Creating Systems In The Fragmented RV Park Industry

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RV parks are booming but there s still plenty of opportunity Here to talk about how we can take advantage of the space before institutional investors come in is Jeremy Hans Jeremy is the co-founder of Climb Capital and has been an active multifamily real estate investor since 2010 He believes that RV parks are a great investment because of the high returns and low risk and discusses their opportunistic approach in finding deals Jeremy is also passionate about what he does and shares inspiring insights of choosing a lifestyle he wants to live 00 01 – 03 29 Building a Lifestyle You Want From reservist to real estate investor How Jeremy is finding work-life balance 03 30 – 19 38 Pivoting to RV Parks The opportunities in the RV parks industry What a deal looks like in the RV resort space The advantage of being the frontrunner in a lesser-explored asset class Investments that Jeremy and his team are staying away from The long-term potential in destination RV parks Adding amenities and testing the market Launching an RV park investment fund 19 39 – 21 03 Closing Segment Reach out to Jeremy Links Below Final Words Tweetable Quotes You could give me multiple millions of dollars in my bank account tomorrow I wouldn t change what I m doing I ve chosen the lifestyle that I want to live – Jeremy Hans If I had better criteria there d probably be a lot of more people in this space because there d be a lot more data but right now there s not So I m making my own and we re making it work – Jeremy Hans —————————————————————————– Connect with Jeremy at the Climb Capital website Email him at jeremy climbcapital com and follow him on LinkedIn Instagram and TikTok Connect with me I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns Facebook LinkedIn Like subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts or whatever platform you listen on Thank you for tuning in Email me sam brickeninvestmentgroup com Want to read the full show notes of the episode Check it out below 00 00 00 Jeremy Hans I think it s more of an issue of where does it kind of fit in the local kind of economy in both size location and distance to things that people want to be at So if you re an RV er if you ever RV ed you don t necessarily need to be right next to where you re trying to go but you want to be close and close is relative It might be an hour It might be 30 minutes depending what you re looking at And so Hey is there a draw Is there a reason somebody want to be there It s it near a major highway Does it have a water feature and is it a place that I or my family would ever want to visit are kind of the basic criteria that we look at And if I had better criteria there d probably be a lot of more people in this space because there d be a lot more data but right now there s not So I m making my own and we re making it work 00 00 46 Sam Wilson Jeremy Hans is the former Navy helicopter pilot who began investing in multifamily and commercial real estate while on active duty He skipped residential real estate almost entirely and recently he has pivoted from multifamily syndications to RV parks amongst other things Jeremy welcome to the show 00 01 03 Jeremy Hans Sam Thanks for having me glad to be here 00 01 05 Sam Wilson Hey man pleasure s mine Three questions I ask every guest who comes in the show in 90 seconds or less where did you start Where are you now And how did you get there 00 01 11 Jeremy Hans Sure So Jeremy Hans started as a middle class white kid from the suburbs of America as white bread as they come right So I did all the right things went to school and learn nothing but you know just keep taking the next step to get a job join the Navy cause I thought that was the next step in my life to get get me started That was great had a great time but realized pretty quick the harder you work in the Navy the more work you get and you don t get paid a dollar more 00 01 30 Jeremy Hans So started planning my exit pretty early on First thing I ever bought was a fourplex in San Diego as a 22 year old kid House hacked and BRRRR before those were words and then got moved not by my own choice to Pensacola Florida and realized I got to do something else right There s no fourplexes to buy here 00 01 44 Jeremy Hans And so jumped into commercial real estate on a small scale met a partner trying to buy the same mobile home park And then together we kind of get got a bunch of education started just doing deals started syndicating on a small scale and slowly kind of grown that to Climb Capital So today we re a team about 10 primarily focused on syndicating RV parks and then doing some private equity stuff on the side as we continue to sell and operate a few of our apartment and mobile home park deals still 00 02 07 Sam Wilson Wow man That s a lot of moving pieces Now you are you re still active military You re reservist What s your status 00 02 14 Jeremy Hans So I I m a reservist so I left active duty in 2017 did a couple