The recent collapse of several banks in the US has investors’ and business owners’ attention. As money management in banking moves to the limelight and scrutiny is high, it seems as if most investment-conscious Americans are looking for ways to diversify and protect their assets and investments. Are there recession-ready markets? Is there a way to shelter money that doesn’t involve stocks or mutual funds but still appreciates? Knowing the various commodities markets and the economic factors that lead to bank collapse can help ease the mental strain of juggling your money and where it can be protected. That’s where investing and more specifically, investing in RV parks comes in. Investing in tangible, appreciating, and cash-flowing assets is one way to offset investment anxiety.
There are many commodities that provide appreciation and value like gold and silver. Stocks, bonds, mutual funds, and a million other markets provide value, cash flow, and appreciation, however, they are intangible, and valuations can quickly plummet or in worst-case scenarios be wiped out entirely. When it comes to investing, we can look at our options via four main strategies:
-FDIC $250K limit
-No cash flow
+Low entry capital requirement
-Lack of control
+Hedge against inflation
+Short term profits
-No cash flow
|Buy and Invest in Real Estate||
-High entry to market
The bottom line is to protect your money and shield your investment from known vulnerabilities. RV park investing is a special subset in the commercial world. “We have seen investor demand for outdoor hospitality properties explode as other sectors have continued to erode,” says Yogi H. Singh, partner of National Land Lease Capital (NLLC), a private investment firm that owns RV parks and marinas across the nation. “The national shortage of professionally developed, resort-quality assets, along with the high barriers to entry, provide insulation to the sector that we find attractive.” Americans have flocked to camping as a new way to travel and vacation. The post-COVID world means more remote work and less dependence on an office. This new era of remote work has pushed younger Americans and families into the camping and the RV space. In 2022 alone, almost 500,000 new RVs were shipped around the United States according to the National Association of RV Parks and Campgrounds website. New resort-type amenities at RV parks mean families can enjoy pools, lazy rivers, high-speed wi-fi, recreational sports courts, restaurants, proximity to hiking and water sports, and a host of other luxuries that the baby boomer camping generations were not accustomed to. Not only is Climb Capital buying and operating this level of RV parks, we are also pushing to stay ahead of this trending market by developing and expanding our current parks to meet consumer demand and amenity expectations.
RV parks and campgrounds are attractive to many investors simply because of the cash-on-cash returns they offer. Focusing on purchasing parks that are currently undermanaged or that have room for expansion is an important criteria for Climb as we continue to grow along with the market. Buying great assets in great locations where we can use our years of expertise to become the operator ensures the success of the investment. Climb Capital’s Acquisitions Director, Carter Moses, believes that “Due to the strong cash flow and upside from a fragmented industry, RV parks generally offer a higher ROI than other types of commercial properties.” Many have been fearful as the fed continues to increase interest rates but over the last few months, we have seen some settling in this regard. With conservative underwriting, we are continuing to purchase properties with cap rates in our buy box between 9-12%. Regardless of economic downtown and using COVID as a benchmark, RV parks remain full, demand remains high, and cash flow remains consistent. The time to invest in tangible, appreciating, and cash-flowing assets is upon us, and the RV niche is a special hedge in the ever-changing commodities market.