Author Topic: RV Park / Campgrounds  (Read 7734 times)

JohnGalt

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RV Park / Campgrounds
« on: August 16, 2012, 07:25:00 PM »
I've been looking into RV Park's for sale lately.  Does anyone have any experience with anything along those lines?

On the surface, putting 30%-40% down on a $200k-$500k park (ideally in one of the west coast or rocky mountain states) and living/running it doesn't sound like a bad way to do semi-retirement until it is paid off (or you have enough income from other assets and can afford hiring a manager).  It's even more interesting when I consider that I could probably do that and keep doing what I do now part-time to continue saving.  One of my FI goals is to live somewhere with and spend lots of time enjoying more interesting outdoor activities than I have here in Dallas. I could hit that down payment amount much sooner than I'll hit FI.  I'd just need to figure out how to find a park with good numbers.

shadowmoss

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Re: RV Park / Campgrounds
« Reply #1 on: August 17, 2012, 01:16:50 PM »
You might check the Escapees forums.  They are the largest group of RV'ers in the world (from memory...).  Probably somewhere there is a forum in there about actually owning a park.

paddedhat

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Re: RV Park / Campgrounds
« Reply #2 on: October 03, 2012, 05:04:58 AM »
I don't know if this is a typical scenario.  I am a homebuilder. A few years back one of my sharper, more aggressive subcontractors told me that he had been spending the last few years actively shopping for a campground. At that point he had gone from browsing through countless numbers of them, to taking an in depth look at dozens. This typically involved at least access to a summary of the books, and having his accountant develop a reasonable return on investment projection. At this point, he and his partner had taken four flights to different locations, with the intent of physically inspecting the ones that really looked promising. After spending years on the search and well over $10K in expenses, he gave up. He was looking to invest $300K max. His conclusion is that there is good money to be made if you want to spend 4X that, and stick to those located in destination areas, where you have a guaranteed flow of families that want to spend a few days, to a week, vacationing.  his budget limited him to more remote, rural locations and "mom and pop" operators who typically didn't operate, or think, like business people. They often started the business on "free" family land, decades ago. Typically, the payoff they were looking for was high enough that you couldn't make a case for a sound business model. Often the facilities need a lot of upgrading, and there wasn't enough return to upgrade the grounds, pay yourself a decent salary for your efforts, and have either a $2-300K loan, or the lost oportunity cost of tying a lot of your cash up, with little return.

JohnGalt

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Re: RV Park / Campgrounds
« Reply #3 on: October 03, 2012, 07:20:55 AM »
Thanks for the response paddedhat.  That scenario is one I was afraid of after looking at the campgrounds for sale in that price range. 

Did he ever consider starting one on just some vacant land?

paddedhat

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Re: RV Park / Campgrounds
« Reply #4 on: October 03, 2012, 09:54:12 AM »
I'm in PA. and as a builder and avid RVer, I alway suspected that starting a new campground in this state would be somewhere between difficult, to impossible. The bottom line is that in many states you are going to go through years of aggrevation, battling the local government, and the state, just to get a permit to start the damn thing.   In most rural areas you would need extremely expensive on-site water and sewage systems, storm water management, and other issues addressed before you could even start spending money on developing roads, campsites and ammenities. I got to know an owner of a small, seasonal campground in a very remote part of northern PA. Interestingly enough, he filled his bucket list by buying this particular property and moving up from Alabama to run it. Two years later he sold it. Anyway, I asked about the potential for starting from scratch. He repeated much of what I thought. He stated that he was an active member of the state camground owners association, and it was pretty much a concensus among the body that new, small owner operations, built from the ground up, are probably a thing of the past. One interesting trend that confirms this is the presence of corporate buyers adding desirable campground properties to their portfolios. It's common for outfits like Encore to buy out an existing property that was individually owned and independently operated. I'm not talking about $2-300K places in bumtwittle, but nice places in desirable areas, that sell for seven figures. It must be worth paying a premium for these properties, when compared to the hassle of buying a farm down the road and building a new facility. If a regional, or national, operator with deep pockets avoids trying to start from scratch, it says something.

 Just to give you a bit of a feel for how ugly it's gotten in rural America when it comes to dealing with local and state governments, here is a recent experience of mine. My good buddy decides to divide a small family farm after a death in the family. This should be a stupidly simple task. The property is a long patch, with massive amounts of township road frontage and no issues at all. It is a matter of taking the long, thin field and dividing it into four square pieces with 4-500 foot of road frontage on each,  then recording the new deeds. This was completely unopposed by anyone, and free of any legal issues, or neighbors who didn't want to cooperate. It took  THREE years of getting fucked around by the township and the state, and nearly thirty thousand in various costs before he was done. The finished product is a handful of stakes in the ground, and four new deeds filed in the courthouse. Can you imagine trying to turn that same farm into a campground, instead of a few lots? You would be lucky to spend less than five years, and 100K on lawyers and other bullshit, before you even got your first permit.

tooqk4u22

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Re: RV Park / Campgrounds
« Reply #5 on: October 03, 2012, 10:16:26 AM »
Here is a firm that focuses on selling RV/campgrounds

www.recreationalbusinesspartners.com

mensa

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Re: RV Park / Campgrounds
« Reply #6 on: November 18, 2012, 06:04:52 AM »
Not sure if this will be helpful for campgrounds/RV parks, as I'm involved in mobile home parks. That being said:

When valuing income producing properties, what you'll need (for a quick and rough estimate of value) is the approximate net income and the capitalization rate for the area/type of property. Dividing the Net by the cap rate produces the value estimate. Finding the cap rate can be challenging...try inquiring with an appraiser, or with the property taxing authority in the area that you're looking in (though it may be different in the US - don't know if they base property tax on rental income at all). As a buyer, you want a higher cap rate than what the seller is looking for.

Estimating the net income is likely easier, as long as you know what the average (gross) rent/site is for the property, and have researched likely expenses for they type of business you're looking at.

My brother and I bought a mobile home park 14 years ago and it has worked out really well for us. Mind you, these are very different in Canada than the US, by all reports, as ours is very stable (NO vacancy rates...EVER) and the homes appreciate in value. We simply kept our day jobs elsewhere and plowed every last cent into paying down the mortgage on the park. After less than 10 years, we owned it outright and are now able to draw incomes. (Note, we bought in our 20's so we started young).

Check out this site: http://www.mobilehomeparkstore.com/  (not sure if that'll show up as a hyperlink...I'm new here). Although this is more for mobile home parks, rather than RV/Campgrounds, you'll get some good info. Best of luck!