more years on active orders as a reservist but now I m just a part-time 60 day a year flying helicopter pilot in the Navy reserves 00 02 26 Sam Wilson Oh man That s that s really cool You you have a lot of things in the air What s something or a lot of moving pieces like balls in the air was the phrase I was looking for a lot of balls in the air a lot of moving pieces How do you organize all of it 00 02 38 Jeremy Hans You know I I think the thing that I tell people all the time right I also got four kids got an airplane do a lot of stuff at church right I keep it busy right You could give me multiple millions of dollars in my bank account tomorrow I wouldn t change what I m doing right So I ve chosen the lifestyle that I want to live I want to run a company I want to be able to do these things I know that s going to mean a lot of work right now I m okay with that I know that s going to be a lot of long days with little kids I m okay with that And it s just putting kind of you know lifestyle priority in check And maybe that means I don t hang out and watch as much Netflix as I d like But I go I m done So I think that s my answer 00 03 05 Sam Wilson Netflix isn t that much fun anyway Let s let s all be honest 00 03 09 Jeremy Hans Listen when you don t watch it for a month or two and you go back like there s nothing you want to watch Like it s amazing how you know it becomes an addiction that you don t even realize when you stop you know doing some of that stuff that 00 03 19 Sam Wilson Oh for sure For sure and again you re building a lifestyle that you want And I think a lot of people at times people use Netflix as an excuse to get away from the lifestyle they built So that s that s awesome man Good for you Tell me when did you guys switch from multifamily to now syndicating RV parks 00 03 35 Jeremy Hans So we made a pivot really at the end of 2021 We bought our first RV park beginning of 2020 kind of we re not really planning to do it just kind of a deal fell on our lap And then a second one the same And then we looked up in the middle of 2021 and we said Hey COVID eviction were terrible 00 03 48 Jeremy Hans These deals for class C multifamily are getting really thin The people are not getting any better locations aren t getting any better but these RV parks They re making a ton of money The people are happy to be here They re growing by leaps and bounds There s no information Let s jump and do something a little bit different 00 04 01 Jeremy Hans So we kind of had a hard conversation lot teeth sucking and said okay let s do it So we said let s sell off everything else And let s put our full focus on this kind of macro trend right now And we ll ride this until the wave crashes I guess 00 04 13 Sam Wilson Well hopefully the wave doesn t crash but tell me tell me what I guess what were the things that turned you know the deal fell in your lap which I think is funny part of the story like for most of us where all sudden it s like oh yeah And then there it was and then I just did it but it there had to be enough compelling information that came your way as you guys dissected this first deal that said man this is where we need to go long 00 04 34 Jeremy Hans Right So you know we kind of stair stepped it Our first deal was an RV park in the RV park space wasn t an RV park but it really looked operated more like a a mobile home park And so we had to learn some of the complexities of the RVs specifically but the actual model was much more mobile home park esque was something we understood and done for years And in that process we brought on our own in house management from day one 00 04 53 Jeremy Hans And so we had a little bit more flexibility So then when we bought our second RV park that was actually a traditional kind of resort style you know destination RV park We kind of already had built half of the team necessary to run that thing And so what has been hard for a lot of other people to switch to which is you can t just call up somebody off of the internet to go run your RV park 00 05 10 Jeremy Hans We had already built basically half the system to be able to do that And so that second RV park is when we really realized if we kind of dig into this a little bit deeper there s a lot of opportunity And so that s when we really started hey to expand you know basically provide the same CapEx kind of turnaround that we did into a classy multifamily Similar idea right into a hospitality product and just kinda watch that continue to succeed And then macro I mean people want to do you know live on the road remote work ubiquitous internet s everywhere so people feel like they can do it now People want to take you know midlife retirements traveling with their kids for a year 00 05 39 Jeremy Hans I mean van life you name it There s people that want to be on the road COVID has changed I think a lot of people s outlooks on what travel looks like and what they want to be doing And so I think we re really meeting a demand that right now has not really been kind of eaten up by the institutional