WS1853 Why People Are Investing in RV Parks | Paul Moore

Uncover the secrets of the flourishing RV park investment trend with our guest, Paul Moore of Wellings Capital. This episode dives into the dynamics that have escalated the demand for RV parks, making them a promising investment opportunity. Tune in as we examine the impact of global shifts like the COVID situation, remote work revolution, and the rise of RV rentals on platforms like RV Share and Outdoorsy, and how these factors are driving the growth of this asset class.

Join us as we navigate through the intricacies of RV park development, discussing the different types, challenges of expansion, labor involvement, and the need for solid cash flow projections. With Paul's expert insights, we highlight the crucial role of having a reliable operator with a solid track record. We also delve into the current real estate market scenario and how it could influence investment decisions in the near future.

Expand your investment horizons with wisdom from industry giants like Warren Buffett, Peter Lynch, and Howard Marx. We also discuss the resilience of the multifamily market, the importance of due diligence, and the role of private investor clubs in providing honest syndicator feedback. Whether you're a seasoned investor or just starting, this episode promises a treasure trove of knowledge, potentially steering you towards a rewarding addition to your investment portfolio. Join us!

Connect with Paul on LinkedIn to stay updated with his latest insights and visit his website for more information on how you can take your real estate investments to the next level. Get ready to elevate your investment game!
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Transcript

00:00 - Paul Moore (Guest)
I mean RV Park ownership had already risen over 62% this century so far since 2001. And there are 11.2 million US households that own an RV as of a year and a half ago and 9.6 million more said they wanted to buy one. 

00:21 - Whitney Sewell (Host)
This is your daily Real Estate Syndication Show. I'm your host, Whitney, so we are continuing the conversation today with our guest, Paul Moore, diving right back in to another topic. We're here to have you back on the show another day. Paul, Grateful for your time. I want to remind the listeners to go back to yesterday's segment If you didn't already and listen, where Paul broke down a press equity. Just what is that? What does that mean for investors? I even laid out a slide where it's helpful if you go to YouTube and you can see it and you'll just be able to visualize that as well. But today we're going to dive into a different topic. Paul, welcome back to the show. 

01:02 - Paul Moore (Guest)
Whitney, you got the same shirt on as yesterday. It's crazy, isn't it? Yeah, so do I. 

01:08 - Whitney Sewell (Host)
So do you. Yeah, it's so do you. 

01:09 - Paul Moore (Guest)
I just dressed up for your show, and those who can't see me would probably rather not. 

01:16 - Whitney Sewell (Host)
Yeah, I'm sure they're more safe not to see the YouTube channel today. 

01:21 - Paul Moore (Guest)
Right. 

01:23 - Whitney Sewell (Host)
Well, I'm looking forward to diving into what it means to invest into an industrial building, paul and I'm joking, by the way. We're going to talk about RV parks, paul has become an expert. 

01:36 - Paul Moore (Guest)
I can talk about industrial. 

01:37 - Whitney Sewell (Host)
Let's talk about RV parks. I know you have a special report on it as well, and there's a number of things around that asset class that I've been learning about a little bit and as we've had a few guests talk about them. But I want to jump in, get us started on maybe even why you all would consider an RV park as part of your investment portfolio, and from the last segment you talked about, there's a number of asset classes you all are investing in and through your fund, but why is RV parks one of those you're considering? 

02:05 - Paul Moore (Guest)
Yeah. So we actually wanted to invest in RV parks for a couple of years and we didn't have an operator that we really knew like entrusted I say that right, and we were. We finally found one and we're really surprised that. I mean, covid has just accelerated a long term trend. I mean RV park ownership had already risen over 62% this century so far since 2001. And there are 11.2 million US households that own an RV as of a year and a half ago and 9.6 million more said they wanted to buy one. 20 over a quarter of new campers. Rv campers were new in 2020 alone. 

02:49
During the pandemic, I mean, when a lot of people were hiding in their basements, a huge percentage of people hit the road with RVs and the RV park. The demand on RV parks was enormous. Rv parks have continued to experience growth since then. The rate of new campers has just I mean in 2020, 21 and even into 22. Until interest rates started going up, the demand on parks was significant and we really believe that this is a trend that, even though it's slowed down now with the interest rate rise, those RVs are still on the road. Those people are still using the RVs, and for a couple reasons I'll get into later. We think that the demand on RV parks will continue to increase for a long time. 

03:41 - Whitney Sewell (Host)
Wow, because it sure seems like the. I want to think anyway that COVID has kind of passed us, but it seems like I still hear about it all the time. But I would love for it to be gone right, as most people, I think, would. But you know, it was a major upswing for RV parks, like you talked about during COVID, and is that just continuing? I mean, what's what's kind of the effect of that, or is it not going to die down? 

04:03 - Paul Moore (Guest)
Well, there's there are three things that have never happened before in world history other than us doing another show today, and that is number one. There was COVID, so that was, I mean, obviously we've had plagues before, but they didn't have RVs then, but COVID was number one. Number two we have this remote work revolution, which is huge. I mean, people were talking for years. I mean the remote work had already doubled or tripled, I think, since 2010. But the number of people who can work part time or full time from remotely or from the road now is enormous. In fact, there are 35% of workers have been offered a remote work on a full time basis. 23% can or do on a part time basis. That leaves only 42% who can't, and so that is very, very high number. And what that means is that a lot of people who, a lot of people, re-prioritized during COVID too. They saw or heard about people die, whether it was from COVID or the shot later did I say that? Or they're seeing all these kinds of things going on and they're saying, hey, I want to. I want to spend more time with my kids. I talked to a guy today in Denver, super successful guy. He's like, hey, my kids, I only have 18 summers with my kids and they're getting older. I want to spend more time with them, so a lot of them hit the road with RVs. But so that's a huge increase right there. That's added to the COVID effect. 

05:45
But the third thing is also unprecedented and that is the opportunity for people to not only own but also to rent an RV. There are websites, now called RV Share and Outdoorsy, that allow people to rent out their RV, and so now, instead of the RV being sitting idle 49 and a half weeks average per year it's only used two and a half weeks per year, let's say. Now they can lease it out and people can be using that 10, 20, 30, 40 weeks a year. A friend of ours, whitney another Whitney named Whitney Elkins Hutton she actually bought an RV two years ago and she told me and she said it was okay for me to share this she spent about $80,000 on it and she made $40,000 in pure profit the first six months she had it. So this is another investment opportunity and I gotta tell you, as a guy who doesn't even know how to tighten his own doorknob, as I said on a previous show with you, I don't like the idea of owning an RV. 

06:55
I don't like the idea of the potential repairs, maintenance. I don't even like the idea of setting it up on site and all that can be done. Now Outdoorsy RV Share there's other services out there that actually do. They actually will take it to the site, they'll set it up for you, you can drive your car there and use it. There's just so many wonderful things about that. But think about this if an RV is only typically used two or three weeks a year, now it's used 20 or 30 weeks a year what's that doing? It's putting incredible pressure on a limited number of RV spaces out there. I've got neighbors on both sides of me that have RVs. One has one of those super hyped up, expensive ones and he said it's very, very hard to get a nice spot in an RV part now. Sometimes he has to reserve about a year in advance. So I think it's a real opportunity. There's other things about RV part development we can jump into to talk about that as well if you like, but I think that's my case for the demand. 

08:00 - Whitney Sewell (Host)
Yeah, no, I completely agree. We started camping as well in the last few years and we really enjoy it. I mean it's a great time. But I can relate to a number of those things that you said. 

08:12
A few of the parks, I mean it's obvious that many of these are set up like not to leave for a long time. 

08:19
I mean, they're like practically permanently set up a lot of these RVs, and I'm usually surprised by that for some reason, I guess, but it's very possible that's what they're using them for. Or the park will even be like renting them out differently than what they're, than the rest, than just somebody that was renting the lot right, just like their own Airbnb you write, or something through the things like you're talking about. Through those websites Even I see everybody with their star link and all that right, so that we even even technologies like that have allowed them to just be so mobile and be able to travel with the family and still get work done and and even a few that we have enjoyed being at a lookout and it's like it is. It's like a year to book If you want to be there longer than three days. It's like a year out, and so I've experienced those things firsthand, and so RV developments speak to that. And is that a growing trend? It probably is. I would imagine. 

09:13 - Paul Moore (Guest)
Yeah, well, let's start by talking about the four different types of RV parks. First of all, you've got overnight parks and those are light on amenities, heavy on convenience. There might be right by the highway and it's a place that people stay on their way somewhere else. A second type you just mentioned, and that's what reminded me, and that's the extended stay RV part. Now we both know where Smith Mountain Lake is. If you haven't been to Smith Mountain Lake, you need to come. It's the Tahoe of the East Whitney. You live right next to Smith Mountain Lake or right near it, and am I supposed to say that on here they can? 

09:45 - Whitney Sewell (Host)
never know. Ok, I didn't think so. 

