Making $10,000,000 On Her FIRST RV Park Investment

Dave:
Today we’re going to discuss a somewhat under the radar type of investing. It’s called campground investing, and this industry is more than fresh air scenic shots and a piece of land to pitch a tent on. There’s some potential real money to be made using this strategy, and in this episode you’ll learn how you can get a piece of this $30 billion industry. Hey investors, and welcome to the BiggerPockets Real Estate Podcast. I’m your host, Dave Meyer. Joined today by Mr. Henry Washington. Henry, tell us about what we’re going to learn today. This is something I have no experience. Do you have any experience with this?

Henry :
I do not. And I live in a very outdoorsy place, so this is very interesting to me to learn a little bit more about. I

Dave:
Was wondering, it seems like Arkansas is sort of ideal for campground investing, so I guess you’re going to have a lot to learn from our guests today.

Henry :
Yes, I am going to be listening with open ears because we have a very seasoned investor and brand new BiggerPockets author, Heather Blankenship, and she’s going to be talking about campground investing and some people overlook campground investing. But we’re going to deep dive and what we’re going to cover is what even is campground investing, how current real estate investing skills you may have could transfer over to this asset class, as well as some myths or misconceptions about this category because I believe there is a lot of myths around this category and we have an expert here who can help us either debunk or prove those things. True.

Dave:
Great. Well, I’m looking forward to it. I love learning about these new things, but I never really know how applicable as a buy and hold investor are my skills the same as what you need for investing and running a campground. So super excited to hear from Heather on that and make sure to stick around to the end because we’re going to talk about the exact steps to take to diversify your portfolio with campground investing.

Henry :
And if this type of investing peaks your interest, we will give you a link where you can pre-order book real estate campgrounds and get really cool bonuses that come with it.

Dave:
Sounds good. Let’s bring on Heather. Heather, welcome to the BiggerPockets podcast. Thanks for joining us.

Heather :
Thanks for having me.

Dave:
All right, let’s start with some real basics here. I don’t know the answer, but what exactly is campground investing in the first place?

Heather :
Campground investing actually really shocked me because it’s this unique mix between having a business as well as a real estate asset class. So it’s essentially just a plot of land that people drive up, park their RVs on, and they pay the owner to be able to park their RV there. That is a really dumbed down version of it, and there’s just so many more things that go into it and there’s so many different types of RV parks, but essentially it’s just a piece of land where people park their RVs, but it’s not to be confused with mobile home parks. I feel like this is the biggest misconception is that people think that RV parks and mobile home parks are like, oh, same thing. They are show not the same thing. Mobile home parks are affordable housing and I want to make that really clear. It’s a totally different asset class with different permitting, different zoning, different barriers to entry, different players in the market than an RV park. And mostly what we’re talking about is a short-term RV park where people go and they’re on vacation for an average of three days and it’s literally outdoor hospitality. It’s like running a hotel that’s outside as opposed to managing an apartment. Does that make sense?

Henry :
Yes, that was a great explanation.

Dave:
Running a hotel that’s outside sounds hard though. So tell us a little bit about what are the variables? You said that a lot more goes into it. What are the big things you could be thinking about? Because as a long-term rental property investor, I understand rent and vacancy and some of the big expenses. What are the things you think about as a campground investor?

Heather :
Yeah, so I own multifamily properties as well, and some of the things that when I’m buying multifamily, usually it’s either on city water or city sewer or maybe you’ve got a well in a septic. Those are kind of your variables. There aren’t a whole lot of other options and when we start talking about RV parks, your utilities are going to make or break your deal. So when you, you’re building a buy box or you’re kind of searching out properties, you really need to figure out what type of utilities they have.

