RV Park Reviews

Welcome Guest ( Log In | Register )

2 Pages V  1 2 >  
Reply to this topicStart new topic
> Koa Vs Private (to Buy)
campinngal
post Sep 28 2009, 12:59 AM
Post #1


Newbie
*

Group: Members
Posts: 8
Joined: 25-September 09
Member No.: 37514



Am considering purchasing a KOA (asking = 1.7m) in a busy, seasonal area but am doing lots of research prior. Would like to hear from owners on their experiences or opinions of purchasing a popular (franchised) camp vs independently owned. Any thoughts on any aspect of camp ownership from owners or financial folks would be much appreciated. Thanks. : )
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
pianotuna
post Sep 28 2009, 11:36 PM
Post #2


Advanced Member
******

Group: Members
Posts: 1135
Joined: 7-January 07
Member No.: 10403



Hi campinngal,

Ask why they are selling it.

Lot's of folks seem to downgrade KOA for being "pricey" for the value received.

I'd check everything very carefully. For example the electrical pedestals. I'd check every outlet to see if they are wired correctly.


--------------------
Regards,

Don
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
campinngal
post Sep 29 2009, 02:15 AM
Post #3


Newbie
*

Group: Members
Posts: 8
Joined: 25-September 09
Member No.: 37514



Apparently, they want to pursue another business endeavour. However, this could be a code word for anything (low profits, burnout, too much work, etc.). I like the idea of having the support of the KOA system am also leary of having a "big brother" looking over my shoulder. Also, the KOA's tend to be more spendy and some campers can't justify it. There's so much to consider and my mind is bursting with all sorts of new real estate and financial terms. Thanks for your input, Piano.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
oscardiggs
post Sep 29 2009, 09:44 AM
Post #4


Newbie
*

Group: Members
Posts: 8
Joined: 25-December 07
Member No.: 18340



QUOTE(campinngal @ Sep 29 2009, 03:15 AM) *

Apparently, they want to pursue another business endeavour. However, this could be a code word for anything (low profits, burnout, too much work, etc.). I like the idea of having the support of the KOA system am also leary of having a "big brother" looking over my shoulder. Also, the KOA's tend to be more spendy and some campers can't justify it. There's so much to consider and my mind is bursting with all sorts of new real estate and financial terms. Thanks for your input, Piano.

rolleyes.gif Email me and I will get a man and his wife to help you.What I think you are saying is you dont know what you dont know.I am ful time now and home base in Texas.A lot of new parks have opened and the folks are from different back grounds.The people I will have talk to you are good people that like to help others.
When I showed him this subject he asked things no even mentioned here.Email @ fultimerrv@yahoo.com
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
kcmoedoe
post Sep 29 2009, 10:44 AM
Post #5


Advanced Member
******

Group: Members
Posts: 291
Joined: 22-May 08
Member No.: 21445



In my opinion, asking why they are selling is like kicking the tires on a car, it will tell you nothing. The reasons people sell are virtually limitless. If the actual reason is a business problem, they will not tell you. If it is a personal reason, they may be embarrassed to tell you or feel that by telling you they may turn you off as a buyer. Make your decisions based on research. If it is due to business problems, those problems will turn up when you examine the financial data and match it up with bank statements, credit card deposit statements, utility bills etc. If it is an infastructure problem, you will discover it when you inspect the property. You can also check the financial statements and see if a lot of money has been spent on plumbers and electricians, if so, talk to them and see if the problems are fixed or is there an ongoing problem. You may want to hire outside expertise if you are uncomfortable or unfamiliar with the financials or are uncomfortable making inspections of wiring and plumbing. Due Diligence is the key to properly buying any business. On the KOA vs Independent issue, the fact that KOA is considered too expensive by some is not necessarily a problem. It is to your benefit to get more rental money per site. People that pay a higher price don't cost you any more than the people that pay a lower price. Many people also equate price with quality, it is not always in your best interests to be the low cost provider, you will tend to get the low cost users. This could potentially effect your other revenue centers such as campstore, firewood sales, propane sales, food service sales, gamerooms etc. Remember, you are buying a business not starting a charity and profit is not a dirty word. Finally, if you buy a KOA you are not obligated to maintain the franchise, parks drop the affiliation all the time. If it doesn't work for you, you can move in another direction. However, due to KOA protecting franchise territories, you cannot easily become a franchisee in most areas, so think long and hard about dropping because you probably could not get back in.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
campinngal
post Sep 29 2009, 10:13 PM
Post #6


