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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.
One of the worst attributes of RV parks is that the customers leave. This is Frank Rolfe, the RV Park Mastery Podcast. We're talking about the fact that in general, the RV customer comes in, they stay a while, an average of 14 days, but then they leave, and every time they leave, you have no revenue on that space. So how can you have customers who don't frequently leave? And the answer is, Park models. Now, if you own an RV and you've got a job and you've gotta go home because you have to go back to work next week, then you're certainly gonna turn on the engine of that motor home or turn on the engine of your truck that pulls the fifth wheel, and you're gonna have to leave. But there's a whole another element of the US population which doesn't have to leave. They have no strings attached. This is the retired part of the American population, and many of these people are willing to stay longer, perhaps not in an RV, but in something larger, something that's a little closer to home of what they're used to living in full time, and that is the Park model.
And we have found that by introducing Park models into our RV parks, we've been able to build a very strong additional income stream, and one that goes year-round. Like any other RV park owner, we have RV parks that are open year-round as well as RV parks that are seasonal, so let's first talk about RV parks that are seasonal. A seasonal RV park basically is only open during one part of the year, and that's typically because of temperature. If you have an RV park way way up north, the problem is that nobody is going to haul their RV there during the winter. It's too cold, it may be too dangerous to even go down the roads 'cause they're filled with ice and snow. So the way the revenue works on these RV parks is, you typically have six months or so of revenue followed by six months or so of no revenue, and you have to make all your money during just that one time of year. It's like a light switch, your light bulb is on, or the light bulb is off. And when the light bulb is off, there's no money coming in the door at all, so like a squirrel, you have to put away and bury enough nuts of money to pay all the bills during the portion in which your RV park is not really open for business.
However, there are people who may still want to use the RV park during the off-season, and these are people who aren't dragging their RV or driving their motor home to your location, but are willing to live there, both in the warm months as well as the cold months, you see the same phenomenon in Southern RV parks where the temperature gets very, very high in the summer, and people in those areas, they tend to go there during the winter 'cause they're trying to escape the bitter cold of the north, so they go south. Now, what do they do as the temperatures start rising precipitously to a very high extreme? That's when they leave. But again, they could stay, they could turn on the air conditioner, they could live their year-round. Now, why would someone not wanna live in their RV year-round? Well, that's pretty simple, because for many people that RV, although wonderfully large enough for that estimated 14 days a year of travel is just a little small when it comes to living in it 12 months of the year.
The average park model for an RV park is a 400 square foot unit, but the average RV is only half that in size, and that's a big difference, doubling that interior floor plan leads to customers who are willing to live like that all the time. Now, why do they call them park models? Park models are manufactured by the same people who typically build mobile homes, people who know how to build housing units that are unique, modular, crafted in a factory, but park models do not have or don't always have what is called the HUD seal. This is a seal that's required for mobile home parks to put units into them, RV parks don't always have to utilize the seal although there are manufacturers who also build HUD seal park models as well. The park model fits on an RV park space where mobile home traditionally will not. Mobile homes are too long and too wide to fit, but park models are designed to fit on traditional RV park lots, and that's why they're called Park models, is because they have this unique attribute that they're really built to go inside of RV parks.
The park models are extremely well-built, most people would say that a park model is certainly better both in your average mobile home, I would agree with that. And aesthetically, they're much more pleasing, and the design is much more advanced on the inside than a mobile home, there's really nothing bad you can say about a park model. I've never heard anyone say, Oh, that park model, I don't really like the look of that or, I don't know, I don't like the way they build them. Now, Park models are very, very well-built, and they're built for basically the concept of people who want to live in RV parks all the time. Now, some people use Park models to try and build an ancillary income stream by people who use them like hotel rooms. You often will see those little cabins around the lake at the local campground, and those are also called Park models, but that's not what I'm talking about here. It is a good way to get income from people who don't own an RV, who wanna stay in the RV park because they like the environment, they like the activities, or maybe they're there to visit with their friends and family who have RVs, and they wanna share on that vacation, but that's not what I'm talking about here, because those things are typically used during the same seasonable times as everyone else in an RV.
But the park models I'm talking about instead are those people, predominantly retired, who want to go and live in one spot, then you might say, Well, why do they wanna live in an RV park? Why don't they live somewhere else? Why don't they live in a condo or something? Well, because they're going after a few different directives. Number one, low cost, they can live in an RV park for a fraction of the cost of what it would be if they lived in a condo in a more traditional house. Number two is the environment. They want to live in something unique, they want to be a better part of nature, they want to be in more scenic areas, and those are areas that are not attainable for condominium or a single-family home residency. Now, in one of the properties we brought a lot of park models and it's down in south, in Southern Texas. And when we bought that property, even though you could live there year-round, many people packed up their bags and they went back to the north in the summer because they thought it was too hot, yet the activities were still there all around and the golf courses didn't close, movie, theaters didn't close, dining, restaurants are all open. It was just a perception to people which were called snowbirds, would come down, visit the RV park, and then as winter ended, would then go back to their traditional home.
Well, we broke that code by bringing in these park models. And here's what happened, many, many people decided, why the heck do I go back north to Ohio or Pennsylvania, or in some cases, Canada, when I can just live year-round in the RV park and save a fortune? Because they really didn't like their winter life, I mean, their summer life, excuse me, they didn't like returning home in the summer, when they did, they look forward to what happened in the winter when they came back. So when we brought up the idea that, Hey, you can just live here year-round, sell your RV, sell your house, put the house money in the bank and live here in the most cost-efficient method, it really caught on like wildfire. We have brought in literally over 100 Park models into one of those RV parks, and they've all been sold and people live in there happily, and we as park owners, when you bring in a lot of park models and fill those and sell those, you attain extremely stable income. Because stability, you can't get tradition with most RV parks, it allows you to have revenue coming in the door, even in the off-season. When you take a property that only had revenue for some subset of time each year and you suddenly make that year-round, that really benefits you enormously.
It allows you to not have to worry about saving enough to get you through that cold winter, that hot summer, it makes banks and future buyers much more comfortable with the asset because they know it has a much more dependable income stream. It's really a win-win for everyone. If you have an RV park, you've never looked into bringing in park models and selling them, I urge you to do so. As America is changing, as Billboards are retiring, as housing prices have become impossibly high, you'll see there's market forces at bay that are unique that we're not accustomed to, and park models are in the right side of most of those mega-trends. This is Frank Rolfe with the RV park Mastery podcast. I hope you enjoyed this, talk to you again soon.