RV Destinations: 10 Reasons Why this Asset Class is Worth Investing In

RV Destinations

As we embrace the new year, many investors are looking for new opportunities in the real estate market. And with good reason, RV destinations are an excellent investment, providing annual returns and long-term growth potential. In today’s article, we’ll discuss the compelling case for investing in RV destinations. So keep reading to learn more about why this asset class is worth investing in.

10 Reasons To Invest In RV Destinations

There are plenty of reasons for investors to consider this asset class. Here are 10 of the top reasons to consider investing in RV Destinations:

#1 The Demand For RV Destinations Has Exceeded The Supply

The steady increase in demand for RV destinations over the years came to a head these past two years as the pandemic sent people outdoors in record numbers (93.8 million). The influx of campers has overwhelmed the existing supply of space at campgrounds and RV parks.

According to KOA’s 2022 camping report, the number of new households identifying as regular campers increased by more than 22 million between 2014 and 2021. Because there is more demand for places to stay at RV destinations than what’s available, prices remain high—providing investors with solid investment returns.

#2 RV Destinations Provide A Steady Source Of Income

RV destinations are great investments for those looking to generate a steady source of income. Many RV destinations offer monthly and long-term rentals and daily stay rates. This means investors can count on an ongoing stream of rental income from their property—regardless of the season or market fluctuations.

#3 Low Maintenance & Long-Term Growth Potential

RV destinations require minimal maintenance, which can reduce operational costs and lower the need for major repairs over time. Additionally, RV destinations are an excellent long-term investment thanks to their potential for increasing property values with steady market growth.

#4 Tax Benefits

Investing in RV destinations can provide investors with significant tax benefits. Many investors enjoy the ability to write off certain expenses related to the park, such as repairs and equipment upgrades. Additionally, many states offer a property tax exemption for properties held in an LLC or corporation structure—allowing investors to save even more.

#5 Low Barrier To Entry

Investing in RV destinations is relatively easy and accessible. The initial capital requirements are usually lower than other real estate investments and take less time to turn a profit since RV parks are often cash-flow positive within the first few years of operation.

The barrier to entry is higher for luxury RV destinations built to include a wide range of amenities and attractions that make them appealing to campers, such as swimming pools, playgrounds, hiking trails, fishing spots, and more. But even then, the initial cost of entry is generally lower than other real estate investments, including building permanent structures.

#6 The Potential For Revenue Diversification

Investing in RV destinations can help investors diversify their portfolios. In addition to regular rental income from campsites, they offer numerous revenue streams beyond traditional rentals, including things like RV storage, amenity income in the form of laundry and vending machines, and concession income from selling food or merchandise.

#7 This Asset Class Is Very Fragmented

Over 8,000 RV destinations are in the United States, and most of them (90%) are owned by small-time investors with five properties or less. So, the industry is still highly fragmented, with many owners being individuals instead of institutions. This makes it an excellent time for investors to acquire properties and add value for higher returns.

#8 RV Sales Are WAY Up

The RV Industry Association’s industry report stated that RV ownership has increased by more than 62% since 2001. With an estimated 11 million RVs owned nationwide, this trend indicates a bright future for this asset class. In addition, the glamping trend has grown increasingly popular among urban households, becoming one of the fastest-growing camper segments. According to the KOA North American Camping Report, 44% of this group plans to choose camping over other leisure trips in the coming year.

#9 They’re Recession-Proof

RV destinations are often considered a recession-proof asset class due to their low operational costs, steady rental income, and tax benefits. Even during economic uncertainty, RV destinations can remain profitable thanks to their ability to provide travelers with an affordable alternative to expensive hotels and resorts. During the 2008 recession and the years after, RV destinations continued to see an upward growth in revenue while other asset classes declined.

#10 RV-Sharing Apps Are Resulting In Higher Occupancy For RV Destinations

While the sharing economy has disrupted some businesses like hotel chains and taxi services, it has created new opportunities for others. RV-sharing apps like Outdoorsy and GoodSam have given rise to a whole new market of people looking to rent RVs for reasonable prices.

With more people accessing RVs regularly for leisure trips than in previous years, the demand for reputable RV destinations to visit will only continue to increase. This means higher occupancy rates and more revenue for RV destination owners.

The Bottom Line

Investing in RV destinations is an exciting opportunity for real estate investors looking to capitalize on the growing outdoor recreation and camping trend.

With its low barrier to entry, the potential for revenue diversification, and recession-proof nature, investing in RV destinations are a great way to get into the real estate market with minimal risk and maximum return.

On top of that, with the rise in RV-sharing apps, RV park occupancy rates will likely remain high for years to come. So if you’re looking for a great investment opportunity in 2024, RV parks are worth considering.

Redwood Capital is Investing in Luxury RV Destinations

Redwood Capital is securing new luxury RV park development sites along the Gulf Coast. 

For more information on RV park investments, download our RV Park investment guide

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