What do you think of when you think of RV and boat storage? The word booming should immediately come to mind. There is an RV craze sweeping the nation as baby boomers retire and, for the first time in their lives, invest in fun and leisure. A popular bumper sticker sums it up nicely: We are spending our kids inheritance.
The younger generation isnt left out of the RV trend, either. Busy parents want to spend quality time enjoying the outdoors with their children. However, they are unwilling to give up all the conveniences of homean indoor toilet, a comfortable bed, cooking appliances, etc. An RV vacation offers the best of both worlds. Families that RV also benefit financially. On average, a family of four saves more than 70 percent on vacation costs over other forms of travel. More than 16,000 public and private RV parks, ranging from simple campgrounds to luxury resorts, cater to this crowd.
There are several other reasons RVing has become so popular. Concerns with terrorist threats and emerging patriotism have caused many folks to avoid air travel and explore vacation spots such as national parks and monuments. RVing can also provide a great tax break. What most people dont know is if you finance an RV with a kitchen and bathroom, you qualify for a tax deduction as long as you occupy it 14 days out of the year. It can actually be considered a second home.
Still not convinced? Current statistics from the Recreational Vehicle Association show there are more than 7 million RVs on the road and more than 30 million people using them. These numbers are expected to rise a whooping 15 percent in the next seven years.
In August 2002, RV shipments to dealers were reported to be 17 percent higher than the same seven-month period the year before. Additionally, six out of 10 RVers say they plan to purchase another unit in the future, with 40 percent indicating it would likely be a new vehicle. Of those who dont already own RVs, a recent study showed one out of six households intend to purchase some type of recreational vehicle in the near future.
Finally, an article from Naples News earlier this year stated the weak economy hasnt put the brakes on RV sales. In fact, according to the Frommers Travel Guide, RVs are getting hotter and hotter.
RV Storage Skyrockets
With the RV market growing so quickly, the RV-storage business has really taken off. The average RV ranges from 12 feet (a small travel-trailer) to 40-plus feet (a large-class motorhome). Even when there is ability to store RVs in driveways, they are cumbersome, block normal use of the driveway, and are an eyesore to neighbors. This also leaves vehicles open to the elements and vulnerable to vandals.
Many local ordinances prohibit larger RVs, usually those longer than 22 feet, from being parked at curbside for longer than 72 hours. With sideyards basically nonexistent in newer housing developments, RV owners are left with no choice but to pay for RV storage. Current market trends show that not only will RV owners pay for storage, they will pay top dollar for good storage.
RVs are a major investment, costing from an average of $25,000 up to $1.5 million for luxury models. The majority of damage to RVs and boats is caused by exposure to the elements. Prolonged exposure to the sun can damage siding, tires, gaskets and seals, and will cause interior deterioration. Similarly, marina storage for boats is becoming increasingly difficult to find and leaves boats open to harsh weather conditions.
With the demand for RV and boat storage being so high, one might think the market was saturated with storage facilities. Think again. There are huge opportunities in this expanding business. There are few dedicated RVstorage facilities and, of those that exist, most are strictly open-storage facilities with few amenities.
The future of RV and boat storage looks promising. Research shows younger generations are even more interested in the outdoors and openair sports than those preceding them. It is likely their sense of adventure will continue into their adult life and be passed down to their children.
RV-storage lots of yesterday provided little more then a gravel road, chain-link fence and padlock for security. RV storage of today provides covered and enclosed parking in secure lots. Common amenities include security cameras and touch-pad entry with 24-hour access. Higher-end lots may even provide climate- controlled enclosed spaces with running water, electricity, wash bays, dump stations and propane.
There are three basic types of RV- and boat-storage options (aside from open parking). Fully enclosed units are similar to garages. They have roll-up doors and offer the most security. Often times, these units are sold like condominiums. This type of storage offers the best security and protection.
Units covered with three walls provide upper, rear and side protection. This protects an RV or boat from sun as well as wind. It also provides better protection for sites with property-line divisions. Covered (flat or angled) units are similar to a basic carport design, but are taller and wider to accommodate RVs and boats. Angled covers generally provide better site coverage and space utilization, and more spaces per acre.
Investing in RV Storage
There are four reasons to invest in RV storage: easy construction, simple maintenance, an untapped market and the rising popularity of recreational vehicles. To make the most profit, investors need to ride the wave of the RV craze and build now. Many dont know the return investment on RV storage can be greater than that of self-storage, since the building costs are less. Structures are easy to build since there are no moving parts (except with enclosed spaces), and the sites are virtually maintenance-free once operational.
RV- and boat-storage investors need only follow these simple steps to get their project off the ground:
- Locate a property. There are several factors to take into consideration when choosing property for RV and boat storage. Properties near freeway entrances and those visible from the freeway do well. Sites near vacation spots, such as lakes, have an added bonus. Boat owners typically want to park their vessels closest to where they launch. Owners can actually save money this way, as savings in gas often makes up for storage costs.
