On this day 3 years ago, I committed to close RV & Boat Storage at 3100 Sheridan Rd, Kenosha, WI for $948,228.

I know the price number seems odd. At the last minute, we decided to buy a boom lift and included it in the purchase contract.

It was a 35,000 sq ft building on an 8.7-acre site.

Pros:

• Much room to grow. It had 260 spots and was 60% occupied.

• Location. The property was next to Lake Michigan in Kenosha, Wisconsin. The view was phenomenal. Given its proximity to Chicago, it would likely become a resort or residential development in 10 to 20 years. It was the largest property next to the water from there to Chicago.

  

• Outside Storage Allowed. The property covered 8.7 acres and zoning allowed outside storage. It had low occupancy, with only a third of the lot in use. But it had great potential for expansion. There was a high demand for outside storage, including RV and possibly truck trailer storage.

• Growing Market. Back in 2021, there was a big hype around RVs and travel, with RV traveling growing like wildfire. People usually buy RVs for the long haul, keeping them for 10 to 20 years. This made it seem like a stable and growing market.

Big Idea:

Now let me remind you, this is still during COVID hysteria and low interest rates.

4% for a 5-year term, that's how low.

RV parks and storage became very popular.

We niched down to build a list of storage facilities with large parking lots and started calling them to buy.

At that time, demand for parking seemed set to grow. Managing the lots seemed to be easy.

Most municipalities ban parking in neighborhoods, so RVs need a place to park, especially in dense areas. This has created a strong market with limited supply.

Unlike other real estate investments, parking lots have low Opex. They need no utilities or structures, so they are low maintenance.

The plan was to buy many of these facilities. Then, we would rinse and repeat by doing the following:

1. Renovate lightly

2. Remove onsite management

3. Reduce Opex

4. Boost revenue with marketing and automation.

Lyft:

The plan worked 75%. Let me get through it.

Day one after we closed, we hired a property manager full-time onsite.

For context, the seller was self-managing this property, so we had to put someone in place right away.

Next, we installed the StorEdge storage system to transfer all payments online.

Afterwards, we did the automatic gates, new asphalt next to the building, and the security cameras, lights, tuckpointing, and painting.

Next, we moved on to improving the parking lot. We brought close to 100 tons of gravel and placed numbers near the fence to assign parking spots.

We aimed to systemize. Everyone should park in a dedicated space. We should know who is up to date on payments. Collections should be automated. Everything must be neat and

Cons:

First, we planned to assign separate areas in the building for cars and boats. However, these areas were not marked. To add markings, we would need to grind, buff, and seal the floors, costing over $150,000. This expense was not economically feasible.

Our outdoor area was unpaved, complicating the marking process. This led to a constant struggle. We often had to remind customers to park in their spots. After long weekends or big parties, some parked their RVs anywhere. This habit sparked disputes. We often argued over who scratched a mirror or fender. This was our main issue.

The second problem was, surprisingly, not enough demand on Google and Facebook ads.

The third challenge was seasonality. About 40% of car collectors and 20% of RV owners would take their vehicles in the spring. Revenue dropped almost 30% during the summer months.

The last challenge was that revenue management was very difficult. You see, we learned that one of the most effective ways to improve revenue is to price these the same as airlines. If you have many 10x20 spots, you price them at the lowest introductory rate; let's say $9.99.

And if this is your last spot, you price it max, let's say $120. And you review supply and demand weekly and reprice it. Boy, we were so wrong with this facility.

When airfare costs $300, customers rarely cancel to repurchase at $250 later if the price drops. This does not work for RV owners. Every price change made RV tenants unhappy. Unlike self-storage customers, they had wheels. They could come and move out in 10 minutes. They would switch easily if they found a sale across the street or had parking disputes with neighbors. It was a constant battle and quite dramatic.

Disposition:

All and behold. Given these challenges, we realized we couldn't automate this facility to operate remotely. We would need a full-time person on-site, and even 40 hours a week was not enough to cover the demands.

So, we decided to pivot and put this property on the market after holding it less than 1 year.

Our broker recommended listing it at $1.65 million, but we had multiple offers and sold it for $1.7 million.

During those 10 months, we managed to increase the rents over $13,000 a month. We improved the property. We made it cleaner, safer, and more welcoming. We also added many automations.

The investor who bought this facility from us made a brilliant move. He capitalized on everything the facility had. They brought in portable units. They added a lot of self-storage space, which was easy to automate. I'm sure they did well with it.

Takeaways

1. I've decided not to buy more RV facilities unless they generate over $50,000 a month. This ensures I can cover costs for on-site staff. Facilities generating $10,000 to $20,000 struggle to break even on operational expenses.

2. RV or Boat Storage is very different from self-storage. You need an on-site manager who is also a community manager. It's way more hands-on.

3. Seasonality in RV and boat storage can drop your revenue by 30% or more in the off-season.

4. Don't bank on shiny and "Disneyland" investments lasting long term. Fundamentals revert to their normal state over time. In this case, RV sales went back to normal after pandemic highs, and the same was true for demand for parking lots.

   

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