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dalsgal
post Jan 19 2012, 11:41 AM
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If a campground owner doesn't look as though they worked 112 hrs a week it is probably because they have some good employees that handle the bulk of the labor and long hours. That also adds to your overhead. You seem to be looking many years down the road rather than the first, really tough, years. A campground that is in good shape, bringing in good revenue and easy to run is also going to be a much higher price than one that you must invest lots of time and money into fixing. Those CG's are going to take lots of TLC, not only in work on premise but in PR. I think you should try to find a job as work campers just to get a better idea of how a CG is run. Spending a few days camping does not give you the real picture at all. I am not trying to discourage you but to make you see things a bit more realistically. Don't misunderstand, I love managing a park but it is hard work with little downtime. People think that because you live on premise that you are available for anything they want, at any hour of any day.
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kcmoedoe
post Jan 19 2012, 07:53 PM
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If you are serious, go to a campground buyer's seminar. The one run by Darrell Hess and Associates is excellent. There are others, I believe KOA sponsors one, and a few of the other brokers of campgrounds have their own, or you could hire a campground consultant and learn the ropes that way. Either way, the investment might ease your fears or save you from making a big mistake. The rewards of owning a small business are many, but they seldom include high income, easy work and short hours with lots of vacation time. Making a relatively small investment (and yes, $200,000 is a small investment in this context), and expecting to make large yearly income is just dreaming. Any investment offering such returns are scams.
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RLM
post Jan 19 2012, 08:46 PM
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I can't help you with the specifics of accomplishing your goal. But, I can address a few of the issues in your post.

The people who will pour cold water on your dream will be the ones who care about you most. Like close friends and family. They won't see the dream as a possible reality. Instead they will want to 'protect' you from something they feel in-appropriate based on their values.

As an example of that, our own "loved" ones told us not to undertake building our own house like you did. We didn't listen and despite some stupid mistakes along the way, we accomplished a lifelong goal of building our own house from ground up.

I have established a business. It was another goal of mine, but one that I would not do again. It was successful only because we had to work 24/7 for several years to make it so. Unlike your statement that you have no background or experience in campground, I did have previous experience in my business. Anyone can accomplish anything - it's just a matter of how much work they are willing to put into it.

I'm a die-hard Texan, but I could be persuaded to move to Colorado. We've been there several times doing work camping jobs in the last several years and it's a fantastic state. We return every year to do volunteer work for a church organization.

I'm only posting a reply to this thread because I can emphasis and identify with someone like you who has a dream and is willing to chase it. I would never discourage it, but would respectfully suggest that you get into a Crawl, Walk, Run mode which you appear to be doing.

I sincerely wish you success.

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kcmoedoe
post Jan 20 2012, 01:33 PM
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QUOTE(RLM @ Jan 19 2012, 09:46 PM) *


The people who will pour cold water on your dream will be the ones who care about you most. Like close friends and family. They won't see the dream as a possible reality. Instead they will want to 'protect' you from something they feel in-appropriate based on their values.

Anyone can accomplish anything - it's just a matter of how much work they are willing to put into it.

I would never discourage it, but would respectfully suggest that you get into a Crawl, Walk, Run mode which you appear to be doing.

I sincerely wish you success.