investors yet 00 05 52 Sam Wilson Right No it hasn t Why do you think that is 00 05 54 Jeremy Hans It s hard right It s hard because nobody has the management system in place to be able in a box to go buy an RV park tomorrow right They re all different They re businesses that require a lot more work Totally could be in time as that people kind of build out these systems a little bit better but until your hotel type spaces moves into the RV park space I think there s going to be a lot of opportunity to kind of play that delta cap rates which you still buy RV parks a lot better than you can buy mobile home park and make a lot more money 00 06 20 Sam Wilson Yeah absolutely absolutely What s your long term plan with it I mean cause these are these are known like you said for producing an excellent income stream Is your idea to hold onto em in perpetuity You going to package em all up and sell em once the institutions start coming in What what s your long term play 00 06 37 Jeremy Hans I see myself as a deal junkie right And so at the end of the day when somebody wants to pay me what I would assume is too much money for them in the future we ll likely package them together and try to sell them off to institutional investors 00 06 47 Jeremy Hans But I think the only place you can the only way you can get to that is when you have years of experience really solid system and some really good product And so our process right now is to continue over the next two to three years to really try to buy as much as we can update systemize make sure things are running really at peak efficiency continue to scale and then be at a position to kind of see hey we want to hold these long term and we want to be the guys or hey we want to sell these off and go find our next big adventure But I m an adventure guy so I can t claim that in 10 years or 20 years I ll necessarily be the RV park guy I am today 00 07 15 Sam Wilson Right Understood Understood What does a deal look like in the RV resort space right now for you 00 07 23 Jeremy Hans For us it s trying to provide an opportunity for us to provide value right So we want to create value Typically that looks like some kind of expansion typically some kind of ability to raise rents to a more of a market standard That market is really fungible It s hard to kind of tell where it s at but trying to you know understand where that is and can we push it providing other ancillary services that we can also get paid for And I think the big one for us is just marketing and and putting together business systems and processes We re buying RV parks from people that don t have online booking right We re buying RV parks from guys who you know they ve got the same lady that s running it for 20 or 30 years and she s doing a great job for what she knows but she doesn t know how to use online digital marketing right And so they re just leaving money on the table cause they re not running like a business And so if I could run a business where somebody else has had a hobby I typically can find a way to make some money on that 00 08 08 Sam Wilson Yeah absolutely absolutely Is there you know a geographic focus for you guys Is there somewhere you say hey this is better than that What is that 00 08 18 Jeremy Hans Yeah so I think that s a funny question Our company s name is Climb Capital right which is supposed to be like climb out capital the idea of like flying taking off right Climb out also kind proceeds maybe climbing out of like a ditch And so we just went with climb 00 08 29 Jeremy Hans But the reason we we named that right both military aviators my partner and I that founded it We wanted to create a business that built a lifestyle that we wanted to have So one right we both liked to RV I met my wife actually growing up with my parents you know RVing going on camping trips but we wanted be able to buy an airplane 00 08 44 Jeremy Hans So we bought an airplane and we want to be able to have a reason to fly it So we want to buy stuff in the Southeast We re based out of Pensacola Florida We want to buy stuff far enough away that it convinces our wives that we need to keep this airplane So really anything from Texas to the Carolinas and any place where I can go get a reason to fly away a place I want to be myself right So tired of dealing with class C places class C people class C problems I want to go buy vacation properties and vacation areas with vacation people and enjoy my life while I make a little bit of money 00 09 10 Sam Wilson So that s an interesting point and maybe a differentiator that you put on there was vacation properties in vacation places that you want a vacation Is there a difference between the RV resorts you were looking at versus maybe something in a fly overstate 00 09 24 Jeremy Hans There s absolutely opportunities for destination RV parks in flyover states You know we re really heavy in places like Alabama Some people don t think Alabama s like a place that you want to be but we re doing great there 00 09 35 Jeremy Hans I think it s more of an issue