Thorough due diligence is non-negotiable when purchasing an RV park. Without it, you risk stepping into a minefield of legal, financial, and operational challenges. While some discoveries during this process are manageable, others are absolute deal-breakers. Here's a closer look at the major red flags that should send you back to the drawing board.

Missing Permits or Licenses

Operating without proper permits or licenses is a serious issue. Surprisingly, some RV parks exist entirely off the grid, bypassing local regulations entirely. These situations often arise from original owners expanding illegally over time, unnoticed—or ignored—by authorities. Buying a property without proper governmental approvals is a risk no buyer should take. If a park lacks these essential documents, walk away immediately.

Environmental Contamination

A Phase I Environmental Study is a must before any purchase. While most parks pass without issue, contamination—if present—is an insurmountable problem for this type of real estate. Cleanup costs can reach millions, far exceeding the economic feasibility of the property. While a Phase II assessment might clarify the extent of damage, the results often lead to the same conclusion: cancel the contract.

Floodplain Risks

An RV Park in a floodplain comes with inherent challenges. Financing becomes difficult, resale opportunities diminish, and operations may face interruptions. However, not all floodplain designations are equal. If only non-essential areas, like amenities, are affected, the risk might be manageable. Evaluate carefully, but proceed with extreme caution.

Missing Financial Documentation

Banks typically require at least three years of financial records for financing. If the seller cannot provide this, your loan prospects shrink dramatically. While seller financing might bridge the gap, a lack of documentation often signals broader management issues. Only consider moving forward if the price is so advantageous that it offsets the potential risks.

Failing Private Utilities

RV parks relying on well water, septic systems, or packaging plants face unique challenges. Malfunctioning utilities can quickly escalate into a crisis, with steep fines and the potential for forced closure. If repairs or alternatives aren’t feasible, the deal becomes untenable. Don’t underestimate the complexity or cost of resolving utility issues.

Weak Market Fundamentals

The success of an RV park is tied to its location. If the area has declining demand, whether due to new competition, closed attractions, or population shifts, the park’s future profitability is at risk. A stagnant or declining market limits growth potential and complicates exit strategies. Ensure the park’s market dynamics align with long-term success.

Conclusion

Successful RV Park investments hinge on identifying properties with solid fundamentals. While some issues uncovered in due diligence can be managed, others signal that it’s time to move on. The best deals come from recognizing—and avoiding—deal-breaking flaws. Always approach the process with a critical eye and a firm commitment to finding a property with strong potential.

By Frank Rolfe

Frank Rolfe has been an active investor in RV parks for nearly two decades. As a result of his large collection of RV and mobile home parks, he has amassed a virtual reference book of knowledge on what makes for a successful RV park investment, as well as the potential pitfalls that destroy many investors.