09:48 - Paul Moore (Guest)
So there's extended stay parks there at Smith Mountain Lake that have like a seven year waiting list. People build decks around their RVs and they actually stay there permanently. My cousin had a place for like 20 years at an RV campground. They had a permanent place set up that that was permanent. A third type that's not really well known is workforce housing. We saw a lot of this in North Dakota during the oil boom. And then the fourth part. The fourth type is destination RV parks. 

10:19
Now there's two types of destination parks. One is near a, like Branson, missouri, or Gatlinburg, tennessee, or one can be the destination and some are both, and so being the destination means the park has a lot of amusement and so it might have limited food service it might have. It might have cabins set up. A lot of people come in their RVs and they want their extended family or their in-laws to come and they they don't have an RV so they might want to stay in a cabin. Some of them have swimming lakes, fishing lakes, water parks, drive in like a drive in theater screen, putt putt. Golf Might have golf cart rental, all kinds of things, a lot more than that Face painting and gem mining and t-shirt painting and hay rides, all this kind of stuff. Some of that's paid. Some of them even have Whibbits. 

11:20 - Whitney Sewell (Host)
I don't know what that is. 

11:22 - Paul Moore (Guest)
I didn't think you did so. Whibbits are a floating obstacle course out on a swimming light and so if I, if I could share my screen just really quick, because I know people are going to be super curious and I know all of you who are listening, you're going to be so jealous of the people who are on YouTube that you're going to want to go over to Whitney Sewell's YouTube channel right now. That's Whitney Sewell. Okay, sorry. Anyway, this is Whibbits, for those of you who can see that it's a floating obstacle course Can you see that, whitney, I can, and so those are about $200,000 or $300,000. 

11:58
You can see that this is about a half a million dollar lake, including the beach. Here it's about a five acre lake. This is at one of the parks that we invested in, and Whibbits are these floating obstacle courses. You can charge the kids or adults $17 an hour to run and play and jump and splash and all that stuff on these. They have slides and stair steps and places you can climb in and under and around and an RV park operator can make about $1,000 an hour during the high season as the value add from just Whibbits. 

12:35 - Whitney Sewell (Host)
So I mean I could see my kids loving that. I mean it would be well worth $17 to them to get to run around on that thing. 

12:43 - Paul Moore (Guest)
Wouldn't it, man? That's incredible and you could get some work done, that's right. 

12:48 - Whitney Sewell (Host)
Yeah, yeah, they'd want me out there with them, but anyway. So, paul, you listed out these different types of parks and I didn't realize that there were so many different types, or I guess I have a number of these, but what's the most profitable type? I know there's pros and cons, but you got to be more interested in that. 

13:05 - Paul Moore (Guest)
I just don't have an answer because I can imagine. So let me just finish the. You asked me about development. So developing one of these destination parks. I mean one of them we invested in was like three or $4 million in your brand, some Missouri, but it had an 18 to $20 million all in budget because they bought land around it. They expanded it from just I think it was 61 sites to over a hundred sites. They added a whole bunch of cabbons. They added maybe and I'm thinking of different ones we've invested in now Some of them have, like maybe a wedding venue, a camp store, food service, human foods, ball table, tried that one all kinds of things that they've added and so the development's really intense but so is the labor. 

13:54
I mean some of these take over a hundred employees to manage in the summer, almost like a little amusement park. So the question is that more profitable? Well, those are projected to cash flow, to investors net really high. Actually I'm probably not supposed to say how much because I have a compliance person who listens to these and she may want me to cut out projections like that. But the I can say that they cash flow, they're projected, excuse me, are targeted to cash flow in the teens or even higher. I would say it depends on your cost, your operating expenses, your capital, your debt structure, all that. But I can imagine any of the four being quite profitable. I mean, I know that when we were doing some things, we were doing workforce housing up in North Dakota. As you remember, back when you and I first met, we were making incredible profits from leasing spots to oil workers. That was about 12 years ago and the oil companies were paying a massive amount of money to have their employees stay there. 

15:05 - Whitney Sewell (Host)
Yeah, I enjoy the asset class myself as far as going and camping, but we don't own any yet, and so I just. I love the exposure, though, that you're offering investors in numerous asset classes, and even considering RV parks, and maybe why would you, even through your phone, consider development versus park that's already operating, or are you? 

15:26 - Paul Moore (Guest)
Yeah, so we're only investing with one operator. We are really very, very fixated on finding the right operators with the track record, with their own money and the deals, a lot of their own money. And we the only RV park operator that we have found that we love is doing either buying cash flowing parks, so they're cash flowing from day one, but they're expanding them dramatically, like I told you about the one in Branson, and so that's the operator we like, and so, therefore, we're sticking with them for now. If there are other RV park operators who might be a fit, we would certainly be open to that down the road. 