Henry :
Okay, so let’s break this down just a little bit more. So when we’re talking about utilities, what are each of the utilities that you need at a campground and are you, I assume like a hotel, I’m not paying for my own water, so I would assume at an RV park all the utilities are on the owner. So what are all the utilities and then what are the big red flags in terms of utilities? When people are looking for some of these plots of land,

Heather :
It’s kind of a wide variety. Some people want to go camping and they want to spend 20 bucks and they’re going to go and they’re going to take their tent and they’re not going to have any hookups. So there’s going to be these dry camping tent sites and that’s okay because that’s a market of people. And then you’re going to have these people who have these giant multimillion dollar buses and they’re expecting 50 amp hookups. They’re expecting really great wifi. Wifi is a utility for us, not an amenity. People expect you to have that just like they do in a hotel as well as your water and your sewer hookup. Now you will find some campgrounds that might have say water and electric and they don’t have a sewer dump at the site, but they have a dump station. People definitely don’t prefer that, but sometimes if you’re going camping and say, I know this really amazing campground that’s on the Gulf of Mexico, and you can literally pull your RV up to the back of the ocean, I will do without my sewer dump station to camp on the ocean. So there’s some unique situations where some of that stuff isn’t as important, but generally when people are camping in tourist towns or they’re going to stay near an attraction like a baseball game or something that they’re going to see, they’re going to expect the same amenities they have in a hotel, which is the water, the sewer, the electricity, the wifi cable cable’s kind of iffy nowadays, but if you’ve got really great wifi, but those are the typical things they’re going to expect.

Henry :
Okay, so let me quickly recap. So what we’re talking about here is you’re going out and you’re either buying an existing or you’re finding a plot of land and you’re turning it into an RV park and that’s where people bring in their RVs to hang out and do fun vacationy things at these places. And so it’s short term, you don’t have long-term people.

Heather :
Sometimes you do. There are long-term parks, but it’s usually two different places. Parks, there’s long-term parks. There’s parks that operate almost like a lake house where people, maybe it’s within an hour of their house and on the weekends they go hang out there, they would at their lakehouse. So those are seasonal sites. Usually it’s in somewhere, maybe it’s Wisconsin, somewhere up north where it’s going to be really cold in the winter, so they’re not going to be able to access it and then they’re going to stay there. There’s also man camps where people stay because there’s a pipeline coming through the area and that’s a different thing and you could totally lose your butt on that if you buy one of those and you don’t know what you’re buying. So there’s a wide variety of RV park types.

Dave:
Alright, so Heather, maybe just back up a second, this sounds interesting and a whole very unique business, but why should investors consider this? What’s the upside of buying a campground?

Heather :
So one of the most amazing things about buying an RV park is it is this perfect mix between cashflow and appreciation. And the reason that is is because it’s commercial real estate and I assume most of your listeners understand commercial real estate is valued based on the income you’re taking in the cap rate, and it just kind of continues to grow and sky’s the limit on what it’s worth, unlike a single family home where we’re looking at market comps and things like that. And so because you have this business aspect of it, you have all these different streams of revenue. One of my RV parks has over 10 different streams of revenue, and so that just keeps pumping the cash out from my cashflow as well as increasing the value of the property.

Dave:
10 streams of income. What are five?

Heather :
Okay, so most of us love seeing somebody like say Cody Sanchez. Talk about laundry mats. Right? Well, an RV park has a laundromat inside of it. For some reason, these RVs all want to do laundry while they’re camping probably because your kids are outside getting covered in mud and everybody’s got to wash all their stuff. And so you’ve got a laundromat mixed in with your RV park. People rent golf carts. You have a camp store where people are buying not only souvenirs but things they’ve forgotten food items. My camp store alone at that property we’re talking about brings in over $150,000 a year. Wow. And then you’ve got, there’s a pizza kitchen, it just kind of sky’s the limit. You’ve got cabin rentals and glamping tents and water rentals. You could go on forever.

Dave:
Wow. It sounds incredible. I can speak from experience about how when you’re at a camp store and it’s the most convenient thing, you’ll pay anything for a beer or a soda or whatever it is, you just got a captive audience there and I can see why it generates so much profit all now that we understand what campground investing is and even more importantly, all the ways this asset can offer cashflow in returns. When we come back, we’ll get into how Heather bought her first campground and some of the most popular and lucrative approaches to campground investing. So stick around.

Henry :
Welcome back investors. We are here with Heather Blankenship learning the ins and outs of campground investing.

Dave:
So how did you get into this and learn to manage all of these different revenue streams? It seems like it’s much more complicated than just a traditional long-term rental property.

Heather :
It’s definitely an active asset class. So when people, it was always entertaining to me when I first started out and I was operating my first park myself and they’re like, this is going to be my retirement job. And you’re like, this is not a retirement job. So almost a decade ago, actually it was 13 years ago in April, I was driving across the country in a camper from Florida to California and staying in these RV parks and looking at how busy they were and how much I had paid to stay there. And I’m like, dude, these things have got to be making a ton of money. It’s like renting parking spots. It’s totally not renting parking spots that’d be buying a parking garage, which we know is totally different. But I started Google searching RV parks for sale and campgrounds for sale, and by the time I got to California, I had found one that was in bankruptcy and the bank owned it. They had it left over from that market crash in 2008 and they were operating it themselves and they wanted to get rid of it. I was 26 years old, I called them and I was like, Hey, I want to buy this. And they’re like, how much money do you have? I’m like, don’t have any.
And it was $3.2 million and by the time I got back to Tennessee, which is where I lived at the time from California, it was closing day on a $3.2 million RV park that I had never seen, and they gave me a non-recourse loan with no money down, but my first payment was $18,500 and my first electric bill was 10 grand. So I had to very quickly figure out how the heck do you run an RV park?

Henry :
Okay, well, I was going to back up for a second, but no, now I need to hear. So how many months of mortgage payments did you have to endure before you were actually profitable? How did you make that work?

Heather :
It took me almost three years, and that’s what people see, and when you’re looking at social media and you see how successful people are and what they’re doing now, you don’t see how hard it was to get there. I get these messages from, I have a women’s mastermind, and so I get these messages from women and they’re like, it just doesn’t seem to be working out for me. And one of the biggest things I tell them is You’re not failing. You’re probably giving up too soon because when you buy something like I did, I didn’t even know I’d bought real estate. I just knew it was a campground, and you have a massive learning curve to figure out how the heck do you make this work? It is not overnight, and I was breaking even after probably about a year and a half, but to actually be comfortable and able to sleep at night took me about three years, and I actually had my first, I got pregnant with my first child.
I have five kids. I got pregnant with my first child the same month I bought that RV park, so I was pregnant shoveling mulch. I literally slept in the office floor so that I wouldn’t take up one of the spaces I wanted to keep the income. This was back before you could hire all these Google experts and I was figuring out Google ads and pay for clicks, and I had no clue how to do that, trying to have my Facebook page. What was popular back then to get all my campers, it was literally a ton of work, but that 3.2 million RV park is now worth 13 million and has allowed me to build my portfolio up to about $30 million by pulling equity out and buying other properties. So the three years was worth it.

Henry :
I mean absolutely. Looking at those numbers of three years is worth

Dave:
It. Oh, just for 10 million bucks. Yeah, I think it sounds

Henry :
Worth it, but what the average investor listening to this is thinking is how the heck did you float yourself until you were even at breakeven? You said it took you about a year, year and a half to get to breakeven. So what should people be thinking about when they’re buying one of these? Because even if you can get into one with little to no money, it doesn’t mean you need little to no money to operate it. And that’s the same thing with the single family real estate that we try to share with people. So how did that happen for you? How did you float it? There’s

Heather :
A couple factors. So a lot of people when I’m talking to them, they’re like, I’m quitting my job and buying X, Y, Z. Like, dude, don’t quit your job. You still need that income until you’ve made enough money to make up for it and you are steadily making that much money, not just like one month. And I was fortunate enough that my now ex-husband still had a job then he had a job with a decent income, so I didn’t need to support us at that time. Fast forward a few years in and I did need to support us and was grateful to have that campground, but at the time, his income supported our family, and then I had a little bit of savings, so that helped me. And the bank did give me six months of interest only payments. So between the interest only having some savings and not needing a salary myself for the meantime, I was able to do it, but it was so close every month I can remember getting a cutoff notice for the power, and you can’t have an RV park without power when everyone’s expecting electricity and going and begging the power company to give me until Monday to take my income in from the weekend, and they gave me the extra three days.
It was rough for a couple years. And so obviously I have learned a ton since then. And if I were doing the evaluation, I would make sure when you’re saying what do you tell people, make sure you keep your job so you have an income. And then when you’re running those numbers, make sure there’s enough in there for either a salary for you or b, a salary to have a team. Otherwise, you’ve literally just created a job for yourself that you don’t get paid for. So making sure that that salary for yourself or some people to do your operations is written into your underwriting. Because a lot of times when you’re buying these deals, 88% of them are owned by mom and pop and mom and pop as we know, they have really great properties, but a lot of times they aren’t the best at spelling out their numbers and giving you all those details. So making sure you add those numbers back in when you’re looking at a profit and loss statement is like, dude, it’s key.

