After years of lock down, people naturally want to go wherever they want for a vacation. The next best thing would be somewhere close by, within a couple of hours from home. This is why investing in RV Parks appeals to many.
In the fifth episode of the Passive Investing Show, J and Ashley are joined by Don Spafford to discuss what investors should expect in making RV Park investments. They talk about rentals, additional income opportunities, overall expenses, risks to face, and multiple other aspects of maintaining and improving an RV Park.
Here are some power takeaways from today’s conversation:
Episode Highlights:
[07:41] Why Invest in RV Parks vs. Other Real Estate
Don Spafford narrows his reasons for liking RV Parks down to two things: first is that there is less competition so it’s easier to keep their purchase prices to a reasonable level and ultimately produce income for the return. The second reason is that RV Parks are something unique and different that other people are not really investing in so they stand out.
[12:47] Adding Value to RV Park Investments
Maintaining a strong online presence and improving your website so more people can find it is crucial. This includes online reservations and dynamic pricing — that alone generally adds at least another 5% to revenue.
Another way to add value to RV Park investments is by creating additional RV storage with more pad sites. It is important to add amenities like WiFi in case tenants want to work remotely.
[17:42] Source of Income
While the bulk of your income will come from rentals, RV Park investments can offer other additional income streams as well. Transient renters usually bring in the highest revenue. Having people coming in every couple of days will generate more income than having tenants for a month at a time.
[23:45] Compressing Cap Rates
When asked whether cap rates were compressing because of COVID, Don shared that while cap rates are indeed compressing, it is not necessarily because of the pandemic. Rather, it’s due to more people entering the RV Park investment space.
Notable Quotes from the Episode:
[39:13] “ [To] my kids and everyone that's looking to start in real estate when they're young, I say, ‘Hey, you’ve got to house hack’. That's the very best way you can get started with very little money and just save that huge living expense and save and invest for more.”
[26:30] “From my perspective, there's very little risk, you know, but of course, I've educated myself enough on this space that I know, but you know, somebody new coming in looking out and saying, oh, I want to maybe invest in that.”
[29:43] “Passive investors in real estate investments also rely on tax advantages.”
Resources Mentioned:
