Commercial Real Estate News / Buying / How to Purchase an RV Storage Facility

How to Purchase an RV Storage Facility

Published: 09-25-23 Category: Buying

MyEListings' markets and economics editor and creates content about global macro events and their impact on US commercial real estate.

Recreational vehicles parked against mountains

Like buying a marina or any commercial real estate space, purchasing an RV storage facility requires careful planning, consideration, and due diligence. The RV lifestyle has become increasingly popular, with RV sales having mushroomed during the pandemic.

That means more people are looking for a place to store their vehicles. If you're considering this as an investment opportunity, here's what you need to know.

Why You Might Want to Buy an RV Storage Facility

Recreational vehicle sales exploded during the COVID-19 pandemic to over 600,000 units delivered in 2021 from about 431,000 in 2020. Prior to that, the industry grew from delivering fewer than 170,000 units in 2009 to over 500,000 units in 2017.

Currently, there are approximately 800 RV/Boat-exclusive storage facilities in the US, versus an estimated 11 to 12 million RVs. Clearly, this cumulative total includes inoperable and obsolete RVs as well as those in regular use.

If we surmise that 80% of these are use-eligible, and 22% of those are stored in specialty locations as reported by the RV Industry Association (RVIA), this pencils to 2,420 stored at each RV storage facility.

The average storage facility houses 100 to 500 units, suggesting a very strong demand backstop for the business.

Location, Location, Location: Strategic Placement for Maximum Demand

The RV storage facility's location will significantly influence its success. Ideally:

Choose a spot with quick access to primary highways and roads.
Select a location frequented by RV owners or near popular travel destinations to ensure a steady flow of customers.
If you plan to store boats as well, prefer proximity to boat launch locations to maximize opportunity.

Size Matters: Ensuring Enough Space and Essential Amenities

Determine the RV storage facility's size based on:

The number of RV and boat (if applicable) spaces desired.
Desired amenities like dump stations, wash stations, and power hookups. These extras can attract more customers and allow for premium pricing.
Parcel size of 7-10 acres to facilitate easier profitability, with 50% coverage under roof.
Drive lanes of proper width: 50-55' wide to accommodate vehicles.
Parking spaces of 14 by 40 feet, or 560 sq ft.

Inspect the Facility's Condition

Before investing:

Opt for RV storage facilities in good repair to minimize initial overhead costs.
Identify any necessary improvements upfront, so you're not caught by surprise later.
Look for adjacent property that could possibly be purchased for expansion, if practicable.

The more work there is to do up front, the less cash flow the business can facilitate, so requiring repairs as a condition for closing can be wise. Have your attorney review the condition with you and the inspector, and note negotiation points as appropriate.

Getting the Right Price: Strategic Investment for Future Profits

Price is mostly influenced by location, size, and condition:

Research and obtain multiple valid comps to ensure you're getting a fair deal.
Consider hiring an RV storage facility expert to advise you strategically.
Don't be afraid to negotiate; every dollar saved upfront means more profit later.

Once you reach a suitable agreement, make a written offer through your attorney to place the property in the escrow period for your inspection. The escrow period, in this case, refers to the contractual time window during which the buyer may inspect the property before her escrow deposit “goes hard,” or becomes non-refundable.

Financing Your Investment: Options to Get You Started

There are several ways to finance your RV storage facility purchase:

Conventional Bank Loans: The most common but requires a high credit score and a significant down payment.
SBA Loans: Backed by the Small Business Administration, they can be easier to qualify for and might offer lower rates. 7(a) SBA loans from $500k-$5MM carry a variable interest rate, whereas 504 loans go up to 5.5MM at a fixed rate for up to 25 years each.
Private Lenders: These often provide more flexible terms compared to traditional financial institutions, and can generally be located online.
Equity Capital: Finding an investor to partner with can be advantageous, especially if they bring expertise and operating acumen to the table as well.
Crowdfunding: Sites such as Crowdstreet, Yieldstreet and Equitymogul are tailor-made for pairing real estate investors with suitable investment projects.

Always compare rates, terms, and conditions to find the best financing option for your needs. Understand the various forms of ownership that are available, from corporate structures to partnerships, and choose yours to suit your specific needs.

Additional Tips for First-Time Buyers

These items should be done by any investor, but first-time buyers should pay special heed to each of the following:

Opt for an Inspection: Engage a qualified professional to highlight any potential issues or challenges.
Conduct a Feasibility Study: Determine demand in the area and project profitability.
Seek Legal Counsel: A lawyer can help review agreements and protect your interests during the buying process, and is an invaluable asset to the process.

While buying an RV storage facility requires thorough research and careful planning, it can offer significant returns. Following the outlined steps and being diligent in your process will place you on the path to a rewarding investment. Happy investing!

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