Henry :
Yeah, this is great information here because one thing that you said that is very true is that this is not just real estate, it is a business, but because it is a business and real estate, it opens up different loan options for you that aren’t available to somebody who’s just going to buy just regular real estate. And so for those of you that are listening to this and you’re thinking, man, well how do I account? Because essentially what you’re talking about between that year to year and a half, when you got from not making money to breaking even, what you essentially had to fund your business with was what businesses call startup capital. You didn’t really have any startup capital, but if you’re running a business, you can get an SBA loan, I think it’s like 5 0 3 or something, I can’t remember exactly what it’s called, but you can underwrite into the loan, the estimated startup costs that you need so that you aren’t having to come out of your pocket with those expenses and you can actually have that into your loan. So people who are listening to this and you want to do this, yes, it sounds scary, and yes, it’s intense, but if you plan for these things on the front side, there are loan products where you can actually include the startup costs and the costs you need to sustain your park until the spots are actually full.

Heather :
Let’s talk about that for a second, Henry, because the way we’re describing it does sound really freaking scary. But remember, I bought a park out of bankruptcy. I did not go buy this active investment that already had a bunch of customers there. I had a hundred people I had to evict on day one because they were paying $300 a month. That included all of their utilities. So I had this major uphill battle, which is not the same as going and buying a normal RV park that’s already operating and maybe there’s some low hanging fruit and you’re going to make it worth a little bit more and improve the operations. So it is not typically a year and a half. It’s not that long of a process, but you’re absolutely right. There’s some really great SBA loan options.

Henry :
So give the people an example too from it took you three years where you feel like you were actually profitable, how you had to evict however many people you said, and so now you’ve got a park that doesn’t have any campers. So how long did it take you to go from where you started from maybe a couple of spots full to where you felt like it was actually producing income that timeframe typically look like?

Heather :
So I was really, really lucky and blessed. I bought this property in Pigeon Forge, Tennessee, and it was a mile. It is a mile from Dollywood, which is if you’re not familiar with Pigeon Forge, it is the Disney world of Tennessee and being a mile, it’s like being a mile from Disney World. And so getting it cleaned up, getting all the people out of there that shouldn’t have been there. It was not difficult to get people to come. It was difficult to figure out operations and expenses and all those things because it’s an area that people are coming to regardless. So you do a little bit of marketing. Like I said, I was figuring out Google AdWords and pay for clicks and Facebook at the time and people start coming. So getting business wasn’t tough.

Dave:
So Heather, I’m just curious, if you were a beginning medium real estate investor, how transferable are the skills that you have in buying a few more traditional real estate investments to campground investing?

Heather :
Actually, I think they work really well because you’ve learned a lot of good skills with buying, whether you’re buying short-term rentals, long-term rentals, you’ve learned to look for deals, right? You’ve learned to evaluate deals. You’re definitely evaluating a little bit different, but once you learn your kind of inputs in your categories, it’s the same idea. So you’ve learned to buy, you’ve learned to evaluate, you’ve learned to negotiate, you’ve learned how to put in offers. So that initial kind of searching for the deals you’ve learned a lot. The only difference is you’re not going to find them on the MLS. They’re in some unique places that you find RV parks. You can find them on correct C and LoopNet, which if you buy commercial real estate you’re familiar with, but there’s some other unique places like RV park stores.com, parks and places, campground connection, kind of RV park specific websites, or you’ve learned to look for off-market deals and you know how to do that.
So all those things are transferable once you actually buy the property is where it gets a little bit different. But if you have done any kind of Airbnb deals, meaning our short-term rentals rented on Airbnb, it’s literally having a bunch of Airbnbs in one spot. A lot of RV parks have tiny homes. We call ’em camping cabins as well as glamping tents, and those are actually on Airbnb. I mostly rent them through my direct booking site, but they operate the exact same way. So there’s a lot of skills that are transferable. You just need to learn the industry specific stuff.

