b'Brokers Note that Campground Sales Have Slowed, but Remain Resilient Amid High Interest Rates and Inflation nBY JEFF CRIDER economy and higher gas prices, he esti-Inflation does not appear to be dampen- mates. ing consumers enthusiasm for campingDespite the negative effects of higher in-this year, but higher interest rates are slow- flation and interest rates, Baehre said he is ing down the pace of campground and RVstill selling parks as fast as he can list them. park sales, according to campground oper- Sheedy also continues to see very strong ators and park brokers.interest in RV park purchases. The pace of sales and transactions perThere has never been this much in-month are definitely slowing for everyone,vestor interest in RV parks, especially at the just like house, car and RV sales are slow- institutional level, but the prices do have to ing, said Russell Baehre, of Baehre Realmake sense, he said. EstateLLCinKerrville,Sheedy added that even though RV park Texas.and campground prices are generally lower Campground and RVthan they were in 2021, RV park and camp-park sales are slowing forground valuations remain higher than they a variety of reasons.have ever been prior to that. BanksarequotingIts important to look at your valuations higherinterestrates,over a five to 10-year window and not be higher debt service cov- emotionally attached to one all-time high erage ratios and lookingmoment, Sheedy noted. 2021 was likely Russell Baehre forhigherloan-to-valuethe exception, not the rule. If every owner ratios. This has all affected CAP rates andPhoto: Shutterstock went back five years without knowing what values, Baehre said.their property was worth in 2021, theyd be Inflation, meanwhile, is affecting parksgrounds and RV parks are coming down inInsurance rates are also spiking in areasecstatic. Most parks, while down 15% to bottom lines.response to rising interestof the country that are at risk of wildfires20% since 2021, are still up 60% to 80% in The inflation rate has affected all of therates.and hurricanes, he said.value since 2018. Its extremely difficult to parks net income because they are all hav- Comparedto2021,Youareseeingsignificantinsurancetime a sale perfectly. (But) most parks and ing to pay higher wages, electricity and in- whenonecouldgetacost increases on the sale of properties andcampgroundsarestillworthalotof surancerates,whicheitherhavetogetmortgageinthe4%tobuyers are factoring in this additional costmoney. passed down to the consumer, i.e., the5% range, current mort- when purchasing, Sheedy said.For his part, Scott Crompton, a broker RVer, or absorbed by the park, Baehre ex- gage rates for RV parksSheedy estimates that RV park priceswith VESKCO, said he is also seeing con-plained. If absorbed by the park it inevitablyare generally in the highhave fallen anywhere from 10% to 30% astinued investor interest in private parks.lowers their net income and, in the end, the6% to 7% range, whicha result of market conditions as well asRV parks, like other recurring revenue value from that perspective.has increased underlyingJohn Sheedy parks year-over-year revenue. Many parksmodel businesses, will continue to attract John Sheedy, vice president of Parkmonthly mortgage payments by 30% tohad lower income in 2022 versus 2021 forprivate and institutional buyers. he said, BrokerageInc.,saidpricesforcamp- 40%, Sheedy said.avarietyofreasons,includingasofteradding, Theres a big appetite for very well-WOODALLSCM.com April 2023 27'