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campinngal
post Sep 25 2009, 09:46 PM
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My husband and I are considering purchasing a campground (or dude ranch). My husband has a steady job that he would give up. We are in our 40's. Am just beginning researching this idea and have purchased a book about buying, owning, managing, etc. Have several basic questions and was hoping to hear from campground owners. Hotel values have dropped ridiculously during the recession. My friend in commerical real estate has a resort that was assessed at 10 million, 2 years ago. It's current assessment is 1.5 million. Have the value of campgrounds dropped as well? He says that the standard right now when making an offer is to offer 20 to 30 cents on the dollar and that one cannot judge profits from the last few years in this economy. Thoughts on this (as it would apply to a campground offer)? Would a campground provide a decent living and/or retirement? If you were to have the choice of buying a campground or ranch today, would you do it? If so, would you go for a higher priced campground with a larger profit or a low priced campground with a smaller profit? A seasonal or year round? Both seem to offer the same percentage profit, it's just the numbers are different. Also, what are the benefits and/or pitfalls of going with a franchise (like KOA) vs. an independentally owned campground. Finally, if you can recommend any books, articles, websites, etc., it would be appreciated. Thank you so much. : )
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kcmoedoe
post Sep 27 2009, 11:05 AM
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You can make any offer you wish, but be prepared to find a lot of sellers refusing to talk to you if you are considering offering only $.20 on the dollar. Also, most brokers will not work with a client who continually gives lowball offers. I seriously doubt there is any RV park for sale where the asking price is $1,000,000 and the seller would be willing to take $200,000. Profitable, full time campgrounds (that is the park makes someone a full time living) usually sell for between 7 to 10 times earnings (10 to 15% cap rate). Under this pricing, a million dollar park would be earning at least $100,000 per year, I can't see how any sane seller would sell their business for what it earns in less than two years. There is no way any property has lost 85% of it's valuation from a year ago unless there was some serious deficencies in how the property was originally listed or it was a business that has totally crashed in this ecomony (think a sub-prime mortgage company). Prices for businesses have not fallen as far as residental real estate, especially if the income has not fallen in recent times. Me thinks your broker friend is stretching the truth a little. Before making any purchase, You MUST get current financials and verify the numbers. For campgrounds, I suggest you take a campground ownership class, the one offered by Darrell Hess and Assoc. is highly recomended. Their seminar will give you great insight into the ins and outs of campground ownership and gives you insight into correct valuations as well as giving you the information you need to investigate and validate the financial statements on the business. You can make a good living owning a campground, but it will take a considerable investment. Campgrounds can be financed, you will probably need a minimum of 25% down payment and have some reserve funds to make improvements and cover operating expenses. I would buy as much park as I could afford, the more you have the more your potential earnings. Campground ownership is a seven day a week commitment, you might as well maximize your earnings. The true value in business ownership is getting it paid for operating and improving the business over time and then selling it in the future. That is your retirement. Buy a million dolllar park, pay it off over 20 years, get 3% to 4% appreciation on the valuation and you can easily have 2 million or more at retirement and have made a living over those 20 years. If you financed the purchase and made a 25% down payment, that is a very good rate of return on your $250,000 and your labor. If pricing and rates of return are equal, I would clearly opt for a seasonal park, why work 12 months when you can work 6. That being said, seasonal parks generally sell at a premium for that reason. As for a dude ranch, unless you have ranching experience, I would advise going another direction, ranching is really, really tough and the returns are not as consistent as an RV park.
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abbygolden
post Sep 27 2009, 12:53 PM
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QUOTE(kcmoedoe @ Sep 27 2009, 12:05 PM) *

You can make any offer you wish, but be prepared to find a lot of sellers refusing to talk to you if you are considering offering only $.20 on the dollar. Also, most brokers will not work with a client who continually gives lowball offers. I seriously doubt there is any RV park for sale where the asking price is $1,000,000 and the seller would be willing to take $200,000. Profitable, full time campgrounds (that is the park makes someone a full time living) usually sell for between 7 to 10 times earnings (10 to 15% cap rate). Under this pricing, a million dollar park would be earning at least $100,000 per year, I can't see how any sane seller would sell their business for what it earns in less than two years. There is no way any property has lost 85% of it's valuation from a year ago unless there was some serious deficencies in how the property was originally listed or it was a business that has totally crashed in this ecomony (think a sub-prime mortgage company). Prices for businesses have not fallen as far as residental real estate, especially if the businesses income has not fallen in recent times. Me thinks your broker friend is stretching the truth a little. Before making any purchase, You MUST get current financials and verify the numbers. For campgrounds, I suggest you take a campground ownership class, the one offered by Darrell Hess and Assoc. is highly recomended. They seminar will give you great insight into the ins and outs of campground ownership and gives you insight into correct valuations as well as giving you the information you need to investigate and validate the financial statements on the business. You can make a good living owning a campground, but I will take a considerable investment. Campgrounds can be financed, you will probably need a minimum of 25% down payment and have some reserve funds to make improvements and cover operating expenses. I would buy as much park as I could afford, the more you have the more your potential earnings. Campground ownership is a seven day a week commitment, you might as well maximize your earnings. The true value in business ownership is getting it paid for and then selling in the future. That is your retirement. Buy a million dolllar park, pay it off over 20 years, get 2% appreciation on the valuation and you can easily have 2 million or more at retirement and have made a living over those 20 years. If you financed the purchase and made a 25% down payment, that is a very good rate of return on your $250,000 and your labor. If pricing and rates of return are equal, I would clearly opt for a seasonal park, why work 12 months when you can work 6. That being said, seasonal parks generally sell at a premium for that reason. As for a dude ranch, unless you have ranching experience, I would advise going another direction, ranching is really, really tough and the returns are not as consistent as an RV park.