Dave:
That makes a lot of sense. There’s so much about just financial underwriting, learning to find data, learning to make good and reasonable assumptions about growth and what Henry was just talking about, how long it takes to stabilize a property and get it up and running. And honestly, so much of it’s just confidence, I guess, where you’re just like, I’m really about to say that. Yeah, it’s just learning to run a business and you’re like, okay, there are going to be some things about this that I probably am not going to know and I might even screw up a few times, but I’ll figure it out. There’s so much of that that sounds like it would transfer.

Heather :
Yeah, it’s the confidence and the connections that you’ve made too, because when you’re like, dude, I have no idea, but I know a guy who does something related to this that I talk or whether it’s your contractors that you can call and a lot of times they know somebody or you’ve built these relationships and you can usually stumble your way through it at that point with a higher level of success than if you’re starting from zero.

Henry :
I think one thing that is interesting to me is this does sound super fun and I’m sure people are interested in it, but then they may be scared at the thought of how much time and effort you had to put into operating this. Are there RV parks or RV park investors who underwrite in a salary for an operations manager to come do all those things for you so that you aren’t involved in the day-to-day

Heather :
A hundred percent. One thing we don’t have, and there’s probably probably going to get a lot of hateful messages for this, we do not have good management companies. I have not found a really great management company option, so you are going to have to have some management skills at this point. I manage all my properties from 900 miles away. I live in South Florida now, and so I have really great park managers. Sometimes it’s tough to find somebody who’s been an RV park manager. It’s pretty niche. You can find people, but it’s tougher. But if you find people who’ve been a hotel manager or managed an apartment complex, they have, like we talked about some transferable skills and you can usually teach them the rest if you have some basic knowledge on that, but you can definitely hire a team. However, I would say if you have never done this before, I wouldn’t live 900 miles away. If you know nothing and you have no base relationship with that park manager, that sounds like a really quick way to go broke to me. I would want to be able to visit the property frequently when you’re first starting out until the ins and outs and have been able to write some solid operation plans for SOPs and procedures and things like that.

Henry :
Can I play a little game with you?

Heather :
Of course.

Henry :
So I have some just myths. Maybe they’re myths, maybe they’re truths in my head about what this is like. Can I just spout them off to you and you talk to me about how realistic or unrealistic they are?

Heather :
Yes, let’s do it.

Dave:
That’s a good game. I like this.

Henry :
Okay, myth number one is that you really have to have a very strong level of expertise in this very strategic niche in order to be profitable.

Heather :
No, you definitely don’t. You do need to quickly learn some things, but if you have a good work ethic and you are good at doing the things you say you’re going to do and following up and managing people, those are some basic skills you would need. For example, I get a report every day from the property I know because one of my biggest expenses is my man hours because there’s grounds care, there’s housekeepers, there’s the people in that camp store. We talked about the customer service people. So my man hours are a big part of my budget. So every day I know how much money I took in for the day, how much money I took in last year and the year before that on the same day, as well as what all those employees did, how many people are checking out and how many people are checking in because I want to be controlling those man hours since they’re one of my biggest expenses. And you learn that by just doing it over time. But those are management skills. So as long as you’ve got some of those management skills that transfer, you’ll be okay. And as we’re talking about today, have a book coming out with BiggerPockets all about how to buy, operate and manage RV parks, and it’ll give you the base knowledge you need to be able to do that.

Henry :
Okay, good. I like that. Myth number two is that this would only work in some niche area where you’re close to some cool amenities like a dolly world or something else where people are coming to stay there because they want to go see something else.

Heather :
So the whole theory when people say if you build it, they’ll come. So there are tons of RV parks that are in the middle of freaking nowhere. If you go to them, you’re like, why is this here? And they have amazing water parks and cool themes going on for the weekend and think about boy scout camp or girl scout camp or church camp, whatever your frame of reference is, that always took you to the middle of freaking nowhere where if you were old enough to know you’d be like, we’re going to get murdered here. You’re literally in the middle of nowhere, but they come up with all this fun crap for you to do for the week. And so if you have good marketing and you have someone who’s good at planning all that out, there’s definitely really amazing campgrounds that are not next to tourist towns and big events.

