How To Start Your First RV Park

Want to meet a guy who bought an RV park for 400k? The cash flow is $15,300 a month. It's not me. I wish it was. His name is Kenworth, not Ken. Don't get it twisted. This guy's Southern. He is a real estate man from South Carolina who focused on single family home investing for years. Then one day he got a call, and he gets a phone call from one of his investors. And the phone call basically go like this. It's like, I got an RV park. Nobody else wants to buy it. It's a little bit outside of town. Do you want it? And Kenworth said, well, I've never looked at it, but let me take a look. We're gonna break down how Kenworth invested in this deal, his lessons learned, and how you can mimic it too. So this phone call actually came through in 2017. And despite Kenworth having hundreds of single family deals, five kids and a brewery, check this out. Isn't this a cool brewery? Also, this shirt of mine is from there. 13 stripes. He also said, I want to own an RV park. And so he said, okay, what makes this a good asset? Well, he paid 400k for it, put about 10% down, and with closing costs, he's in for around $47,000. This park of his had 35 spots at $350 a month. So he is actually making a 283% cash on cash return. So you can see the graph right here, and here's how it shaked out. But by the way, I've massaged these numbers a little bit, assumed some of the costs and amounts. So every single specific detail of Kenworth's deal won't be shared in case, you know, you guys are the IRS. Okay, but look at these numbers. Current revenue there, 35 sites, current rent for each site. 350 bucks equals a monthly rent of $12,250 in his pocket for an annual rent of 146, $7,000 a year. At the time, in 2017, they were only charging that 350 bucks. And they didn't include any extra services on top of it, meaning things like charging your RV or sewage lighting, et cetera. When he threw those costs on top of it, he was looking at making almost half of his whole loan amount back in year one. So let me show you what that would look like. Basically, here's the breakdown. Future site RV sites still 35 charge an extra 100 bucks. That means the monthly rent gets to $15,750 or total rent of $189,000. He adds maybe another $10,000 on top of that in variable costs that he charges them. Then he takes out expenses of a property manager who makes three, $3,600 a year and gets to live there for free. Maintenance costs of $10,000. And that means he's making an annual profit of about $175,000. Now that in itself is awesome. I love 133k profit with somebody else managing my asset. And at almost 300% cash on cash return, ooh, that's almost as good as you JPEG nerds out there with your NFTs. But here's where it gets even better. As he adds the site upgrades and looks at the total appreciation cost real estate, he's making closer to a 373% cash on cash return. Now he did some work to make sure this was a good deal and I thought I would ask him. Kenworth, if you were going to tell other people what to do, what exactly should you look for in an RV park deal? He gives us our details. All right, here it goes. One location. Make sure you like the trajectory of the park. You basically means that you like the location, the growth of the population there and that you don't have too many issues with things going wrong with the police or anything like that. If it's in a low income neighborhood bankable, this is a great one. If you can't get a loan on the deal, it's not worth doing. So the bank is actually your best friend in checking if the deal is a good one or not. In order to get in the deal, you want to make calls to competitors, Go visit parks, go stay in one to ensure that the costs are correct, that you aren't under or overpriced, and that you know what the market is, then you got to make sure the cash flows there and then it nets enough to pay an operator and you unless you're going to go and live in RV park, but typically you need somebody else to manage it for you and they need to be on site. Marketability is also really important. Like is this place getting calls? Can you fill it? What I actually like to do is I like to throw up a craigslist ad. It might look something like this. And it basically says, I have this RV park. It's located in this area. I have open spots. Now I'm not looking to fill it because I haven't even bought the park yet. But I'm looking to see if other people out there are looking for what I'm selling, you know, do they already want it? The other thing that you need to know is that there's nothing in this world that is ever free. So there are good and bad things about every park. And there are some things that you really gotta be careful about. One of them is you gotta be wary of contractor tenants. So that basically means when he bought the park originally, it was four full of local construction contractors building a power plant. Then one day the plan was completed ahead of schedule, and when he came home from a tropical Christmas vacation, the park was empty. He had to go and replace every single tenant there. So you have to figure out the average length of stay before you do the deal and why they're there. So I would make sure when you buy a park, you want to actually go talk to the people and figure out why they're located there. And is there just one reason or many? Many would be better. Then he has something else called the path to progress, which basically means Kenworth likes to invest, build and buy on fringes that are on the path to growth and progress. That way he makes money on the cash flow, AKA money in every month and on the appreciation. So I might not buy an RV park in Austin, Texas, because it's right in the middle of everything. It's already expensive, the city's growing regardless, but I would rather buy one in the periphery of the city where I see the city expanding. I like the progress, but it's not right in the middle yet. The third is whenever he works inside of his sector, he looks at the growth around his sector. He was in construction and saw the booming housing demands, but limited supply, AKA RV park needs. What is your unfair insight and how could you leverage it with RV parks? If you're in advertising, your unfair advantage may be that you know how to market the hell out of that RV park. If you're in graphic design, it might be that you actually know how to clean up some of it. If you're in interior design, you get the gist. The fourth is if you want to get more deal flow, you got to tell people what you're looking for. He didn't even have to go find this deal. It found him. How? He told people over days, months and years that he always wanted good deals to be brought to him. But the problem is you can't just ask for people to bring stuff for you. You gotta be number five, easy to work with. They bring him deals because he's a classy Southern gent, nice, fun, easygoing. Hell, I had him do a call as a favor and by the end of it he's sending me free beer and merch. That's how you sow seeds in the future. The last one is you do the deals you say you're going to do. He said he has never not followed through and closed a deal he said he was going to do. That's rare. I've certainly had deals fall through on my side. An ability like this to execute or at least say no and say no early is big. The last and most important one is never ever in all years should you do a deal without an on site operator in RV park land? Every single RV and mobile home park owner I speak to tells me the same thing. Your operator is critical. They're expensive, but they're crucial. Usually a few hundred to a few thousand dollars a month depending on how big the park is and how much additives they have. But they run the show. Shout out to Karen, his operator, who he said is the is the. He said he didn't say she's a because he's Southern. But you get the deal. And I think the most important thing for all of us to learn today is that this opportunity is out there. The fascinating part, the icing on the cake. He bought it for 400k in 2017 and he just got an offer on it for 800k. I think that's a mighty nice return. If you want to learn more about how to buy RV parks, how to buy cash flowing assets, you should definitely, definitely, definitely join the Contrarian Cash Flow Group. And you can also hit that follow button. I'll be doing more videos like this.