CXRE knows the RV park industry. Our team regularly meets and speaks with RV park owners allowing us to constantly be in tune with the RV park market in Texas. We understand the needs of buyers and sellers and have the experience and expertise to help our clients achieve their investment goals.
Looking to purchase an RV park? We provide buyer representation and advisory services that will help steer you in the right direction. CXRE works directly with buyers to find suitable sellers. We speak with hundreds of RV park owners each month which allows us to identify opportunities for our clients before they even hit the market.
Need to sell your RV park? CXRE goes the extra mile to represent sellers in getting their RV parks properly marketed and sold. Additionally, because of the many conversations we have each month with prospective purchasers, our team is able to quickly identify qualified buyers for your property. As another advisory service for sellers, we also guide clients through the 1031 exchange process and other equally complex real estate transactions.
Our clients continue to work with us because they know that we value their needs. We provide our clients with invaluable information about the market on a weekly basis, allowing them to have a leg up on other investors in the market. If you are interested in investing in an RV park, or if you want to sell your RV park, please contact us.
SHOULD I OWN AN RV PARK?
Are you looking to purchase commercial real estate but are unsure which type of investment to pursue? Do you consider yourself a people-person? Do you enjoy being your own boss? If the answer is “yes”, then buying an RV park is absolutely the right investment for you. Not familiar with RV parks or the RV industry? That’s okay. Many RV park investors can vouch that the processes and practices involved in owning an RV park can quickly be learned.
WHY BUY RV PARKS AS AN INVESTMENT
RV parks are high-yielding investments with returns that can range anywhere from 10% all the way up above 20%. Compared to most other real estate asset classes, RV parks are actually among the highest-yielding. Whether you are a first-time investor or an investor looking to diversify your portfolio, purchasing RV parks is a great way to maximize the return on your money.
RV parks are great investments both for the hands-on owner and for the remote owner. Many owners of RV parks that are hands-on seem to find fulfillment in fixing and improving things throughout the park and simply getting to know the guests. That said, for the most part, RV parks are low-headache investments and simple to manage, making them great investments for remote owners as well. RV parks can be strong long-term investments while still also providing great short-term returns.
These are typically great assets to consider when trying to achieve an attractive return after five years. That said, owning an RV park can also be a great asset to pass on to heirs to enjoy. Overall, owning RV parks is well worth the investment and can be much more rewarding than any stock, bond or other asset class of real estate.
BUYING vs. DEVELOPING AN RV PARK
When considering the option to either purchase an already existing RV park or build one from the ground up, it is important to identify the benefits of each approach. Generally, buying an existing RV park entails less risk and receives third party financing easier than a park built from the ground up. Developing a park, however, can reap more benefits if you can find land at a below-market price in a market with growing demand and limited supply.
Purchasing existing RV parks will typically offer a higher ROI than many other types of commercial properties. While many commercial properties are purchased at in-place cap rates ranging from 6% to 8%, RV parks can frequently be bought at in-place cap rates well over 9% and 10%. As a result, investors who are hoping to maximize their investment dollars should consider RV park investment a lucrative option.
It is also important to have an idea of how large of an RV park you can purchase based on your budget. A good rule of thumb to consider is to stay in the range of $25K to $35K per pad. One valuable thing to consider with RV parks is that the NOI can grow substantially once you get beyond 100+ pads. Essentially, the larger the RV park, the better your income to expense ratio becomes. Additionally, just like with any other commercial property, there are different classes of RV parks to consider.
There are resort-style parks with many amenities like swimming pools, clubhouses, laundry and showers facilities, etc., vs simple parks with very few amenities. Additionally, some parks are fully paved while some are mostly gravel. All of these factors, in conjunction with the location and market trends, will contribute to the potential cap rate of an RV park investment.
When considering the development of an RV park, there are a multitude of items to consider. First and foremost, developers should exercise caution if developing in an area that already has an RV park. As the old saying goes, location, location, location. In this case, location is crucial because it is important to know where the competition is and if there is enough demand in the area. It is also crucial to determine that you have the necessary space to build the amount of sites you desire.
A good rule of thumb to consider is approximately 10 sites per acre, with each site providing room for one RV, its utility connections, and one or two additional vehicles. The average cost to build an RV park will usually come in between $15K and $35K per site, depending on the choice of gravel or concrete sites and driveways. A successful RV park design will often include more than just RV sites and driveways. Occupants also prefer parks that boast amenities. A lot of times simple amenities like a laundry facility, playground area for children, designated pet areas, and pavilions will do the job. Developers that want to go above and beyond will consider swimming pools and large clubhouses with showers and restroom facilities. It is also important to build office space and storage areas for your workers and equipment.
A growing trend among new RV parks being built across the country are RV parks that also include what are referred to in the industry as park model cabins. These are essentially camping cabins on wheels that are legally classified as RVs but don’t leave the park. Another trend is the inclusion of tiny-homes in the RV park. This approach of building cabins or tiny-homes within an RV park provides a more diversified asset that can expand the range of people who can take advantage of a particular RV park.