of where does it kind of fit in the local kind of economy in both size location and distance to things that people want to be at So if you re an RV er or if you ever RV d you don t necessarily need to be right next to where you re trying to go but you want to be close and close is relative 00 09 49 Jeremy Hans It might be an hour It might be 30 minutes depending what you re looking And so hey is there a draw Is there a reason somebody want to be there It s it near major highway Does it have a water feature And is it a place that I or my family would would ever want to visit are kind of the basic criteria that we look at 00 10 02 Jeremy Hans And if I had better criteria there d probably be a lot of more people in this space because there d be a lot more data but right now there s not So I m making my own and we re making it work 00 10 09 Sam Wilson That s it That s it And I think that s where the opportunity lies and that s that s something that you know that a lot of people are it s overlooked because there s just there is no data There s not data There s not good management There s not it s a it s a very fragmented I think industry which you know for those who are willing to you know be the front runners into it and pioneer the professionalization if that s even a word kind of just made it up of the space you know as you as you bring more more of a institutional approach to owning and operating 00 10 39 Jeremy Hans I mean this is yeah this is to us this is not an unknown right This is the same thing that happened in apartments 10 or 15 years ago right Happened to mobile home park seven or eight years ago happened to sell storage happened to short term rentals happened to residential real estate We re just providing the same opportunity right with a new asset class And knowing that we have really kind of a short time we feel like before it is going to be institutionalized and that advantage kind of goes away and we ll have to go find the next asset and the next thing to go kind of find our niche in the world 00 11 04 Sam Wilson What is a a deal that you would look at And you d say absolutely not That is just a bad RV resort or park to buy 00 11 12 Jeremy Hans So for us I think the biggest one is size We want to be able to have a full-time property manager on site and we don t hire property managers We hire people that want to run businesses and we you know teach them how to be a property manager and how to run it 00 11 23 Jeremy Hans And then we let them have a whole much more control than anybody s ever given that person or probably use most of their employees right We find a lot of opportunity by having that super high trust And so if we can t have a a site that will ever make enough money to support that person and then still have any kind of profit on top of it it s probably just not going to be for us 00 11 39 Jeremy Hans And then the second one is if it s really hard to get to and there s no reason to be there I don t care if a lot of people have been there in the past There may not be that anybody in their future cause there s no reason to be there So for us a lot of times I d be like you know man camps places that are you know work you know way out in the west Texas or up in North Dakota not a bad place 00 11 56 Jeremy Hans People make a lot of money on it That s just not our business model And so we try to stay away from places we don t think is a long term kind of defensible vacation investment if that makes sense 00 12 03 Sam Wilson Right Right Tell me about the long term component you said earlier that these functions to an to a certain extent sort of like a mobile home park What did you mean by that 00 12 14 Jeremy Hans Well so the first one we bought was 36 space RV park had two rows one road down the middle of it and functionally people live there like they were mobile homes So one of the things that we kind of recognize is that we re trying to buy destination RV parks where people have short term stays and they re they re paying a higher rate for that shorter term 00 12 29 Jeremy Hans But we also know that based on the lack of affordable housing in this country that we always have the opportunity if things would turn and people just decide to not vacation anymore which by the way hasn t ever been a thing But if people stop vacationing right we can always take either a portion or the entirety of that park and really turn it back into more or less an RV park mobile home park which would allow long term renters 00 12 48 Jeremy Hans We might turn down what we provide for amenities or other services But there s always kind of a baseline Like if you have it somebody will pull in And so for our long term spots more than a month at a time we typically have 10 or 15 people on the wait list for each spot because there s just not enough places to park these RVs as if they ve been printing em so fast and there hasn t necessarily been the same building for the actual RV park spaces 00 13 09 Sam Wilson Right right Are there are there code considerations or municipal restriction