Why Campground Investing is Poised for Growth
At EquityMultiple, we are always on the lookout for trends that we believe can support compelling, unique investment opportunities for our investors. Over the past few years, our team has researched and vetted niche asset classes from medical office buildings, to student housing, and even campgrounds.
For the purpose of this article, we’d like to focus on campground investing. Continue reading to learn why we believe campgrounds are particularly interesting right now, and why you may want to consider investing in campgrounds as part of a broader portfolio diversification strategy.
About Campground Investing
Let’s start with the basics. A campground is a parcel of land designated for camping. Typically, there are multiple sites on the property, which can be rented for overnight use. Campers who are interested in staying at a campground may choose to stay in a recreational vehicle (RV), tent, or cabin. Like other real estate assets, campgrounds generate income in the form of patrons paying to use the space and can appreciate in value due to improvements by savvy operators.
One of the major differences between campgrounds and other assets like offices and multifamily buildings is that camping is highly dependent on seasonality. While some campgrounds may keep their facilities open year-round, the busiest time of year tends to be from April/May through September/October, when warm weather draws people to the great outdoors.
A few other things to note:
- Location, Location, Location: When considering a campground investment, location is key. Is the property convenient for campers who might want a quick weekend getaway? Are there opportunities for hiking, biking, fishing, and other outdoor activities in the surrounding area?
- Amenities Abound: Make no mistake: going camping does not necessarily mean heading into the wilderness and off the grid. Many well-run campgrounds today even have pools, RV hookups, hot tubs, hiking trails, ponds, and other amenities on their grounds for visitors to relax and explore.
- Diverse Tenant Mix: While many campers are short-term guests, renting a spot for one day or one week at a time, others opt to extend their stays. Some private campgrounds even offer monthly, seasonal, or yearly stays, which can provide additional revenue.
A Growing Interest in Outdoor Recreation
According to KOA, the proportion of first-time campers exploded in 2020, at a rate five times that observed in 2019.¹ In more than half of respondents (55%), this newfound interest can be attributed to COVID-19, as individuals sought out vacations with easy social distancing. This can be further evidenced by the boom in RV sales in 2020. Traditionally, when there is an economic downturn, as there was at the beginning of the COVID-19 pandemic, RV sales drop. However, the typical sales cadence took a 180, as nationwide RV sales increased 17.3% year-over-year from August 2019 to August 2020.²
Now, you might think this is just temporary. But camping was on the rise even prior to the pandemic. In fact, 67% of North American households now state they camp at least occasionally, an increase of almost 10 percentage points from the first year of The North American Camping Report in 2014.¹
We expect this trend will continue, not only because it has been on the rise since the early 2010s, but also because of the way COVID has changed the nature of many Americans’ work lives. Individuals and families purchased RVs in droves in 2020 partially to allow for a socially distant vacation, but also because their flexible work schedules allowed for them to travel and work from anywhere.
Additionally, it’s worth noting those who start camping early in life tend to continue camping the rest of their lives (assuming they have a great first experience).¹ If this trend continues in Gen Z, as it has with Millennials and Gen X generations, we can expect demand will not decrease any time soon.
Ready to get started? Contact Investor Relations to learn more about current and future opportunities, including potential campground investments.
¹Source: KOA (as of April 21, 2021)
This document is for informational purposes only and is not an offer or solicitation to purchase or sell securities. Investing involves risks, including the potential for principal loss. There is no guarantee that the strategies and services will be successful or outperform other strategies and services. Certain assumptions may have been made in connection with the analysis presented herein, and changes to the assumptions may have a material impact on the analysis or results.
¹Past performance is no guarantee of future results. The investments discussed herein may be unsuitable for investors depending on their specific investment objectives and financial position. Investors should independently evaluate each investment discussed in the context of their own objectives, risk profile and circumstances.
All opinions expressed herein constitute the author’s judgement as of the date of this article and are subject to change without notice. Statements made are not facts, including statements regarding trends, market conditions and the experience or expertise of author are based on current expectations, estimates, opinions and/or beliefs. Such statements are not facts and involve known and unknown risks, uncertainties and other factors. Past events and trends do not predict or guarantee or indicate future events or results.
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