- Consider the marketability of the area. Is it a safe area where people would likely want to store their belongings? A few hours on the Internet can sometimes show you the demographics of a location. This is important, since we know the average RV owner is married, owns a home and has a median household income of $56,000. We also know through research that the baby boomer population (those ranging in age from 35 to 54 years old) is the leading force behind the upswing in the market.
- Find out if market competition is fierce or loose. Dont be discouraged if there is already a facility in town. If the market is right, several facilities can exist at 100 percent occupancy without a problem. In fact, once you begin looking around, you may find several have waiting lists of customers needing storage.
- Look into zoning. The city-planning center or a commercial real estate agency can tell you if the property is zoned for a storage facility.
- Secure financing. You can obtain financing through small-business administrations, banks, personal loans, etc. Some steel companies will lease you the materials needed to build the storage facility, thereby reducing initial start-up costs.
- Choose a design. An RV- and boat-storage professional can suggest the best design based on property size and your budget. He will provide pictures of facilities he has built in the past and will work with you one-on-one throughout the design phase.
- Hire an engineer. Many construction companies provide in-house engineering. Engineers will create the blueprints and calculations needed to obtain permits. Unless other arrangements have been made, customers will usually need to pull building permits from the city themselves.
- Build the structure. Construction time will vary depending on the size of a project. Generally speaking, it will take two to three weeks to build 40,000 square feet, once engineering is complete and materials are on site. Construction costs vary depending on the structure. Fully enclosed units will cost between $6.50 and $9.50 per square foot to build; covered units will cost between $3.50 and $6.50 per square foot; and three-walled units will cost between $4.50 and $7.50 per square foot.
- Create a marketing plan. RV- and boat-storage business owners can market through the Yellow Pages, the Internet, direct mail, etc. Many who hire a professional to create a marketing program are surprised to find they have actually reduced their marketing costs.
The daily operating costs associated with running an RV- and boat-storage facility is minimal. Most storage facilities have an on-site manager residing in an apartment to keep constant surveillance. Insurance fees can be obtained through an agent/broker or self-storage specialty insurance agency. This insurance will cover losses due to theft, etc.
The cost of security will vary depending on what you provide. The most desirable storage facilities will have locked gates with keypad entry, security cameras, perimeter fencing and special lighting.
The money you spend on advertising is worth its weight in gold. The best advertisement by far is a good location, visible from the freeway or a main street. Many facilities have had great luck advertising in the Yellow Pages, on the Internet, through direct mail and through local RV clubs. One storage owner launched a successful advertising campaign and, as a result, had 75 percent of his RV spaces reserved even before construction began. Other miscellaneous expenses to keep in mind are property taxes and repairs.
Getting the Most for Your Dollar
Geo Self Storage designed a graph that concisely describes how vehicle-storage investors can get the most for their money. In general, it shows the best return on investment for land that costs from $2 to $4.50 a square foot is RV covers. At $2 a square foot, its a 40 percent cash-on-cash return. For land that costs $4.50 a square foot and up, the best return on investment is underground self-storage with RV covers above.
Whether you choose to build enclosed units, covered units, covered units with three walls, or combine RV and boat units with self-storage, it is important to act quickly. Now is the perfect time to cash in on the RV craze. Its really quite simple: Find land. Build project. Start renting.
Robert Hayworth is CEO of Baja Construction Inc., which has been at the forefront of the turnkey metal-structure industry for more than 30 years. The companys structure gallery includes self-storage, carports, and RV and boat storage. Baja maintains the highest standards while keeping costs low and construction time to a minimum. For more information about starting a project in your area, call 800.366.9600; visit www.bajacarports.com.
Popular Q & A
Q: How much rent can you charge for RV- and boat-storage spaces?
A: Spaces range in price from $45 to $750, depending on the type of structure (coverage) and amenities offered.
Q: What happens if a tenant doesnt pay his monthly fee?
A: Similar to self-storage, liens are the most common remedy for tenants who refuse to pay their rent. Access to property can be denied by changing access codes. If rent remains unpaid, you can place a lien and sell items within the states guidelines. Vehicles abandoned on property can be towed. Customers will have to deal with towing companies to reclaim their vehicles.
Q: How much land do you need?
A: The optimum amount of land is 10 acres. Although you can build a nice facility on 1 acre, you will not have any room to expand in the future.
Q: What kind of coverage can you get per square foot?
A: You can typically get about 40 percent coverage.
Q: Whats the best layout design?
A: I recommend putting the buildings back-to-back, with spaces on a 60 degree angle11-by-30-foot spaces with 35-foot driveways. Spaces designed perpendicular would require 50-foot driveways.
Q: What size spaces do you recommend for the units?
A: I usually recommend 11-by-30-foot units set back-to-back.