Good points, but I will give a different take on these few points. People will often "pour cold water" onto your dreams because they have a much more grounded perspective. People often get so involved in their dreams, they overlook a lot of reality.
Saying you can accomplish anything, it just a matter of how much work you put into it sounds great, is very motivational but not really true. I'm in my mid fifties, six foot tall and no matter how motivated and how hard I worked, I will never, ever become an NBA center, a Kentucky Derby winning jockey, or a male model. No matter how hard you work, if your goal is unreasonable, it will not happen. I have seen lots of applications from people trying to buy failing RV parks and other businesses who believe that if they try hard enough the business will turn around. We often have to take the hard line approach and tell them it appears to us to be a failed business model, so no, we can't make the loan.
I do agree you should take your time before committing, but for most people, once you commit, the time for Crawling and Walking is over and you will need to hit the ground running. I hope I am not to discouraging, because if you buy the right park, for the right reasons and do the right things, it can be very rewarding. We have many successful operations on the books that proves the industry can be very successful.
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cyclist
post Jan 20 2012, 10:47 PM
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I have learned quite a bit listening to all the advice given here. I truly appreciate everybodies feedback. I have decided to contact the local SCOPES office and get some guidance. The realities of all of this scare me because what I want, is time to work and enjoy time with my family, It appears that all I will do is work. My daughter is 6 and this is way to important time of her life for me to miss. I still want to look into this though as I really think it fits my lifestyle. thanks again.
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sunkatchers
post Feb 2 2012, 11:10 AM
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I wouldn’t want to be the one to pour “COLD WATER” on anyone’s dreams. BUT and you knew there would be a but. A few years back I had the privilege to work as a Travelling Ambassador for a very large campground owners association. I would go and visit each of the 400 odd parks in the system and 90% of these parks where privately owned. I must say it was an eye opener for me. I have be around the camping industry for 35 or 40 years and one of the most common threads I found as an Ambassador was the number of owners that had purchase/inherited a campground that had ABSOLUTLY no business skills what so ever. Some of them had no idea what a Business Plan even was, how to establish or read a profit and loss statement. They had no idea how much each site was valued at (to set fees), How to set-up and measure each profit stream (Firewood sales, store sales, etc…) how to set goals, implement action plan, and communicate the plan with major players nor how to measure progress/failure. Running a campground is a business not a hobby unless you have unlimited wealth.
I would strongly recommend that anyone thinking about such a venture needs to first take some business classes and go hire on as a Manager at a park for 2 years before you dump the family’s lifesavings and future in a whim that “sounded like fun”
Not trying to discourage but as the man said; Do your homework, learn the skills and work with the success stories.
Ron
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Kawartha
post Feb 27 2012, 03:55 PM
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If it has not already been mentioned, there are real estate agents for buying and selling parks and there is a formula. It is usually adding zeros to the number of seasonal sites as in 130 seasonal sites means $1.3 million dollars. There are often 2 sets of books and the accounting may be well-organized or very sloppy and disorganized. The owner may be paying his taxes but most are using cash transactions and other approaches to pay less than they should be. The accounting records are likely to be approximate.

Infrastructure is most important when evaluating a park for purchase. There should be official drawings of the location of the electrical wires, transformers etc. and the feeds to the outlets at the trailers, the complete watersystem location of the pipes, wells, etc. and feeds to the trailers and the sewer system pipe locations and septic systems.

Potential problems are inadequate water during hot periods of the summer, pool with a leaking problem, the need to import water by truck etc. You need to know whether the water system is adequate for the number of sites, when it was put in (how many sites at the time) and whether it has been maintained and expanded.

Sewage systems can be "underbuilt" without the proper pipes, joints, and parts to prevent back-ups, nor a quick way to access and solve problems. Trees and roads can interfere with sewage pipes if they are not in an ideal location too. Septic systems are often subject to stuff being flushed down toilets that destroy the sump pumps as in diapers, depens, etc.. Multiple sump pumps at around $5,000 each are needed to completely guarantee NO destruction.

Just covering some of the basics.

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kcmoedoe
post Feb 27 2012, 05:30 PM
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QUOTE(Kawartha @ Feb 27 2012, 04:55 PM) *

If it has not already been mentioned, there are real estate agents for buying and selling parks and there is a formula. It is usually adding zeros to the number of seasonal sites as in 130 seasonal sites means $1.3 million dollars. There are often 2 sets of books and the accounting may be well-organized or very sloppy and disorganized. The owner may be paying his taxes but most are using cash transactions and other approaches to pay less than they should be. The accounting records are likely to be approximate.

Infrastructure is most important when evaluating a park for purchase. There should be official drawings of the location of the electrical wires, transformers etc. and the feeds to the outlets at the trailers, the complete watersystem location of the pipes, wells, etc. and feeds to the trailers and the sewer system pipe locations and septic systems.

Potential problems are inadequate water during hot periods of the summer, pool with a leaking problem, the need to import water by truck etc. You need to know whether the water system is adequate for the number of sites, when it was put in (how many sites at the time) and whether it has been maintained and expanded.

Sewage systems can be "underbuilt" without the proper pipes, joints, and parts to prevent back-ups, nor a quick way to access and solve problems. Trees and roads can interfere with sewage pipes if they are not in an ideal location too. Septic systems are often subject to stuff being flushed down toilets that destroy the sump pumps as in diapers, depens, etc.. Multiple sump pumps at around $5,000 each are needed to completely guarantee NO destruction.