What a great response! Lots of info and a great insight into a portion of the industry about which I knew nothing. I hadn't been considering doing anything like this, but if I had I'm now totally dissuaded about even dreaming about it. Great post, thanks.
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Posts in this topic
campinngal   Considering Purchasing A Campground   Sep 25 2009, 09:46 PM
Lindsay Richards   BE CAREFUL   Sep 26 2009, 10:13 PM
kcmoedoe   You can make any offer you wish, but be prepared t...   Sep 27 2009, 11:05 AM
abbygolden   You can make any offer you wish, but be prepared ...   Sep 27 2009, 12:53 PM
rgatijnet   I would think that to some extend a campground is ...   Sep 27 2009, 11:38 AM
kcmoedoe   I would think that to some extend a campground is...   Sep 28 2009, 10:05 AM
Lee and Fran   I know of a park for sell in Utah and the price I ...   Sep 27 2009, 07:01 PM
kcmoedoe   I hope I haven't turned too many people off of...   Sep 27 2009, 07:43 PM
campinngal   Thank you so much, particulary KCMOE for your valu...   Sep 28 2009, 12:54 AM
kcmoedoe   Thank you so much, particulary KCMOE for your val...   Sep 28 2009, 09:37 AM
pogoil   My wife and I are in our 40s and 5 years ago we bo...   Sep 28 2009, 02:38 PM
Lindsay Richards   One thing you must remember in any small business ...   Sep 28 2009, 03:01 PM
kcmoedoe   One thing you must remember in any small business...   Sep 28 2009, 03:14 PM
Gunship Guy   What a great topic. The replies were all very inf...   Sep 28 2009, 09:02 PM
pogoil   What a great topic. The replies were all very in...   Sep 29 2009, 01:36 PM
coacbcps   What a great topic. The replies were all very in...   Sep 29 2009, 03:06 PM
campinngal   Pogoil, Thanks for your insights. Am curious if y...   Sep 29 2009, 10:08 PM
pogoil   Pogoil, Thanks for your insights. Am curious i...   Sep 30 2009, 12:14 PM
Lindsay Richards   Keep in mind that if you live on the property, man...   May 14 2012, 10:48 AM
wantacampground   I would like to revive this topic as I am currentl...   Jun 13 2012, 11:36 AM
kcmoedoe   I would like to revive this topic as I am current...   Jun 13 2012, 11:55 AM
wantacampground   Best place to start is www.rvparkstore.com Many ...   Jun 13 2012, 12:01 PM
kcmoedoe   Kcmoedoe - thank you for your reply. I have read ...   Jun 13 2012, 07:25 PM
wantacampground   I am not sure you will unearth a lot of hidden ge...   Jun 14 2012, 10:11 AM
Lindsay Richards   You might consider scheduling an appointment with ...   Jun 13 2012, 01:17 PM
wantacampground   You might consider scheduling an appointment with...   Jun 13 2012, 02:40 PM
Lindsay Richards   We bought an old house in the down town of a res...   Jun 14 2012, 12:25 PM
kcmoedoe   If you are willing to wade through a bunch of dead...   Jun 14 2012, 01:34 PM
SASMITH   wantacampground, Thanks for reviving this thread, ...   Aug 4 2012, 07:39 PM
wantacampground   wantacampground, Thanks for reviving this thread,...   Aug 15 2012, 02:21 PM
SASMITH   Sorry, been out for awhile. I think it would be gr...   Aug 15 2012, 09:01 PM
Lindsay Richards   We go by there on most trips as it is about 4 or 5...   Aug 4 2012, 07:52 PM
Lindsay Richards   I was going to college in Tampa from 1962 to 1966 ...   Aug 5 2012, 09:35 AM
Texasrvers   SASMITH, We are glad that you are a member of our...   Aug 5 2012, 11:36 AM
SASMITH   SASMITH, We are glad that you are a member of ou...   Aug 10 2012, 07:44 PM
Lindsay Richards   I think a fair price is about 5 to 6 times the gro...   Aug 15 2012, 09:24 PM
kcmoedoe   I think a fair price is about 5 to 6 times the gr...   Aug 16 2012, 09:17 AM


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