Some more boring but crucial aspects in the development of an RV park are the sewer, Wi-Fi and electric. Sometimes a property’s location and its state and local regulations can affect whether you need to connect to a public sewer or build your own septic system. It is often preferable to ensure that a development site will have access to city water and sewer. Building out Wi-Fi throughout a park is also very important for today’s RV parks and is not something that developers should cut corners on as it is a valuable service for the occupants.
MOBILE HOME PARKS vs. RV PARKS
When evaluating the possible purchase of a mobile home park versus an RV park there are many factors to consider. And although brokers represent both mobile home parks and RV parks, they are not the same and both require different approaches to properly manage and maintain.
Length of stay:
In many cases, the two asset types are quite similar when it comes to the length of stay. Many RV parks are extended-stay parks that consist of occupants mostly paying rent on a monthly basis. This is of course comparable to mobile home parks in which lots are also rented out on a monthly basis. However, many overnight or destination-oriented RV parks are far different from mobile home parks due to most occupants typically staying for no longer than a couple of weeks. When evaluating RV parks to purchase, it is always important to find out the breakdown of the number of occupants that are monthly, weekly, and daily. This is not a common concern for mobile home parks.
This is probably one of the most significant differences between mobile home parks and RV parks. With an RV park, there is typically more occupant turnover, meaning you may have new campers moving into the RV park on a daily or weekly basis in many cases. This will often require the park manager to acquaint the new guests with the park and the facilities. Additionally, an RV park manager will need to maintain common areas, and also check each vacant space to make sure it is clean before renting. Many RV parks will also typically have common area showers and restrooms that need to be cleaned daily, whereas most mobile homeowners have their own showers and toilets.
There are typically more investors looking to buy mobile home parks than those looking to buy an RV park. This higher interest in mobile home parks can likely be attributed to low operating expenses and little upkeep, which are both very appealing to investors. With more investors pursuing mobile home parks, however, this drives up the price and lowers availability. On the other hand, as an RV Park Investor, there is often a better inventory of potential RV Parks to purchase and much less competition compared to mobile home parks.
Market trends indicate that a mobile home park will typically sell at a lower cap rate than an RV park. For instance, many mobile home parks in the Houston market are currently trading in at a cap rate of around 6-7% while RV parks in the same market are trading in at 9-10% cap rates. Smaller RV parks will generally sell for much higher cap rates than larger ones. Destination and overnight style RV parks are also generally priced at higher cap rates than extended stay RV parks, likely because the destination style parks are in a prime location like the coast where the land value is much higher.
Obtaining a loan for an RV park is often more difficult than for a mobile home park. It can be expected to see loans for an RV park with interest rates a point or two higher than that of a mobile home park. With both asset types, getting a loan will also strongly take into account the borrower’s credit and experience in running similar types of businesses.
TEXAS RV PARK MARKETS
Coastal markets in Texas have become extremely popular destinations for snowbirds looking to travel south from the midwest and Canada. Areas like Rockport, Port Aransas, Brownsville, and McAllen are hot spots for seasonal snowbird activity. Activity has actually been so strong in the Rockport area, that the city of Rockport has issued a moratorium on the development of RV parks. The busy months for snowbirds are typically November through February, and of course, these markets are always strong during the summer months. As a result, RV parks in these markets can still boast strong numbers for eight or nine months out of the year. Be wary though, as some coastal areas have less snowbird activity than others and only have strong numbers five to six months out of the year.
The southeast Texas market consists of many RV parks. The many oil and gas refineries throughout the region drive activity in this area. From Lake Jackson to the surrounding Houston area and all the way to Beaumont, there are countless chemical plants. It’s common to find RV parks in this region close to the chemical plants because many construction and plant workers need a place to stay during temporary projects, expansions, and turnarounds. In a strong economy when these chemical plants are busy with activity, the RV parks in this market perform very strongly.
Texas Hill Country:
The Texas Hill Country has numerous clusters of attractive areas to purchase or develop RV parks. Similar to the coastal markets, the hill country boasts snowbird activity as well. It also attracts many Texan retirees. Consisting of cities like San Antonio, Austin, Round Rock, and New Braunfels, there are plenty of great rivers, lakes, state parks, and historic sites that make the region attractive to so many people. This region has also seen an increase in tiny-home parks, a trend that is becoming more and more popular in the surrounding Austin area.
The West Texas region has its fair share of RV parks and the market is strongly driven by oilfield related work and transient guests. Cities like Midland, Odessa, San Angelo, El Paso, and Abilene, to name a few, typically have a good demand for RV parks. RV parks in these regions are typically not as immaculate with amenities as ones that you will find in most other Texas markets. It is common to find developers looking to build RV parks in this region due to low land prices. RV parks typically sell at much higher cap rates in this region as well, which is to be expected in most tertiary markets.