considerations around converting an RV park to a long term stay RV park 00 13 20 Jeremy Hans I can t speak to everywhere Generally no it typically depends on your zoning but most of our zoning allows us to have longer term We choose not to because we can get a higher you know return 00 13 29 Jeremy Hans And then generally as a business we re choosing to not sign leases because just like a hotel if you don t pay you got to we don t want to deal with the evictions We don t want to deal with the government oversight and we don t want people to feel like that they re intruding on somebody s living space if they re coming to vacation 00 13 43 Jeremy Hans So if you want to pull out your your plants and you re starting to you know start guarding in front of your your trailer that s probably not going to be a place that somebody else is going to feel comfortable coming for a night or a weekend And so we have to make that consideration too And it takes you know I don t mind somebody that stays two or three or four months even a year 00 13 59 Jeremy Hans Traveling nurses traveling contractors people that are on the road working remote Great Just living there and just leaving all your trash out front treating like mobile home park ain t going to work ours So just kind of a business choice 00 14 09 Sam Wilson Right And again this this goes back to the vacation theme Like it s that s a really good point that you don t you want other people to come in and be like oh Hey I belong here not oh I m intruding on somebody else s you know backyard barbecue Okay cool That is really cool What about amenities and things like that I m sure every park you look at has different amenities Are there certain amenities you find that bring value Certain ones you d say man that s that s you know we re getting rid of that on every park we buy what s that front look like for you 00 14 39 Jeremy Hans I mean it s really relative based on location and what the park is For me personally I you know I ve got four kids Like if I m going to an RV park I want some water Like I need those kids to go burn some energy get messy you know not sweat all over me all day 00 14 51 Jeremy Hans And so if there s not some kind of water feature it s probably not a place for me personally And so that s probably not going to be a place for us you know professionally either But besides that there s nothing in the RV park space that I feel like I m really strongly for or against Generally if I can find a way to bring that in as part of the business and then not take away 00 15 08 Jeremy Hans You know either from time or effort for my my property manager it s kind of an add on then I m always willing to try it And then I m always willing to throw it out If it doesn t make sense you know we ve tried to do like paddle boats and some some rentals like that great idea And then we found massive headaches of dealing with you know local municipalities on legalities and insurance 00 15 24 Jeremy Hans And so Hey okay great It s not going to work We ll just take it away It s not going to hurt my feelings We re still there But you know it s just things like that Just testing the market and being very willing to kind of continue to learn in a space where there s not a lot of information And then we ll create that information over time and tell people in two or three years exactly how to do it 00 15 40 Sam Wilson Tell me about this classes of RV park so there are similar classes like there is in multifamily or is I mean what s the 00 15 49 Jeremy Hans Well there s definitely yeah there s definitely kind of the the the high highs and the lows lows the middles definitely a lot more squishy I would describe it When you start talking about high end kind of RV resorts where you know the the RVs for a lot of these owners of those resorts have to be within 10 years or newer 00 16 04 Jeremy Hans And if they re not you have to get you know special permission or whatever that s tippy top right You re talking people that are spending sometimes even buying condos RV spots whole different business model than what I m looking for right So we re definitely kind of more that B class family style park 00 16 18 Jeremy Hans And then when you start thinking about RV parks that look more like rundown mobile home parks that s also not what I m looking for And so I ve not seen a classification system that I love It s kind of like you know when you see it you ll know This is a place This is a place for me This is not a place for me 00 16 30 Jeremy Hans And a lot of that comes down to just kind of personal feel like would my family be able to comfortable here If not it s probably not for us And if so then let s keep digging and see if this is the right deal 00 16 39 Sam Wilson Right right No that s I think that that s absolutely right I mean and again the classification system probably largely doesn t exist because it is so fragmented It is so mom and pop and it is so nuanced to you know to its exact location 00 16 53 Jeremy Hans And some of it listen like I don t want to