Why We Love RV Park Investing in 2022
Why RV parks?
For the past decade Climb Capital has focused on C class value-add apartment buildings. Our process was to identify and purchase multifamily assets that were under performing and mostly owned by mom and pop type operators who had owned these property for decades and needed a bunch of love, leaving the owners ready to get out. When we started this interest rates were low, the buying pool wasn’t huge, and the increasing ease of the syndication model made it an extremely appealing asset class to lean into. Like all economic trends though, things change. In 2022 the investor demand for C class value add is extremely saturated, most of the mom and pop operators have been bought out and the properties flipped, and interest rate compression has reached a peak. Climb Capital doesn’t want to create a box it gets stuck in, we want to stay nimble which means we are looking to pivot to the next big opportunity.
With all that in mind, in 2022 Climb Capital’s new main focus is luxury RV park purchases. Here is why:
There is a remote work and travel boom underway
The asset class in massive growth
The asset class serves the entire economic spectrum
It’s an widely fragmented industry
Let’s dig deeper into each one of these and look at specifics.
Everyone knew that remote work was the future, but in 2020 the Coronavirus pandemic accelerated that change by probably a full decade. This made apparent all of the factors that contribute to this change, the increase in cost of city life, housing prices are skyrocketing, high state taxes, and the fact that tons of jobs can just be done from a laptop now. Why pay all that money for a big house in a city, pay the big tax bill and the upkeep that goes with it when you can buy an RV, drive around and see our lovely country with your wife and kids at a fraction of the cost and keep your job and the same pay. For many people it’s a giant pay raise and a quality of life increase. The pandemic has made planning travel around events and airlines extremely difficult for 2 years now and that might continue in some form, but that’s not going to stop people from traveling. Instead of getting on a plane and going to Hawaii people are getting in an RV and driving to the Sunbelt and Gulf Coast. With luxury RV parks these families can have a meaningful and life changing vacation in a country many have always lived in but haven’t seen much of and they can do it without sacrificing fun or beauty and best of all it’s far less headache than flying. This trend towards RV’s isn’t a trend, it’s a social awakening and it’s here to stay
Travel and growth
Nice sounding narratives are great, but the data is even more compelling.
The RV industry has seen consistent growth every year since 2009.
The typical household income for RV owning households is about $62,000. These families spend an average of 3-4 weeks each year using their RV in some way.
Recreational Vehicle (RV) Market is expected to grow by $8.88B during 2021-2025.
These changing work landscapes and a growing industry show clearly that people want to travel more. While previous generations may have sought status through material goods, younger people are overwhelmingly saying they consider experiences to be what’s most important, and travel at the top of the list of important experiences. The pivot to RV parks by Climb Capital has been deliberate specifically because RV parks cater to the adapting American way of life in so many of these ways.
#vanlife appeals to the entire income spectrum
No matter what happens in the economic future, more and more people are deciding that mobile living is an appealing way of live. Past generations may have considered the American dream a 3/2 with a garage, a fence, and yard, but those days are behind us. After the 2008 crisis and the Coronavirus pandemic, we have seen large shifts in the way people are wanting to live, some people are buying RV’s to downsize their cost of living and live on the road (commonly known a #vanlife) and some people are doing it for a luxury lifestyle, the great news is that because RV’s are mobile Climb Capital can capture customers of both these demographics by owning parks with a diverse set of amenities and in geographic locations.
It’s a fragmented asset class
Most RV parks are owned by single owner operators. Syndicators and institutional investor groups haven’t tapped into the RV park investing class yet and scooped everything up. Most owners have a single park, some have a few, but unlike apartment owners who own thousands of assets, there are less than a handful of owners who have more than 5 parks. This type of market fragmentation implies one very important thing: opportunity. This is the same opportunity that people wanted in mid-sized older apartments a few years ago, now they have all been flipped and while the popularity is high it’s trailing real world opportunity by at least 24 months.
RV parks are in 2022 what C-class value-add apartments were in 2014, they are the next big thing and Climb Capital is way ahead of the curve. We already own some, we know the business model, we have experience and operations already in place. Like all speculative opportunities this future is obvious to a few people and the majority will think we are crazy. At the time of this writing apartment cap rates are extremely compressed, all the meat has been taken off the bones, the great deals have all been flipped, and big scaled operators that are very hard to compete with have come in and planted their dominance. RV parks have none of these obstacles but have all the opportunities that we loved about apartments. Climb Capital is moving to position itself as experts in RV space and we are moving with ferocity, you would be wise to join us and we can succeed together!