Newbie
*

Group: Members
Posts: 8
Joined: 25-September 09
Member No.: 37514



KC, You are a wealth of information and I so appreciate you taking the time to respond. I am thinking that I need to take a class in purchasing a campground before going any further. We have a campground that we absolutely LOVE that is for sale right now, and may not be available later on, but I'm leary about jumping the gun here until we're fully educated on this big investment. Thanks again.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
Denali
post Sep 30 2009, 09:47 AM
Post #7


Advanced Member
******

Group: Members
Posts: 1012
Joined: 11-January 05
From: Fulltime traveler
Member No.: 2163



A friend of mine bought a KOA campground about ten years ago. She kept the KOA affiliation for a year or two but dropped it after that. She said she had to pay KOA 10% of her gross receipts (not net), plus an annual fee, plus maintain store items that never sold and otherwise comply with requirements that she did not think made business sense.

By dropping the KOA affiliation, she could lower her prices to better compete with other local parks.

For all I know, however, different parks work out different deals with KOA.

--
Dave



--------------------
Dave Rudisill
Fulltimer since 2002
2004 Beaver Monterey
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
Dutch Oven Man
post Oct 18 2009, 04:40 PM
Post #8


Newbie
*

Group: Moderated
Posts: 1
Joined: 18-October 09
Member No.: 38132



At a minimum, I would request to see their books and have a CPA (or equalivant business consultant) review. This is normal in most cases where an individual is wanting to sell their business. If they cannot prove a positive cash flow from their balance sheets, the reason they are selling is probably obvious. If they do have positive cash flow, look at their payroll. If they cannot keep employees on the payroll, this maybe another reason why they are selling. You would want to ask if there is available workforce in the area, etc.

In either case, before you invest 1mil, you need to look and see if the business is worth the money.

Good luck.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
ravencr
post May 6 2010, 01:42 PM
Post #9


Newbie
*

Group: Moderated
Posts: 4
Joined: 6-May 10
Member No.: 42600



I'm in the same boat. I'm looking at 2 different parks, one used to be a KOA and can be converted back if desired and the other is not a KOA and cannot be converted to a KOA due to one being within close proximity. The one that can be converted is over $2mil, and the one that cannot is slightly over $1mil. Their nets are roughly the same, and the cheaper one is only open 6 months versus the other which is open 12 months of the year. I was really excited about the support network offered by the KOA, especially with us wanting to run the park remotely after the first season. But, now I'm torn between which to decide on. Anybody have any experience in a similar situation, by chance? I'd love to hear your viewpoints...thanks in advance for your help.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
johnwadams
post May 6 2010, 02:32 PM
Post #10


Advanced Member
******

Group: Members
Posts: 31
Joined: 19-March 05
From: Cherokee Village, AR
Member No.: 2489



We have traveled a lot over the last 20 years and try to avoid KOA's.
It is not just the price per night. If it is for a one night stop, why pay for what you don't need.
If it is for a week or longer, we can usually find a better RV Park, more suitable to large rigs, at a lower price. Some KOA's are old, need work, need 2 sites consolidated into one for large rigs and don't have 50amp electric service. Find the website for Broke Mill RV Park, new, in Del Rio, Texas. 70' pull throughs. A rally room, and that is a big selling point. Check out the reviews at rvparkreviews.com.

We just left 2 Rallys. The first had 12 rigs and the park had a small rally room. They are building a new one that is fully enclosed and larger. At the second, we had 84 rigs. Rally's bring in money. They last from 3 to 7 days. Think about things like that when looking at a potential park to buy. If the park is not on a city sewer system, expect a visit from the EPA.
We know people that bought a CG back in the late 70's and had to install a complete second septic system. I am a retired accountant. By all means, hire someone to not only look at the books and potential revenue stream but also pick a CPA that is a RVer. (No, I am not looking for work.)
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
ravencr
post May 6 2010, 04:27 PM
Post #11


Newbie
*

Group: Moderated
Posts: 4
Joined: 6-May 10
Member No.: 42600



Thanks John...I'd love for someone to review the parks I'm looking at it, but I've been told it really needs to be someone in the state in which they're located, so they understand all the state and local laws.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
Lindsay Richards
post May 6 2010, 08:55 PM
Post #12


