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An RV as a Second Home


The appealing economics may surprise you.

If you're thinking about retiring and considering escaping the northern cold for a warmer climate, then gather closer for a tale about an extraordinary winter living opportunity.

My wife and I have been second homeowners for thirty years. Living full-time for twenty years in the Vail Valley (the second home was in Denver) we became very conversant in understanding both the culture and economy of the second home market. About half of our neighbors showed up for a month or two in ski season and then came back to stay through the summer.

This is not at all unlike the huge RV snowbird migration that swells the population of RV parks and resorts in California, Arizona, Texas and Florida. Throughout the sunbelt states there are numerous RV parks that fill with trailers, fifth wheelers, and motorhomes. Many offer reduced full-season rates. Some allow long term ground leases for park models. A few have lots you can actually buy. And within that smaller group there's about a dozen or so super-elite properties that most RVers never hear about.

In the Coachella Valley (anchored by Palm Springs on the North and Indio on the south) there are three high-end resort ownership properties in Indio. Desert Shores, where every lot has a casita, garage, and many have a small pool. Motorcoach Country Club, which only allows Class A motorhomes. And Outdoor Resorts Indio (ORI) which is also Class A restricted.

These properties all essentially work the same way. You purchase a lot (driveway). You then pay a monthly homeowners fee and the requisite utilities and property taxes. ORI is one of the few resorts that allows you to improve your lot with enclosures, shade structures and outdoor kitchens. It's amenitized with executive golf course, gardens, pools, tennis and pickleball courts, clubhouse, and on-site dining.
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What's great about ORI is it melds country club living with the unique outgoingness of the RV culture. There are no garage door openers where you drive into your home, cocoon, and then have limited engagement opportunities with your neighbors. What you can only tell, after spending a few weeks or months living at ORI, is how lively, active, and inclusive it feels. This culture pretty much eliminates the "starting from scratch" re-establishment of social connections people have when moving to a new community. There's a wide range of affluence from comfortable to high net worth, and not a hint of class hierarchy.

We were drawn to ORI because we knew four couples from our old Vail Valley neighborhood who now spend the winters here. With an opportunity to live in a new Winnebago Horizon for several months of field testing I knew we had a great place to hook it up. Our experience showed me a largely hidden facet of the high-end RV lifestyle and uncovered a really appealing strategy for enjoying luxury for less.

The ORI rules are pretty simple. Once you purchase a lot you must have a Class A motorhome that's at least 28 feet in length and less than 10 years old. So yes, a new entry level Class A gas motorhome, which you can buy below $100 grand, would qualify. However, most of the rigs you see in ORI are diesel pushers that (new) range from $175,000 to $2,000,000. An unscientific walk through the community seems to indicate that most owners have coaches in the $250,000-$500,000 range. You see Tiffins, Newmars, Prevosts, American Coaches, Entegras, and Winnebagos. You're not required to upgrade your rig after you buy, but the community ethic seems to insure that even older coaches are very well tended to or upgraded to new ones.

Once you've purchased a lot you then are responsible for the monthly HOA fees. At ORI it's $475 a month. When you add in property taxes and electric the good rule of thumb is that your annual operating costs will be around $7,000.
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There are 419 lots and, at any given time, about 10-20% are up for sale. And here's the thing — there are some undeveloped lots (no outdoor kitchen) that are on the market for as little as $25,000. To be sure, there's a few that are on the market for over $200,000+, but some lots that were bought and improved (pre-recession) with over $200,000 in original value can be purchased for half that. Many owners have now taken their lots and added permanent pergola structures with full outdoor kitchens, TV cabinets, fireplaces and premium drive surfacing for $75,000 to $100,000. Casitas are now allowed and are starting to appear throughout the resort. Construction costs range around $200,000 for a fully enclosed casita.

You can take a medium priced lot for $75,000, put another $75,000 of improvements on it, add in a near new diesel pusher for $200,000 and find yourself smack dab in the middle of a beautiful resort for $350,000 - and even less if you keep your improvements and motorhome modest. Granted, even this "good deal" may be out of reach for many. However, if your income and savings allows it, this is a very attractive option, especially when you compare it to patio homes built on golf course communities nearby in Indio. Compared to "sticks and bricks" communities in the valley like Sun City and Trilogy, it's an exceptional value when you consider you're living in a country club. And while a traditional home sits empty during the harsh summer months, your motorhome can be in much cooler climates, sightseeing, and visiting friends and family.

Second home real estate can be a temperamental beast. The Great Recession hammered all the homes in the Coachella Valley including the RV resorts. Prices dropped by half and while they've recovered, the annual price growth of around 4% is not governed by the wildly inflated SoCal and Bay Area prices you read about. Generally, unless you are in a high demand second home market, your modest equity gain is probably eroded by maintenance, taxes, and real estate commissions.

Compare traditional resort real estate to the RV resort model and the gap isn't as great as you might think. First of all, your cash outlay for an RV and a lot to park it on will generally be less, assuming a standard 20-25% downpayment on a sticks and bricks home. And your carrying and transaction costs will be way less with the RV resort model. Of course, on the other side of the ledger, you know that your RV (whether new or lightly used) most likely will have a steep depreciation curve. However, during the 100+ degree summers, you can enjoy your "second home" in cooler climates which, when translated into days of use, lets you get a lot more enjoyment and utilization from your coach.
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What's interesting is that almost all of the the original developers of luxe RV resorts across the country all went bankrupt. Like so many economic white crosses on the side of the RV industry highway, the sales expectations fell significantly short of the huge infrastructure investment required to build upscale resorts. Today, to build an ORI from scratch, you'd probably have to price bare lots at $250,000-$500,000 — which can't support a market. I'm doubtful if any more will be built. The three high-quality resorts I mentioned have a combined inventory of less than 1,000 lots for a market area that includes the western halves of the US and Canada. Yet few people know about these properties.

Talking with many owners at ORI there is a universal recognition that none of them look at this as an asset play. While their real estate investment may show a modest return over time, they see the depreciation of their motorhome as capital converted to fun.

Currently, owners are starting to realize that their valuations are unusually low.  Recognizing that, they're starting to upgrade lots and the association is making changes to property policy and marketing. This will definitely push property prices up. Even then, ownership at ORI should remain an extremely attractive option, but for now, it's a downright steal.

Don Cohen is an ORI resident, former public company CEO, and a consultant to the RV industry.