Blog

RV Park Business Model

RV parks are able to generate both short term fees from nightly stays while concurrently generating highly predictable revenues from long-term rentals and storage of recreational vehicles. The RV park business model allows for multiple forms of revenue and income, which makes these businesses highly economically secure. Additionally, once the most important aspects of a RV Park are that their expenses are typically low. The primary expenses faced by most RV parks are related to the mortgage, property taxes, and utility expenditures. In most instances, the fees that are generated from long-term storage or parking of recreational vehicles is enough to cover most fixed operating costs.

One of the common trends within the RV park industry is to integrate additional onsite services such as laundry and showers. Many parks have developed structures that operate in a coin-operated laundry mat capacity (which includes sales of detergent and soaps).

Another common component of the RV park business model is to have an onsite general store that carries in-demand products among people that are traveling. These ancillary revenue streams can often become major profit centers for a RV park or campground site. One of the other ways that owners can generate additional revenues is through the rental of recreational equipment (including ATVs, boats, and fishing equipment). Collectively, these smaller revenue streams can create substantial profits for these businesses.

In a previous iteration, we developed an RV park business plan that featured an onsite restaurant as well as a liquor store. Given the large scale nature of RV Park properties, these campuses can often accommodate additional business units. In this business model, the restaurant/bar and liquor store showcased revenues substantially higher than that of nightly RV space rentals and long term RV storage.

One of the best aspects of operating these businesses is that they have tremendous access to capital. The large tangible asset base (land, FF&E, and onsite structures) makes RV parks and campsite grounds a low risk investment by a financial institution (or private investor). Loans that are provided to RV park operators are highly secure and safe investments for banks. When approaching a financial institution, it is imperative to have a well developed RV Park business plan (as showcased on this website). When showcasing your RV Park business model, it is extremely important to showcase all revenue centers (which will contribute to the economic stability of the business). Generally speaking, a RV Park owner-operator typically generates 15% to 30% as a return on investment. This ROI can be greatly amplified through the additional of additional revenue centers.

The demand for RV park spaces has increased substantially over the past ten months as a result of the COVID-19 pandemic. As discussed throughout this platform, people still want to take vacations and they are seeking safe ways to do so. Traveling by RV is incredibly safe given that proper social distancing can be accomplished. It is important to note that even once the pandemic wanes, the demand for this type of travel is expected to remain incredibly strong. This is due to the fact that many people have purchased recreational vehicles during this time, and they will continue to want to use them. From 2019 to 2020, recreational vehicle sales were up almost 10%. The low cost of fuel (as a result of economic pullback) has also been a driving force behind new RV sales. Owner-operators of RV parks and campgrounds are poised for substantial revenue growth over the next five years.

As it relates to marketing, many RV park operators focus heavily on creating a repeat customer base. Many vacationers will often take similar routes on a yearly basis (especially if they are traveling by RV in order to visit family members). As such, one of the most important focuses of the overall business model should be to have a very strong marketing campaign in place in order to develop ongoing customers. There are numerous pieces of customer relationship management software that are available specific for campground/RV businesses. These software systems can integrate automated emails to customers. Many businesses will often provide ongoing discounts among guests that use the facilities on an ongoing basis.

RV Park Business Plan

1.0 Executive Summary

The purpose of this business plan is to raise $750,000 for the acquisition of a RV park property while showcasing the expected financials and operations over the next three years. The RV Park, Inc. (“the Company”) is a Texas based corporation that will provide high quality rental spaces to RV owning tenants in its targeted market. The Company was founded by John Doe.

1.1 The Services

As stated above, the Company intends to launch its operations with the acquisition of an existing RV Park. The expected rent roll for this 25 lot RV park is $340,000 per year, which includes rental fees and other ancillary income including the facility’s onsite Laundromat. The RV Park will generate enough positive cash flow to cover both the interest and principal payments for the debt capital sought in this business plan.

The third section of the business plan will further describe the services offered by the RV Park.

1.2 Financing

Mr. Doe is seeking to raise $750,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate. The financing will be used for the following:

  • Acquisition of the Company’s RV Park.
  • Financing for the first six months of operation.
  • Development of the RV Park’s onsite office.

Mr. Doe will contribute $100,000 to the venture.

1.3 Mission Statement

It is the goal of the Company to create a business that provides customers with high quality and scenic parking spaces while providing a steady stream of operating and passive investment income for Mr. Doe.

1.4 Management Team

The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the real estate management industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.

1.5 Sales Forecasts

Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years:

Small Profit and Loss Statement

1.6 Expansion Plan

Management intends to expand its property base through reinvestment and several additional financings. This additional capital will be used to acquire and manage several other RV Park properties.

The Company will also continued to engage a broad based marketing campaign within its target market in Texas in order to provide RV storage services to area residents that want to place their recreational vehicles at a third party facility. Many HOAs prohibit RV owners from having their recreational vehicles in their driveways, and as such, Mr. Doe sees a substantial opportunity to provide these services to the general public as well.

2.0 Company and Financing Summary

2.1 Registered Name and Corporate Structure

RV Park, Inc. The Company is registered as a corporation in the State of Texas.