Advanced Member
******

Group: Members
Posts: 1069
Joined: 2-November 05
Member No.: 4762



Always ask to see actual federal tax returns. Many small businesses do business "off the books" even in these days of credit and debit card. I would be very careful of putting a lot of stock in what people claim "off the books". When we sold our lodging business nearly 4 years ago, we had others telling people some really inflated figures on cash received. Also owning a business and not running it on a daily basis can lead to a lot of trouble. I expect running a campground is very time consuming job and finding very good help is hard. One thing you also must consider is the litigious society we have and one successful suit can wipe you out.


--------------------
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
nedmtnman
post May 7 2010, 08:36 AM
Post #13


Advanced Member
******

Group: Members
Posts: 209
Joined: 14-September 08
From: Muldrow OK
Member No.: 26175



I don't think anyone has mentioned this but I would consult a commercial property Realtor. They would have a pretty good handle on the businesses in their area.


--------------------
2003 Ford F-350
2003 Keystone Everest 343L
Bill and Bob guard cats.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
kcmoedoe
post May 7 2010, 11:17 PM
Post #14


Advanced Member
******

Group: Members
Posts: 291
Joined: 22-May 08
Member No.: 21445



QUOTE(ravencr @ May 6 2010, 01:42 PM) *

I'm in the same boat. I'm looking at 2 different parks, one used to be a KOA and can be converted back if desired and the other is not a KOA and cannot be converted to a KOA due to one being within close proximity. The one that can be converted is over $2mil, and the one that cannot is slightly over $1mil. Their nets are roughly the same, and the cheaper one is only open 6 months versus the other which is open 12 months of the year. I was really excited about the support network offered by the KOA, especially with us wanting to run the park remotely after the first season. But, now I'm torn between which to decide on. Anybody have any experience in a similar situation, by chance? I'd love to hear your viewpoints...thanks in advance for your help.

If the limited facts you have provided are true, you are way overthinking the process. What possible justification is there for paying double for a park that has a longer season and the same net income. Either the higher priced park is overpriced or the lower priced park is a heck of a deal. That OR, the lower priced park is in a less desireable area, has major infastructure problems or some other major factor driving down the value. KOAs primary value is in marketing, they aren't going to run the business for you. The offer nothing in operations support that could possibly be worth one million dollars. My bank has financed dozens of RV parks over the years and the number one criteria is always profitability. Capitalized rate of return (Cap Rate) is the number one thing to look at when comparing similar properties. Take the net income (before income taxes, depreciation and interest) and divide it by the selling price. The lower the number, the less attractive the deal. You should be able to get a Cap Rate of at least 9% . Lower than that, the park won't cash flow. Unless the park is a candidate for a big turnaround, low cap rate deals should be avoided. As a financial institution, we would be very concerned about your plans to run the park remotely. Unless you are an experienced park operator, such a plan is inviting financial failure. Any park consultant will tell you the performance of an owner operator park is superior to a managed park. In my opinion, managed parks are for the experienced park owner only. If you don't intend to be involved in the day to day operation of a relatively small RV park (and a 1 to 2 million dollar park is relatively small) I think you will find you are making a mistake. (unless you are financially able to lose $500K or so, in which case, why are you considering an RV park in the first place?). If you are going to move forward and are uncomfortable in evaluating the parks, hire a park consultant. A google search will reveal several. They do not have to have local knowledge, part of their service will be to research local laws. RV parks are relatively the same wherever they are located.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post
ravencr
post May 10 2010, 07:45 AM
Post #15


Newbie
*

Group: Moderated
Posts: 4
Joined: 6-May 10
Member No.: 42600



Hello everyone,

Thanks for the help. The park that can be converted to a KOA has a 11.9% Cap rate. The other cheaper park did have some major infrastructure issues, so we've decided to pursue further the other more expensive one. As far as running a park remotely, we'll be running it in conjunction with the existing staff on-site for this first season, then planning to run it remotely from there.
User is offlineProfile CardPM
Go to the top of the page
+Quote Post

2 Pages V  1 2 >
Reply to this topicStart new topic
1 User(s) are reading this topic (1 Guests and 0 Anonymous Users)
0 Members:

 



Lo-Fi Version
RVParkReviews.com