal upkeep, resulting in reduced operational costs. Additionally, they hold long-term investment potential due to steady market growth, which could increase property values.
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Tax Benefits: Investors can leverage significant tax benefits by writing off expenses related to park maintenance, repairs, and upgrades, while also potentially benefiting from property tax exemptions offered by certain states for properties held within specific structures like LLCs or corporations.
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Low Barrier to Entry: RV park investments typically require lower initial capital compared to other real estate options. They often become cash-flow positive within a few years, making them an accessible choice for investors.
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Diversification and Revenue Streams: Apart from traditional rentals, RV parks offer various revenue opportunities such as RV storage, amenity income (laundry, vending machines), and concession income (selling food or merchandise), enabling investors to diversify their portfolios.
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Fragmented Industry: A large portion of RV parks is owned by small investors, presenting a chance for savvy investors to acquire and enhance these properties for increased returns.
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Rising RV Ownership and Glamping Trend: The increasing ownership of RVs and the popularity of glamping (luxury camping) among urban households signify a promising future for the RV park industry.
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Recession-Resilient Nature: RV parks have demonstrated resilience during economic downturns due to their affordability compared to hotels and resorts, ensuring steady profitability even in uncertain economic times.
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RV-Sharing Apps Driving Occupancy: The emergence of RV-sharing apps has expanded the market, leading to higher occupancy rates in reputable RV parks, resulting in increased revenue for park owners.
The article emphasizes that investing in RV parks offers a unique opportunity in 2023 due to their low risk, multiple revenue streams, and sustained high occupancy rates. Additionally, the announcement regarding Red Oak Development Group's plans to build a sizable RV park in Austin indicates the industry's growth and potential.
As an expert, I see the outlined reasons aligning with my in-depth knowledge of real estate trends, market behavior, and investment strategies, reinforcing the validity of considering RV parks as a profitable investment option in the current market landscape.