Dave:
So just to be clear though, Heather, you still need an attraction, but you can sort of create the attraction rather than buy close to some attraction, which I would imagine would be more expensive.

Heather :
And then there’s also tons of national parks and state parks and there’s tons of stuff that can be your attraction, whether it’s hiking or fishing or boating or whatever. Think of all the different activities that people enjoy that are outdoors. It kind of sky’s the limit. You just have to play off of what’s in the area.

Henry :
Yeah, there’s a local golf course that I play at here in my town, and they have an RV park, literally, right? It’s all one thing. It’s like a golf course, a clubhouse and an RV park. And of all the things they could be doing to improve this golf course, they’re not improving the golf course. They’re clearing out more land to add more RV pads and it’s never not full. So yeah, I mean the whole attraction there is there’s a golf course, so you’re right, you can create that. Dave, do you have a myth? I have one more, but if you have a myth,

Dave:
You can’t call ’em myths otherwise we know they’re not real, so you have to call ’em

Henry :
Something else. In my head, I just think, I don’t know if they’re real or

Dave:
Not. Assumptions, yes,

Henry :
Assumptions yes.

Dave:
No, what’s your third one? Go for

Henry :
It. That it’s very expensive to do this.

Dave:
Okay, I did have that idea. Yeah,

Heather :
It depends on where. So that park we keep referencing was so expensive because it’s in a tourist town. I’m a mile away from the largest a tourist attraction in the area. It’s the number one visited national park in the country. So the land alone, if we were talking about just land value, if you wanted to just try and sell the land is expensive there, but not everything has to be in the number one visited national park in the country. So some of your largest expenses are going to be related to the land, what it costs to buy land in the area. And if you really wanted to, you could buy a decent campground for the equal to or less than people are investing in individual, large, short-term rentals or one house in California or some of the small multifamily properties. You could easily go find a park for, let’s say a million bucks.
Now is it going to spout out tons of cash? No, but I like to buy RV parks that have some meat on the bone left, some low hanging fruit, so maybe you buy this park that, and we’re going to make something up here, but maybe it’s like 20 or 30 acres and mom and pop only put 20 sites in or 50 sites in and they’ve been operating those 20 or 50 sites really well, but they could expand. So you stabilize your 20 to 50 sites and as you become more successful, you expand the property or you add some more of those streams of revenue and you grow it and make it worth more money. A lot of times there’s those low hanging fruit too of mom and pop don’t always have online reservations for RV parks. They’re not using really great software with dynamic pricing and occupancy optimization. All these details that we could dive really into that we don’t have time for today, you could go buy that million, $2 million RV park and turn it into something worth significantly more, but you’ve got to want to do that value add.

Dave:
Alright, we got to take one more quick break, but more from Heather Blankenship when we come back. Everyone, welcome back to the show. Let’s get back into it. Okay. I have one myth I guess I don’t know, it’s more of a question. Henry’s a better podcast so than me, but the question is what’s the minimum size? Because when I hear this I’m like, oh, it’s got to have hundreds of units. But do smaller campgrounds exist?

Heather :
They do. And so again, we’re back to that question we talked about in the beginning. Do you want to create a job for yourself or are you looking for that? Because some people think it’s super fun to go hang out with all the campers and peel around with the grass and whatever. It depends on your personality. I

