Uncovering Opportunities in RV Destinations

Meeting Summary for Alternative Investing Club: Uncovering Opportunities in RV Destinations
Mar 22, 2024 11:55 AM Pacific Time (US and Canada) ID: 833 2208 3420
Quick recap
Benjamin shared his professional journey and discussed his interest in the RV industry, highlighting its potential as an undervalued asset class with significant growth potential. He also discussed the complexities and opportunities of developing an RV park in the southeastern United States, emphasizing the importance of location, infrastructure, amenities, and marketing. The team also discussed the investment and operational aspects of a new project, with Benjamin revealing the financials and plans for building long-term communities. The conversation ended with an agreement to learn more about the industry, with Benjamin agreeing to share more materials and answer further questions.

Next steps
Benjamin will continue the legal process of forming a real estate private reap and aim to be on the offering platform of Macquarie Jeffreys within about 6 months.

Benjamin will reach out to potential institutional investors for the RV destination development projects.

Benjamin will share more specific materials and examples of the RV destination track record with interested parties.

Summary
Addressing Online Event Attendance Challenges

Daniel and Glenn discussed challenges Glenn had been facing with the attendance of his online events since leaving Intel. They considered implementing a solution to send out calendar invites directly from their webpage. Ashish shared his experience with a Ponzi scheme, suggesting a session to educate on how to identify and avoid such scams. Additionally, Daniel shared an increase in Bitcoin scams and led a casual discussion about March Madness predictions. The conversation ended with an open topic, a decrease in attendees compared to the previous week, and a few unclear predictions.

Addressing Zoom Issues and Speakers

Aneeta expressed her issue with her attire, while Daniel addressed potential attendance problems due to Zoom re-registration issues caused by an unchanged meeting link. The team also discussed the next steps for the group's educational and pitch talk sessions, with Daniel revealing he had begun interviewing potential speakers and proposed forming a committee for review. Lastly, Benjamin presented his professional journey, focusing on his career in investment banking, hedge funds, private equity, and real estate, culminating in the establishment of his own boutique investment management firm, Redwood Capital Advisors, in 2017.

RV Space as Undervalued Asset Class

Benjamin discussed his interest in the RV (Recreational Vehicle) space, highlighting its potential as an undervalued asset class with significant growth potential. He noted that the average age of RV owners in the US is now around 32 years old, reflecting a growing trend towards a more nomadic lifestyle among millennials. Benjamin also pointed out the fragmented nature of the RV market, with many small, family-owned businesses struggling to keep up with modern demands, such as Wi-Fi and online reservations. He then discussed the supply-demand imbalance in the market, suggesting it as an opportune investment area.

RV Resorts and Communities Analysis

Benjamin discussed the differences between RV resorts and communities, with a focus on those found in Mississippi and Alabama. He explained that resorts often have higher turnover due to their location near major attractions, while communities have a longer average stay, leading to a higher operating margin. Despite the higher land costs, he believed that resorts have a long-term advantage due to their potential for higher profits. Benjamin also shared the company's method of selecting locations, which involves a 20-mile circle analysis around the land area to ensure a 70% occupancy rate.

RV Park Industry and Real Estate Investment Focus

Benjamin discussed the importance of location, infrastructure, amenities, and marketing in real estate investment, specifically for the RV park industry. He emphasized that the industry is highly competitive, requiring a focus on luxury, cleanliness, and modern amenities, such as Wi-Fi and pet facilities. Benjamin also mentioned the company's efforts towards sustainability and their focus on hiring reliable human capital. He highlighted that their destinations must be within a 10-minute drive of a Walmart and a major interstate, and ideally have access to public water and sewer.

Luxury RV Travel Business Growth Discussion

Benjamin discussed the rapid growth of his luxury RV travel business which has increased from 108,472 pads to acquiring enough land to scale to over a thousand pads in the next 12 months. He highlighted the changing customer profile, with an average age of 32 and a significant proportion earning over 100,000. Benjamin also discussed the importance of social media marketing and community building. In response to Daniel's questions, he clarified that most guests bring their own RV and a secondary vehicle, and that they use ActiveCampaign for their CRM. Lastly, he acknowledged the significant regulatory challenges in the industry, especially in acquiring and gaining zoning approval for land.

RV Park Development Challenges and Opportunities

Benjamin discussed the complexities and opportunities of developing an RV park in the southeastern United States. He highlighted the challenges of navigating the regulatory environment, particularly with regard to wetlands and the need for strong relationships with local officials. Benjamin also underscored the high cost of development, with the USDA Rural Business Loan program offering significant support. He advised that site selection is crucial, and that potential developers should focus on areas with strong growth potential. Lastly, he stressed the importance of USDA eligibility in determining the feasibility of a project.

Discussing New Project Investment and Operations

Daniel and Benjamin discussed the investment and operational aspects of a new project. The conversation touched on the financials of the project, revealing that the average monthly revenue for their communities is between 900 and 1,200 dollars, with resorts generating about 1,800 monthly. Benjamin explained that they are actively raising capital for the project through a private real estate fund, due to its transparency, reporting requirements and potential for easier financing. They plan to focus on building long-term communities rather than short-term vacations, with a mix of permanent renters and transient guests.

RV Resort Destination Industry Opportunities

Benjamin discussed the growing demand and supply imbalance in the RV resort destination industry, highlighting that the current number of pads being built is insufficient compared to the number of RVs being sold. He underscored that the industry's fragmentation presents a significant opportunity for investors to provide a slightly elevated experience and generate a strong return on investment within the next three to six years. Benjamin also shared his plans to cash out these investments within this timeframe. The team expressed interest in learning more about the industry, and it was agreed that Benjamin would share more materials and answer further questions.