16:08 - Whitney Sewell (Host)
All right, Paul, we're going to transition to a few final questions. What about your predictions for the real estate market or economy over the next six to 12 months and how that's affecting the decisions you all are making? 

16:21 - Paul Moore (Guest)
Yeah, even as we're talking here right now, I mean the last four days I've seen probably what highest number, the largest amount of bad news I have seen since 2008,. 9, 10 in commercial real estate. And so I mean this morning the Twitter channel I'm on was just kind of blasted with people complaining about distributions being paused and capital calls and all kinds of bad news. 

16:51
I don't like to make predictions, that's not that I don't have opinions, but you know, warren Buffett, peter Lynch, howard Marx, charlie Munger these guys I really respect in the investment realm they really really don't like to make predictions because they're wrong so much. Warren Buffett says every company that has an economist has one employee too many, because he just doesn't believe the predictions are really going to work out. And so I guess I don't either I have an opinion on that other than to say I don't think multifamily will suffer in anyway like it did in 2007 through 12. And one of the reasons is this as Whitney, the supply and demand is so, so much in favor of multifamily owners right now versus tenants, and so I really think that the demand will continue to be so high that even if there are deals in trouble and we've all heard of some deals that are in trouble. I think those will get scooped up and they'll just continue without missing a beat. I don't know what you think, but that's kind of what I think. 

18:02 - Whitney Sewell (Host)
Isn't Warren like storing more cash now than he's ever? 

18:05 - Paul Moore (Guest)
ever stored before? Yeah, 157 billion today. 

18:08 - Whitney Sewell (Host)
Yeah, 157 billion. I mean that's predicting something to me. Like that's he definitely is expecting something to happen, but yeah, I know that's not his whole philosophy, but yeah. 

18:20 - Paul Moore (Guest)
There's a couple of problems with Warren. I mean he's right now. It's so hard for him to find deals because I mean, part of it is the scale he's at. I mean it was much easier when he was buying million dollar, making million dollar investments, rather than 10 billion or 100 billion or whatever Number two. He's able to get, whatever it is 5.3 or whatever percent return on his cash right now and that's not too bad. 

18:44 - Whitney Sewell (Host)
Yeah, especially on 50 to 100 billion at a time. Right, what's your best source for meeting new investors right now? Hmm, we. 

18:55 - Paul Moore (Guest)
I can tell you that what I originally planned when we set up Wellings Capital nine or 10 years ago was that I would be out doing investor dinners and luncheons and just meeting people face to face. I had a meeting with my business partner about three hours ago and we talked again about how the fact that most of the conferences we go to face to face, most of the face to face dinners we do with investors or prospective investors, they don't really produce as much fruit as I would have thought I think I'd have to say. Podcasts might be certainly up there, and there's no better podcast out there than Whitney Sewells and that would be one. Another one would be blogging for bigger pockets and for another medical group that I blog, that I put information out on every month, and I think that really is probably two of the better sources and a lot of it's word of mouth and re-investments these days. 

19:57
Can anyone blog on bigger pockets? No, anybody can. There's a I mean I'm not sure if they still have this, but they have a sort of a personal blog section where anybody can blog. I don't know what the readership of that is, but as far as the official blog that bigger pockets puts out. You have to be accepted on that, and I've been doing that for about seven years. 

20:20 - Whitney Sewell (Host)
What's your best advice for prospective investors right now? 

20:24 - Paul Moore (Guest)
Do diligence Deep, thorough. Do diligence If you're going to give 50 or $100,000 or more of your hard earned capital somebody. I would certainly go out and fly to see them face to face in their office. I would meet their team. I would see how they treat their employees, how they talk about their investors, how they talk to the waiter or waitress, how they talk about their family. I would see how much money they put in the deal. I would consider doing an NOI audit on their current deals to confirm that the money is really flowing the way they say it is. I would check out the debt in detail and a whole lot more. I mean, we both are friends with Brian Burke who wrote the Hands Off Investor. I would read that book, I would dog ear that book and I would use it. 

21:13 - Whitney Sewell (Host)
Love that To many suggestions you made there. If you, I've never heard people mention before even the NOI audit, what would be the first step to get that done? What would be the first step to do an NOI audit of an operator's portfolio? 

