- Sean Vidrine started investing in real estate with one mobile home. Now he owns four campgrounds.
- Vidrine said the campground industry can offer high returns, but it’s not a passive investment.
- Vidrine walked Insider through the $40 million worth of real-estate transactions he’s been part of.
Sean Vidrine is relatively new to the campground industry, but he’d been circling the sector since he made his first mobile-home investment about 15 years ago.
“My first investment was a $500 mobile home,” Vidrine told Insider from his home in Lake Charles, Louisiana. “I put $100 down, and the seller financed it for me over four months. Every weekend I’d buy some material, put in some carpet, and paint some walls. Next thing I knew, I had a rental.”
From that rental, Vidrine started building a portfolio of 35 mobile-home units, which eventually grew into two mobile-home parks that he purchased for $1.5 million. Two years later, he sold those for $3 million.
He intends to use the cash to buy more mobile homes or mobile-home parks. But he found that the capitalization rates, or cap rates — a common way to calculate an investment’s expected return, with a higher rate meaning more return and more risk — were much too low for his liking.
“Cap-rate compression of mobile homes has continued, and it’s hard to find great deals for mobile-home parks,” Vidrine said.
It didn’t help that years of easy money had inflated property values. Firms like Blackstone and Apollo were building empires with thousands of mobile homes, and their interest was driving up prices and decreasing yields on fully developed projects. The trend captured the attention of the business world, then The New Yorker, which profiled mobile-home empires in early 2021.
So Vidrine found himself driving to Mississippi to look at a campground that a real-estate agent he was working with had billed as an opportunity. It required some imagination.
Some lakefront cabins at Vidrine’s Jellystone Park campground at Pine Lakes in Illinois.
Jellystone Parks
“There might have been one camper in the park, and I said, ‘Man, this is just not for me,'” Vidrine said. But, intrigued by the park’s beauty, he stayed.
What Vidrine saw in the nearly empty campground was the space required to build something of scale, akin to the collections of mobile homes that had attracted big institutional investors.
Vidrine bought his first campsite in 2019 and now owns four. (A campground can cost $1 million or more.) He said that at his most profitable site — Paradise Ranch in Tylertown, Mississippi, between Jackson and New Orleans — campsites earn $10,000 to $15,000 a year, while cabins bring in more than $25,000. That campground has roughly 200 campsites, representing about $2 million in revenue a year, and eight cabins, for $200,000 in revenue a year.
Reflecting on his humble beginnings and his involvement in $40 million worth of real-estate investments over the years, Vidrine said, “If I can do it, anybody can.”
He shared a few tips he said led to his success as a campground investor and his thoughts on the future of the sector.
Income from campgrounds isn’t passive
Vidrine, who renovated his first-ever rental property, said he’s attracted to and challenged by the hands-on nature of owning and operating campgrounds. But he cautioned that it doesn’t fall into the passive-income category sought by many investors.
“It’s hard to even classify it as just real estate income,” Vidrine said.
Like hotels, campgrounds require staff to clean, check people in, and run the amenities and programming on the site.
Nightly rates at Paradise Ranch in September range from $40 a night for a “primitive” tent site to $195 for a cabin that sleeps eight people, according to the campground’s website.
To boost his returns, Vidrine has focused on capital improvements to his four campgrounds over the past year, including adding a water park to attract guests with children and improving infrastructure such as wastewater-treatment facilities.
The water park at Vidrine’s Jellystone Park location in Monticello, Iowa.
Jellystone Parks
The water park, destined for his property in Pittsfield, Illinois, won’t be completed until next spring or summer. He said he was grappling with the same manufacturing and allowing delays that have challenged builders everywhere, compounded by increased investor interest.
He said he wants to add new cabins, for example, but the timelines are long. “The last quote that I got for park model cabins is that they’re out almost 40 weeks,” Vidrine said.
But capital improvements alone aren’t enough to make an investment work. He said that marketing to booking sites and upgrading software to better capture online demand not only brings in more guests but lowers his costs because he needs fewer people to take reservations over the phone.
Vidrine said this mix of capital improvements and efficiency had increased revenue by 30% year over year for each of his parks.
Big investors are coming for his parks
Like mobile homes before them, RV parks and campgrounds are in an early phase of an institutional rollup.
Investors saw a growing industry with favorable demographic growth catapulted by the coronavirus pandemic and decided to pour money into it. Some have parked their money in branded properties like Camp Margaritaville, which combines regular campground amenities with Jimmy Buffett’s particularly chill lifestyle brand.
Three of Vidrine’s four campgrounds are part of Yogi Bear’s Jellystone Park Camp-Resorts, which has about 80 locations, making it the second-largest franchise network in the US, behind Kampgrounds of America. In April, Jellystone Park was sold for an undisclosed price to Sun Communities, the largest campground and mobile-home real-estate investment trust, along with its parent company, Leisure Systems Inc.
“Money is always looking for a place to be parked,” Vidrine said, adding that he wants to get his hands on a few more properties before deep-pocketed investors price him out — and before they stop being profitable.
Just like with mobile homes, he said, cap-rate compression is happening fast with campgrounds. A cap rate of 5% to 10% is considered a good investment.
“Cap rates are at 10 or more,” he said. “Those days will be gone quickly.”