stay at some places that are perfectly fine to stay but it just doesn t meet my design or style or whatever right And so if it s a place that you know really you know caters to motorcyclists that s great 00 17 04 Jeremy Hans I m a motorcyclist I love it But I probably don t want to stay at a park where it s got you super loud bike going off all night Right So there s so many kind of variability kind of steps there that it s tough to to note And if you ve ever been to RV parks even KOA right The KOA is around the country which is a franchise RV park and campgrounds 00 17 19 Jeremy Hans There s a lot of variability in kind of the classification of how nice they are too right So a lot of it comes down to just your local who s running day to day and making those decisions to spend the money 00 17 28 Sam Wilson Love it Tell me about your fund You guys are launching an RV park investment fund Tell us about that 00 17 35 Jeremy Hans So so the idea here is that a lot of our investors want to get in the RV parks We want them in the RV parks with us When you start making a bet on an asset class right And you start trying to do that on an individual property perspective you need a lot of data So it s really easy to make an investment in the apartment space on a deal by deals because you can really understand that data s really really well really granular 00 17 55 Jeremy Hans What we decided was Hey we think it s probably better for us and for our investors if instead of investors buying into each individual deal and it ran a place in Alabama or South Georgia that they Hey let s take a bigger swing of the bat here have a have a bigger swath right Kind of make a bigger bet on the asset class 00 18 10 Jeremy Hans So that s what we re doing we re doing a 20 million RV park fund and allow us to move a little bit faster buy some of these deals with cash right away and then refinance out to be able to move even better for some of these mom and pop owners who sometimes have very weird requirements for purchase and be able to kind of start moving a little bit faster and a little bit faster spend a little larger scale than we would ve had to go deal to deal 00 18 28 Jeremy Hans And we think for our investor base that they re going to be really happy by being in the asset class and then have some opportunities to get some broader you know not only depth but also breadth of what they re investing in 00 18 39 Sam Wilson Well a 20 million fund what would be the total assets under management that that fund could potentially absorb 00 18 45 Jeremy Hans We re looking probably 60 to 70 million would kind of be our our expectation You know naturally we have kind of delevered as we move into RV park space There s not the institutional capital that there is in the mobile home park in the apartment space And so we ve already kind of naturally delevered just because we can t go lever up to 80 85 on these deals like we could in the past 00 19 03 Jeremy Hans And so we ll keep a little bit lower leverage one because there s some unknowns in the economy but two that s just kind the natural kind of place for the space And we re still making really good returns without having to go kind of unnatural leverage to get there 00 19 14 Sam Wilson Right Man and that s that s absolutely you know as as we ve observed that space that s one of the things we ve found too It s like we don t we don t have to go high LTV in order to juice returns Like we can deleverage take some risk off the table and still hit exceptional returns Like that s a win-win 00 19 32 Jeremy Hans Yeah Let s not tell anybody But if you re listening right now just turn it off We didn t talk about this Yeah 00 19 36 Sam Wilson I have no idea No idea Jeremy this has been a blast man Thanks taking the time to come on today and really talk about the opportunities you guys see in RV parks It sound like you got a lot of a lot of passions and a lot of fun you know that that you incorporate into your life And I love the way that you ve built a life of style around the life that you want And you know like you said Hey in two or three years you may be outta the RV park industry as a whole and made your exit and moved on But but you are very opportunistic and I love I love the enthusiasm and the just go for it mentality you bring to the table So thanks for sharing with us today 00 20 10 Jeremy Hans Absolutely 00 20 10 Sam Wilson Appreciate it If our listeners want to get in touch with you and learn more about you and even maybe your fund what is the best way to that 00 20 17 Jeremy Hans Easiest place to find us of course would be the internet So going to climbcapital com You can always email me directly jeremy climbcapital com And I could be found in many of the major social media platforms to include some TikToks 00 20 29 Jeremy Hans Nice I ll have 00 20 30 Sam Wilson to look that up TikTok Jeremy Hans There it is folks Jeremy thanks for your time today I do appreciate it 00 20 36 Jeremy Hans Thanks guys Thanks for having me Click here to visit this podcast episode