21:28 - Paul Moore (Guest)
If you're a large enough investor to drop, let's say, $8,000 or $10,000 to get that done. I mean that would certainly be worthwhile. You would have to find somebody who is an expert in that. You can Google that NOI audits on real estate, commercial real estate. Find somebody like that. You could reach out to us. We have a couple sources for people to do that type of stuff. Another thing in addition to due diligence I would actually check some of the private investor clubs where there's people reviewing and rating and sometimes bashing some of these syndicators just to see what people are saying about them. I mean, we both know Ian Ippolito, who has the Private Investor Club, the real estate crowdfunding review, the 506 group, and there's also left field investors who I really love. People just talk honestly on those forums about their experience and I would definitely check that out as part of your due diligence. 

22:28 - Whitney Sewell (Host)
Paul, what's some of the most important metrics that you track Could be personally or professionally some of the most important metrics I track. 

22:37 - Paul Moore (Guest)
So one thing personally is I actually don't track this because I've been sort of a shiny object chaser a lot of my career. I've definitely locked in the last 10 or 12 years. I'm not that way anymore. But one thing personally I know that if I do not get focused journaling and solitude and meditation time every morning and I've actually needed more and more of it as I get older I have a minimum, a standard at least of a minimum per of one hour every morning. If I don't do that by about the third day. I was actually with an investor at the bigger pockets conference a year ago and he was an investor who knew me really well and he said I've just got to tell you, after spending a few hours with you, what's wrong with you. And I said Kevin, I said I have been a little tired and I've been skipping my morning quiet times and it's really showing and thank you for pointing it out, and so that's one big one for me. 

23:40
Other metrics were obviously checking. The debt service coverage ratio is a huge, huge factor with any investment You're wanting to check. That that takes so many things into account and I'll just leave it at that, because we're running out of time, but I would definitely be looking at the debt service coverage ratio in any investment. Other metrics would be we like to look at how many calls we have to get, how many calls, excuse me how many leads come in the front door that result in how many investor calls that result in how many investment. That's something that we're really trying to get our arms around. It's harder than you might think, because there are leads from three and four and five years ago that all of a sudden pop up out of nowhere and invest, and there's other people that reimbursed five times and there's other people that never did a call and, because we're 506C, they actually just invested. So it's pretty tough for us to track that metric. That's one we're really focused on right now. 

24:43 - Whitney Sewell (Host)
Now, when you figure that out, I want to know. It is something we've also tried to nail down so many different ways and is difficult to do so. Anyway, how do you like to give back, paul? 

24:55 - Paul Moore (Guest)
If you took the record profits of ExxonMobil, nike, gm and Starbucks, added those together and doubled that number, that's the approximate amount, at least 50% more than that or possibly double that. I just redid the calculations last night and now I'm confused, but anyway, that's the approximate amount of profit being made by human trafficking all around the world right now every year. And there are more people in bondage right now than any time in world history. And it's happening right under our noses. The Sound of Freedom movie came out this year and it really told the world firsthand what was going on. So Welling's Capital. Every giving Tuesday we do our best to make that known. We have a double match for anybody who is to an organization that we've vetted. It's called AIMAIM, agape International Missions, and it's aimfreeorg. We highly recommend people consider giving to them. They're very effective at freeing people from trafficking, giving them a safe home, counseling, clothing, food, job skills and getting them started on a path for a new life. 

26:09 - Whitney Sewell (Host)
A lot of that. Paul, I appreciate you just bringing that awareness to us and I know that you've been passionate about that a long time and I have heard more people talk about human trafficking recently I mean more recently than ever and just raising awareness because it's so real in America for the most part, we're just so blind to all of it. I mean we go on about our business, right, we hear something about it and it's like, oh man, that's horrible, and then we just forget about it, unfortunately. But, man, I appreciate you just bringing it to the forefront because we don't need to forget and we need to be after that like mad. And, man, I appreciate people like yourself who are doing just that. 

26:51
So thank you again, paul, for your time today and just talking through RV parks and even the different types. So I bet many listeners had not even heard of or knew that existed right. Especially even they may have even invested in parks and not known that there were different types like that. And so just grateful for your expertise, paul, and your willingness to educate and share with us today. Again, tell the listeners how they get in touch with you and learn more about you. 

27:14 - Paul Moore (Guest)
Yeah, I'm really doing a lot on Twitter right now or X, it's Paul at PaulMoreInvest, or you can come to our website wellingscapitalcom. You can get a free special report on RV park investing by going wellingscapitalcom slash resources. 

27:37 - Whitney Sewell (Host)
Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the real estate syndication show and how they can also build wealth in real estate. You can also go to lifebridgecapitalcom and start investing today.