Just covering some of the basics.

Not sure where you got your premise that to arrive at a valuation you "add zeros to the number of sites". That would be about as foolish pulling a number out of a hat. Valuation is determined by profitablility, the real estate valuations, the value of the improvements etc. A professional appraisal is needed to arrive at an exact valuation, but there are many formulas and models much more accurate than adding zeros to site numbers.
My bank holds a number of loans on RV parks. I know of no instance where the owners keep two sets of books, steal all the cash or otherwise cheat and deceive. Hiding cash actually hurts the valuation of a business, it is penny wise and dollar foolish. When reviewing a park's books for loan approval we give absolutely no weight to unreported income and if an applicant pushed the issue, we would decline the loan because we only wish to deal with honest people.
Your points regarding water and sewer are absolutely on point and a reason why a park on city water and sewer services is often a more valuable and attractive property. Much easier to repair a pipe or snake a sewer line than replace pumps, pump holding tanks, repair leach fields or dig a new well.
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Kawartha
post Feb 27 2012, 09:04 PM
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QUOTE(kcmoedoe @ Feb 27 2012, 06:30 PM) *

Not sure where you got your premise that to arrive at a valuation you "add zeros to the number of sites". That would be about as foolish pulling a number out of a hat. Valuation is determined by profitablility, the real estate valuations, the value of the improvements etc. A professional appraisal is needed to arrive at an exact valuation, but there are many formulas and models much more accurate than adding zeros to site numbers.
My bank holds a number of loans on RV parks. I know of no instance where the owners keep two sets of books, steal all the cash or otherwise cheat and deceive. Hiding cash actually hurts the valuation of a business, it is penny wise and dollar foolish. When reviewing a park's books for loan approval we give absolutely no weight to unreported income and if an applicant pushed the issue, we would decline the loan because we only wish to deal with honest people.
Your points regarding water and sewer are absolutely on point and a reason why a park on city water and sewer services is often a more valuable and attractive property. Much easier to repair a pipe or snake a sewer line than replace pumps, pump holding tanks, repair leach fields or dig a new well.


The formula I mentioned is used by the corporations that buy campgrounds in my area. They in fact told an owner that his 130 site was worth 1.3 million irrespective of property, buildings etc.
Irrespective of profitability, improvements etc., the bottom line is what a buyer is willing to pay.
Sure a professional appraisal is needed and used but it is a buyer's market. As far as owners are concerned, you have missed a lot. The line between business expenses and personal expenses can be interpreted in a very personally convenient manner and paperwork can easily be a forgotten aspect of some transactions. "The receipt book can't be found" etc.
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kcmoedoe
post Feb 28 2012, 01:19 PM
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QUOTE(Kawartha @ Feb 27 2012, 10:04 PM) *

The formula I mentioned is used by the corporations that buy campgrounds in my area. They in fact told an owner that his 130 site was worth 1.3 million irrespective of property, buildings etc.
Irrespective of profitability, improvements etc., the bottom line is what a buyer is willing to pay.
Sure a professional appraisal is needed and used but it is a buyer's market. As far as owners are concerned, you have missed a lot. The line between business expenses and personal expenses can be interpreted in a very personally convenient manner and paperwork can easily be a forgotten aspect of some transactions. "The receipt book can't be found" etc.

Guess I just deal with a very different market and clientel. Just completed a refi deal for a park where the park appraised for $3,500,000. That particular park had 75 RV sites and 10 cabins. The cabins were not worth $2,750,000 so either the appraiser was an idiot, valuing the sites at around $40,000 a site or your rule of thumb may not apply everywhere. And again I must re-iterate, the books of the parks we have loans are impeccable. Most are professionally prepared by CPAs and we sure don't give any credence to any "off the books" income. Do business owners take personal benefits from the company's revenues? Of course. But that serves to lower the profitability shown on the income statements, not increase it. If they put their personal cell phones, the personal utilities and buy steaks for personal use out of the campground inventory, that increases the company's expenses and cost of goods sold and lowers the profitability. In the end, that will hurt the valuation of the business, not help it.
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