Dave:
Actually would love that. Yeah, great. That

Heather :
Sounds fun. And they hang out with everybody. They like working in the kitchen, they love cooking, whatever it is. Okay. There’s some campgrounds that make homemade root bear and amazing homemade ice cream because that’s what grandma loves to do with her time. So it depends on your personality. Are you looking for a job for yourself or are you looking for that total passive life? Like me, I’ve got five kids now who are homeschooled and I’m in south Florida that you need to build in this budget for. It also depends on your location because if you’re in Arkansas with Henry and you’re not at the golf course, maybe your campsites are 30, 40, 50 bucks a night. But if you’re back over there on the ocean we just talked about where you’re backed up to the ocean and you’re getting 150, $200 a night for your RV sites, the number of sites you need is going to be different depending on what you paid for it and how much you can charge and all of those kinds of things.
And so to kind of give you an answer since I’m skirting around all of it is you need to do different things with the property. On my Instagram account, my team likes to put these things together where they find RV parks that are for sale and have me say whether or not I would buy them and why I would or wouldn’t. And when they show me these RV parks that are like 20 sites and they have no room for expansion, my answer is not no. My answer is usually yes, but I would turn it into a glamping resort because if you took those 20 sites and you put really cool tiny homes or really cool clamping tents or yurts or remodeled train cars, whatever the unique experience you’re going to have is you’re going to be able to charge those short-term rental rates for all 20 of those sites and you’re like, holy crap.
I now have 20 short-term rentals in one location and not only do I have 20 in one location, I have this economies of scale where my housekeeper is not this person who charges me 50 bucks an hour anymore, they’re my employee and they’re making $20 an hour. I have them. I’ve got a full-time maintenance guy who goes around my lawn. People are my people, not this big expense. You can do occupancy optimization because they all look the same. So if something’s broken, you can move them instead of canceling a reservation. And we could talk about it forever, but it just depends on what you’re going to do with the property.

Dave:
It makes sense. Going back to your analogy earlier of how it’s like a hotel and hospitality, it’s like the difference between a boutique hotel and sort of like a mass market hotel where the bigger campgrounds, more self-service and then if you have a smaller place, it maybe tends more towards luxury or not necessarily luxury, but unique amenities. And you can do that because the scale is more appropriate. That one sounds fun to me.

Heather :
And there’s niche properties within this asset class. There’s L-G-B-T-Q parks, there’s nudist parks, there’s all these random things that people have come up with that there is a niche for, and then they charge more money for that and they have this amazing time there because they’re catering to that type of person.

Henry :
My final assumption slash myth is that because this is or can be super niche is that there’s not a ton of opportunity. If I wanted to make this my expertise and then grow and scale this from a business standpoint,

Heather :
So there’s thousands of RV parks in the country now, I will tell you when you’re looking for deals, it’s not going to be the same. You can’t be like, I want a deal in Bentonville, Arkansas and I’m going to have 20 different options for RV parks to buy. Right? When you’re narrowing down your buy box, it’s better to narrow it down to it, either a region of the country or maybe a state or I primarily buy in east Tennessee or you can’t really go like it’s got to be this city unless you live in some tourist attraction or national park or whatever.

Dave:
That gave me a question, Heather. With mobile home parks, there’s a lot of regulation around it. Do campgrounds face similar types of regulation from state to state? Because I’ve heard when you do mobile home parks or tiny homes, like going from one state and expanding is tough because you have to learn a whole new set of laws is the same thing existed in campgrounds.

Heather :
So I actually own more mobile home parks than I do RV parks, so it’s a good conversation for us to have. There are different regulations by county or city just like are if you were going to remodel something, right? Going and getting a permit is going to be a slightly different process. And each county or city, same with having an Airbnb, the rules for short-term rentals are going to be slightly a little bit different. So that’s the case with RV parks glamping when we’re talking about those glamping tents and stuff can be a little more difficult, similar to a mobile home park, not because they don’t want them there, but because they’re not as familiar with them so they don’t have regulations and rules and process in place all the time. So sometimes it can take a little bit longer if you want to put glamping tents in or something like that. And I can remember putting Lifeing tens in one time and having to convince them they weren’t permanent structures and that was the only reason they let me keep them. So your question about mobile home parks, also mobile home parks, one of the big things is rent control. A lot of times you’re in areas that have rent control and you might not be able to do exactly what you want to with that property. There’s no rent control on RV parks because it’s not meant for housing.

Dave:
Awesome. Great. Well thank you. That makes a lot of sense. And yeah, it just seems like a very attractive, fun thing to do. I want to make root beer and just hang out with people and maybe make some sandwiches. That sounds fun.

Henry :
So I think this is a super cool niche and I hope you didn’t take any of my questions as challenging. I think it’s really, really cool and I want people to be able to get into this if they’re interested. As people are looking into this, maybe can you give us what are some of the biggest pitfalls that people see in this industry or looking back now or as you’re doing new deals, what are the things that when I’m looking for property, these are the things that I’m looking for, these are the things that I’m staying away from, and how are you planning getting into new deals?