2.2 Required Funds

At this time, the RV Park requires $750,000 of debt funds. Below is a breakdown of how these funds will be used:

Use of Funds

2.3 Investor Equity

Mr. Doe is not seeking an investment from a third party at this time.

2.4 Management Equity

John Doe owns 100% of the RV Park, Inc.

2.5 Exit Strategy

In the event that Mr. Doe wishes to sell the RV Park to a third party, he will contract a real estate brokerage firm to market the property to potential buyers. Based on historical sales prices of RV parks, Mr. Doe expects that the property will appreciate to have a value in excess of $850,000 by the third year of operations.

3.0 RV Park Operations

Below is a description of the revenue centers for the RV Park.

3.1 Rental of RV Spaces

The primary source of revenue for the RV Park is the rental of the 25 units located on the property that Mr. Doe intends to acquire. Each of these units produces an approximately monthly income of $600 to $750. The Company will have an onsite manager that will be given a free of charge small home to live in and a $20,000 annual stipend. This onsite manager will oversee the general operations of the property while managing issues for people that want to rent the RV Park’s units. Mr. Doe will be in daily contact with this manager to ensure the proper operation of the property.

3.2 Ancillary Fees and Income

The Company will also generate secondary revenues from late fees on rent and income from the Company’s onsite coin operated laundry center. Aggregately these two income streams will provide RV Park, Inc. with approximately 10% of its revenues.

4.0 Strategic and Market Analysis

4.1 Economic Outlook

This section of the analysis will detail the economic climate, the RV park industry, the customer profile, and the competition that the business will face as it progresses through its business operations.

Currently, the economic climate is uncertain. The pandemic stemming from Covid-19 has created a substantial amount of turmoil within the capital markets. It is expected that an economic recession will occur given that numerous businesses are being forced to remain closed for an indefinite period of time (while concurrently having their respective employees remain at home). However, central banks around the world have taken aggressive steps in order to ensure the free flow of capital into financial institutions. This is expected to greatly blunt the economic issues that will arise from this public health matter.

However, the demand for RV park usage is expected to climb over the next 12 to 24 months. As people have becoming more concerned with social distancing, families may seek to do road-based vacations in order to avoid travel on airplanes. As such, the RV Park will be able to operate profitably and with a positive cash flow at all times.

4.2 Industry Analysis

In the United States, there are 19,000 companies that operate in a real estate investment capacity by sourcing funds from private investors/banks with the intent to engage in real estate related activities. Each year, these companies aggregately generate $22.8 billion dollars per year and provide jobs for more than 20,000 Americans. Payrolls for these employees have exceeded $1.3 billion dollars year during the last five years.

Specifically among RV (and mobile home) parks, aggregate rental and fee income in each of the last five years have exceeded $3 billion dollars.

During the next six months to two years, Management expects that the number of agents in this market will remain stable. Certainly some market agents will close (due to poor investments during the boom cycle), but others will enter the market with fresh cash to acquire undervalued properties and RV parks.

4.3 Customer Profile

Management expects the following demographics of tenants that will continue to rent from the RV Park:

  • Household income exceeding $45,000.
  • Between the ages of 21 and 65
  • Will spend five to ten days at the RV park facility on average.

In this section of the analysis, you should describe the type of customer you are seeking to acquire. These traits include income size, type of business/occupation; how far away from your business is to your customer, and what the customer is looking for. In this section, you can also put demographic information about your target market including population size, income demographics, level of education, etc.

Demographic Profile 1
Demographic Profile 2

4.4 Competition

This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition.

5.0 Marketing Plan

RV Park, Inc. intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Company.

5.1 Marketing Objectives

  • Established connections with lenders, banks, and investors.
  • Develop relationships with vacation rental websites that will showcase the RV Park.
  • Maintain an expansive web presence so that reservations can be taken directly over the internet.

5.2 Marketing Strategies

Management intends to place a number of traditional advertisements in RV magazines so that individuals that are traveling near the Company’s facilities will be able to know where to stop, the costs associated with renting an RV rental space, and how to contact the business for more information regarding the Company’s facilities.

The internet has become a very popular platform for property sellers, real estate brokers, and real estate developers to showcase their developed (including RV parks) properties to the general public.

Management intends to use the full marketing capability of electronic advertising to generate sales among the Company’s RV space units. The Company will use major internet vacation databases to showcase the RV park to potential customers that will be traveling within the Company’s target market.

In this section, you should expand on how you intend to implement your marketing. List publications, local newspapers, radio, and other outlets that you will use to promote your business. Discuss how much money you intend to spending on marketing.

5.3 Pricing

In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page.

5.4 Marketing Expenditure Breakdown

RV Park Marketing Expenditures

6.0 Organizational Plan and Personnel Summary

6.1 Corporate Organization

RV Park Corporate Organization

6.2 Personnel Summary

RV Park Personnel Summary

7.0 Financial Plan

7.1 Underlying Assumptions

The Company has based its proforma financial statements on the following:

  • RV Park, Inc. will have an annual revenue growth rate of 5% per year.
  • The Owner will acquire $750,000 of debt funds to develop the business.
  • The loan will have a 30 year term with a 7% interest rate.

