Subscribe
Share
Share
Embed
Welcome to the RV Park Mastery Podcast, where you will learn the correct way to identify, evaluate, negotiate, perform due diligence on, renegotiate, finance, turn-around and operate RV parks. Your host is the 5th largest owner of RV and mobile home parks in the United States, Frank Rolfe.
The RV park industry used to only have three categories. It had overnighter. These are RV parks along the highway where when you were on the way to somewhere, you would stop, spend the night, and then get back on the road. And then we had destination RV parks. These were RV parks near places that people like to go, recreational points of interest, whatever the reason was that people liked to go and spend time there, your RV park was there to serve the needs of those going to the destination. And then you had extended stay RV parks. These were RV parks that were there, for example, for people in the north to migrate to the south for warmer temperatures during the winter, and then they would turn around and go back north during the summer. But now there is more and more of a fourth category of RV parks, and that is the affordable housing segment. This is Frank Rolfe of the RV Park Mastery Podcast. We're gonna talk about RV parks and how there are so many different forces that are making RV parks become a more important and essential part of American affordable housing.
So let's start off with something most people are unaware of, and that's the fact that the apartment supply of lesser expensive apartments is dwindling. Since about 2014, the apartment industry has lost about 9.3 million affordable apartment units, including 2 1/2 million units that were under $600 a month in rent. Why is that? Well, we've had a lot of gentrification of old apartment buildings that people buy, totally redo them into being nice and new again, and then jack the rents up enormously. And also a lot of the old apartments have just been torn down for other uses because an old apartment complex might be in a part of town that over time has become more desirable now, and people want to tear them down and build something they feel to be more profitable. But what's happening as this apartment stock is declining, people are searching for something they can afford to live in. And there's really nothing in America you can live in that's less expensive than an RV in an RV park. Now why would that be? Well, let's say that an RV park charges $20 a night to stay there. So $600 a month. That $600 includes all your utilities, includes your water and your sewer and power in a lot of RV parks.
And the RV itself can be very, very inexpensive. You can find used RVs for sale in the newspaper for $1,000, $5,000. The bottom line is there's nothing as inexpensive out there. No offering that can touch what you can do dollar for dollar in an RV park. So as a result, as people are out there searching, trying to find somewhere to live that's less expensive, RV parks typically fit the bill. Now you might say, why don't they just go to mobile home parks? Well, the problem with mobile home parks are A, they're much more expensive, even though the lot rent might be similar. The mobile home park, you have to buy the mobile home and the mobile homes are much more expensive than used RVs are. Used mobile homes can often be 30, 40, $50,000. So if you have a limited budget, limited amount of capital to buy the unit, limited amount monthly, then an RV is probably more likely to fit the bill. So what's gonna happen is we have bigger need for affordable housing in America. The fact that affordable apartments are actually declining, the fact that we have upward pressure on all other costs for the average American to live, whether it's health insurance, automobile, the list is nearly endless.
So then what happens there? And the answer is you're gonna see more and more demand from people to utilize RV parks not as overnighters, not as destinations, not as extended stay, but as the longest extended stay ever, which is simply to live there each and every day of the year. So if you're an RV park owner and you have this pent-up demand for people looking for places to live endlessly, how do you tap into that demand? Well, clearly what you'd want to let people know is the option is there. You'd want to build a website letting people know that you have options for people who want to stay by the week or by the month or by the year, staying year-round. And you'd want to go ahead and build a very, very nice website that gives credibility to the fact that this is somewhere you could live full-time. And then you'd want to market it very intelligently. You'd want to follow a lot of the same resources on marketing that mobile home park owners do. Put it on Facebook, make sure that it comes up on any Google search of housing options, put signs in front of your RV park on the street letting people know that you can live there full-time.
You could even bring an RV in, maybe a fifth wheel or something with pop-outs on it, and set it up in your RV park ready to go and then advertise it for sale. A lot of people can't visualize the concept, but they can understand it when they see it in person. And maybe if you show them what the end result could be in your RV park, it would be much more easy for them to see that and then buy into it. And you'll also have to have a manager who understands and is very people-friendly, who's all on board with the concept of people living in their RV on a permanent basis and not just on a temporary one. Now, the beauty of the changeover, if you get more affordable housing into your RV park, is numerous. Number one, you have more stability of rents. Another one is that your lenders will look more favorably on that RV park because they'll see that as having a regular year-round income stream. Remember that mobile home parks trade for two cap rates lower than RV parks do. So the more you can make an RV park look like a mobile home park, the more likely that your value will go up.
Additionally, the easier it will be for you or a buyer to refinance or get new financing to buy that property. There's really no downside to the concept of having people live at RV parks year-round. As long as you have rules as far as what the RV must look like and the condition they must keep it in. If you can get over that hurdle, though, and the mindset differential from something being temporary by nature to more permanent by nature, it can be very, very beneficial to your business.
And even though millions of people own RVs right now, which they typically use for travel purposes 14 days a year, many of those same people will at some point retire, look at that RV and say, "Wait a minute. What if I lived in that full-time and sold my house and put that money in the bank?" It's a very reasonable rhetorical question to ask. And as more Americans are asking that question and as more of them realize that they can live in that RV just fine on a year-round basis, the more it will exchange and expand the RV park concept of affordable housing. This is Frank Rolfe with the RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.