Understanding Floodplain Risks: Making Smart Decisions for Your RV Park Investment By Frank Rolfe

Buying an RV park can be exciting—until you discover it falls within a floodplain. While this may feel like a major setback, it's important to fully assess the situation before making a final decision. Not every floodplain designation is a deal-breaker, and there may be ways to work with or around it.

Assess the True Impact

Floodplain designations don't always affect the entire park. In some cases, only a small portion of the property, like a playground or basketball court, might be impacted. In others, only a few lots may be vulnerable. The first step is to determine what areas are affected and understand the extent of the exposure. If it's limited to a few spaces, the financial risk might be much lower than initially anticipated. However, if most or all of the park is in a floodplain, that could require a deeper evaluation of the potential problems.

Review Historical Flooding Data

After identifying the flood-prone areas, look into how often those areas have experienced actual flooding. Reach out to local authorities and nearby property owners to get a sense of the park's history with floods. In many cases, a park may have been designated as a flood risk but never actually flooded. The designation is often based on models and projections that don’t always align with reality, so it’s worth investigating the practical risk.

Explore Solutions for Minimizing Flood Risk

If a portion of the park is at risk, there may be ways to mitigate it. Some parks have successfully reduced their flood risk by building small berms or raising the ground level with additional dirt. You may find practical solutions that significantly reduce the flood risk to your RV park. The key is to get clear, actionable advice on what can be done to address the issue.

Prepare an Emergency Response Plan

If the risk can't be fully eliminated, create a contingency plan. For example, if only a few lots are in danger of flooding, can you alert tenants early if water levels rise? Would it be feasible to leave those lots unused when the park isn’t at full capacity? Having a clear, thought-out plan can ease concerns and make the property more manageable in the event of a flood.

Consider Insurance—With Caution

Flood insurance is available for RV parks, and it’s worth exploring if your park is in a floodplain. Specialty RV park insurance providers offer policies that can protect your income if the park becomes unusable due to a flood. However, these policies have limitations. For instance, loss of income insurance typically stops as soon as the park reopens, even if customers have yet to return. Make sure to fully understand the terms and costs before deciding if flood insurance is worth the investment.

Conclusion

Floodplain designations are never ideal, but they don’t always spell disaster for your RV park investment. By carefully assessing the risk, exploring mitigation options, and planning for the worst, you may find that the floodplain issue is manageable. Take your time to gather the facts and make an informed decision before walking away from a deal that could still be worth pursuing.

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.