7.2 Sensitivity Analysis

The Company’s revenues are sensitive to changes in the general economy. As discussed in the fourth section of the business plan, the housing and real estate market are currently in distress. However, with real estate prices at undervalued prices, Mr. Doe feels that acquiring a RV park now will allow the business to reap substantial income and capital appreciation over the next five to ten years once the real estate market completes its correction

7.3 Source of Funds

Source of Funds

7.4 General Assumptions

General Assumptions

7.5 Profit and Loss Statement

RV Park Profit and Loss Statement

7.6 Cash Flow Analysis

RV Park Cash Flow Analysis

7.7 Balance Sheet

RV Park Balance Sheet

7.8 Breakeven Analysis

RV Park Breakeven Analysis

Appendix A – SWOT Analysis

Strengths

  • Economically insulated business.
  • High gross margins from ongoing RV park services.
  • Recurring streams of revenue on a monthly basis.
  • An owner-operator (John Doe) that has extensive experience in the real estate industry.

Weaknesses

  • Many regulatory and compliance issues.
  • Legal liabilities resulting from accidents onsite.
  • Competitors within the same Texas metropolitan area market.

Opportunities

  • Expansion of the business to maintain several facilities.
  • Attract additional equity capital from private equity firms and angel investors.

Threats

  • Errors and omissions can cause serious legal liability for RV Park, Inc.
  • Many other businesses targeting the same clientele.
  • Liabilities resulting from onsite client injury can severely damage the Company. 

Please note that the remainder of the business plan can be found on the samples page.

RV Park SWOT Analysis

RV parks are highly secure businesses from an economic standpoint. Foremost, these businesses do not require large capital expenditures outside the startup capital needed to acquire land. Beyond land, the second largest expense is usually the development or acquisition of a small house where a full time manager can reside. Outside of property taxes and utility costs, the ongoing direct expenditures to maintain an RV park or campsite property are generally minimal. Usually, a full time manager is provided with a modest salary provided that they are able to live rent-free within the onsite facilities.

Strengths

As it relates to strengths, RV parks can generate revenues in a number of different ways. First, the businesses are able to take reservations among people traveling through the target market area while providing stop-in service to unexpected vacationers. Given that most RV parks acquire substantial acreage; these businesses are often designed to accommodate influxes of businesses from time-to-time. The gross margins generated by RV parks are substantial (usually in excess of 90% depending on what the owner counts as part of their cost of goods sold).

Another important revenue center for a RV park are monthly rental and storage fees among local residents that do not keep their recreational vehicle at home. In many areas (especially in neighborhoods that have a home owner’s association), many RV owners are not able to directly store their vehicles at home. These fees produce substantial streams of recurring revenue that can satisfy the underlying mortgage obligations of the RV park while providing a significant return on investment.

Finally, RV parks are able to generate ancillary streams of revenue from onsite general stores and usage of washers/driers.

Moving forward, the demand for socially distanced vacationing is expected to grow substantially. There is already a growing demand among people that would rather travel by recreational vehicle to and from vacation destinations rather than flying. It is expected that this demand will increase at least 10% per annum over the next five years.


Weaknesses

For weaknesses, RV parks and campsites do face a substantial amount of competition. Given the low startup costs associated with these businesses, it is very easy for someone who already owns a large parcel of land to simply set up a RV park (with electric and tank hook ups). As such, these businesses need to be flexible as it relates to pricing in order to compete in these markets.

Opportunities

For existing RV parks, the best way to increase revenues is to monetize every aspect of operations. This includes having a general store on site (that sells in demand travel items) as well as providing access to washers and dryers. Many RV parks also provide refills of propane.

Another opportunity for growth stems from the acquisition of additional parcels of land in order to accommodate a greater number of customers. Many RV parks focus heavily on providing storage services (during off-peak months) in order to have their revenues remain stable throughout the year.

RV park and campsite businesses generally have substantial access to capital (either via a loan or private investment) given the large amount of property that is used to secure the investment. Banks and financial institutions love to provide mortgages and working capital to RV parks given that nearly 100% of their capital is almost always secured by the land and real estate as collateral. An entrepreneur seeking to obtain capital via these methods should have no problem sourcing capital.

A major opportunity, as it relates to marketing, is to develop an expansive online presence so that reservations can be made months in advance via a proprietary website. This ensures that fees are collected upfront. Additionally, many RV parks now use third party services in order to generate bookings so that the facilities operate at 100% occupancy at all times. Generally, a third party site charges a fee equal to 10% of the transaction. Although this is expensive, it does allow for a much higher occupancy rate with minimal marketing effort on behalf of the RV park or campsite.

Threats

Outside of competitive threats, there is really nothing that impacts the way at a RV park conducts business. Although the economy is heading for substantial economic uncertainty over the next twelve to twenty-four months, the demand for safe vacations will increase substantially. More Americans are reconsidering how they intend to enjoy a vacation as a result of the pandemic, and traveling via recreational vehicle is one of these methods. Interest rates are expected to remain near historical lows for a substantial period of time.