Heather :
That’s a great question. One of the top things we talked about earlier were those utilities. I would really like a property that has city water and city sewer. Now, if it’s an amazing location like we talked about and they have septic and well, I would totally be okay with that if it makes up for it. But if you’re buying septic and well make sure you have those inspections done, you need to have an inspection done on your well and on your septic before you close on that property and make sure that it has the right capacity for what you have and what you plan to do. Because sometimes people will be like, oh, I’m going to add 50 sites. You’re like, do you know how many money you got to spend to be able to get rid of the sewer and the water and all that stuff?
I would also make sure that I’ve verified the number of sites so nobody do this and mess up poor mom and pop unless you are actually under contract. But once you’re under contract, call the city and make sure you are properly zoned and permitted, not only for an RV park before the number of sites you think you’re buying. I have gone as far as now I get a letter from the city addressed to me with how many sites I’m zoned and permitted for so that I don’t have a problem in the future, but making sure you’re properly zoned and permitted is a huge thing.

Henry :
Real quick, before you go on from that, I want you to kind of break that down for people. You said before you mess up mom and pop and so I know what you mean there, but what are you getting at there?

Heather :
So it oftentimes happens, let’s say mom and Pop had a fight and Pop loves his backhoe and he’s gone out and he is gotten on his backhoe and he’s blown off some steam by building five additional sites at their RV park, which is great for them because now they’re bringing in the revenue for the five additional sites. But if the city were to come out and do some form of inspection and actually count the number of sites, which they’re probably not going to do to mom and pop because they’ve been there for a million years, their buddies, there’s no reason to reinspect but you, as you’re thinking about expanding or you’re getting new permits for things, the city’s coming out and they’re looking at what you’re doing. And when they do that, if they find out that you have sites that are not already zoned or permitted to be able to do that, they’re going to make you remove them or they’re going to make you change them in some way that’s going to cost you some money. It’s kind of like if we’re talking about long-term rentals, that they got the proper permit to add the expansion on their house. The house says it’s three bedroom, two bath, but where’d this fourth bedroom come from? Or where’d this extra bathroom come from?

Henry :
So how do you do that in a way where you protect yourself before you buy the asset, but you also don’t throw the current owner under the bus,

Heather :
Right? So when you’re buying normal single family homes, you write this offer and maybe you have five days for an inspection. I haven’t bought a single family home in so long. I dunno what standard, but let’s say they give you five days to do your inspection and then your money goes hard, right? Whatever earnest money you put down, you can’t get back and all those kinds of things. In commercial real estate, it is very common for that period of time to be longer so that you have longer to inspect because there’s more to it In RV Park, there’s a lot of moving parts. So it is not uncommon to have a 60 or 90 day 60 better but 60 or 90 day due diligence period where people go in and they’re getting phase one studies done. They’re inspecting those septic and wells we talked about because it’s a business. They’re going through your credit card merchant service reports to see how much money you’re taking in and all those kinds of things during the due diligence period, after you’ve signed your contract and agreed on your price with mom and pop, you then called the city to get your letter and make sure you’re properly zoned and permitted. Don’t call before, otherwise you’re going to mess up mom and pop.

Dave:
Alright, great. Heather, thank you so much. This has been a lot of fun, a really cool conversation and eye opening about, honestly, an asset class that I had never really personally considered before, but it’s such a cool niche and something that I think would be a really fun, sounds like very profitable option for a lot of investors out there. So if anyone does want to learn more, make sure to check out Heather’s new book. It’s called Real Estate Campgrounds. It’s sold at the BiggerPockets Bookstore, and if you buy it before August 6th, you’ll get free bonuses as long as you use the link www.biggerpockets.com/camp. We’ll also make sure to include all of Heather’s contact information, the book link, all of that good stuff in the show notes below. Heather, thanks so much for joining us today.

Heather :
Thanks Dave and Henry, this is fun.

Henry :
Thank you so much.

Dave:
Absolutely. For BiggerPockets, I’m Dave Meyer, he’s Henry Washington, and we’ll see you next time.