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campinngal
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. : )
Lindsay Richards
BE CAREFUL
kcmoedoe
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.
rgatijnet
I would think that to some extend a campground is not much different than any other business. The value of the property, as a business, is based on the amount of income that it can generate. There are standard tables used to figure the value of a business based on income. IF the property MAY be redeveloped into something else, other than it's current use, than many other factors must come into play. For instance how much to demo the existing use structures? How much to modernize/rebuild or construct new structures for the new business? Now, you take all of those total costs, and see IF the anticipated income makes it a viable business proposition.
Down here we have many many businesses that CANNOT be sold as a profitable business. They were started when the cost of real estate was lower and the long term owners are the only employees with a small mortgage payment. Once sold, at even today's reduced real estate values, the business can no longer generate enough income to support the new larger mortgage, and the new owner's salary and other payments.
abbygolden
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.
Lee and Fran
I know of a park for sell in Utah and the price I believe is around 1 to 1 and a half mil. It has a store, gas station, restaurant, indoor pool, many rv spaces, some rv type of trailers he has built for travelers to stay in besides rvers. And is in a mountain setting with a large lake the other side of the mtn from it that is very active in summer. He runs this place year round. It also has a house for owner to live in on the property.
kcmoedoe
I hope I haven't turned too many people off of purchasing a park. Speaking as a former bank executive, we had several parks in our portfolio. My experience was they all performed well, we never had a default. We limited our exposure to parks that were full time businesses. We had both owner/operator type operations and corporate parks. The profitability of parks rose over time as they were able to raise rates in response to rising costs, while their investment in the property was steady. Over time, several of the parks sold at a considerable profit to the owner, yet remained profitable to the new owner. Also, we had several that sold to developers for higher use conversions. Again, the investment turned a substantial profit to the park owner. We chose not to finance any park where the financials did not support the payments and provide a livable income to the owner. We were not interested in situations where the owner needed to supliment the income from the park to survive. As I stated in the other post, we required 25% down payments as a minimum. We also required the buyer to have financial reserves to allow for any repairs and allow the owner to carry the property through the off season. Among the reasons we favored RV parks were the fact that the clientel was not a function of ownership. There was little chance that the change in ownership would significantly effect sales. This is not always the case in service businesses. In many businesses, the owner may be the primary reason the business has customers (for example building trades, landscaping businesses, medical practices etc all rely on relationships whereas RV parks generally do not). Parks have substantial tax write offs, so much of the profits stay with ownership. They are good investments for hard working people, but they are not get rich quick or even get rich fair fast schemes. They also are not inexpensive to get started in. Individuals that financed with us, typically invested most of their life savings, usually $200,000 and up. Also, the people that bought parks talked as much or more about buying a lifestyle than they talked about all the money they were going to make. Good luck.
campinngal
Thank you so much, particulary KCMOE for your valuable insights. Very much appreciated and a great place for me to start. Would love to hear from owners on KOA vs private. Am interested in a pricey KOA in a busy seasonal area and am wondering if it's worth it.
kcmoedoe
QUOTE(campinngal @ Sep 28 2009, 12:54 AM) *

Thank you so much, particulary KCMOE for your valuable insights. Very much appreciated and a great place for me to start. Would love to hear from owners on KOA vs private. Am interested in a pricey KOA in a busy seasonal area and am wondering if it's worth it.
KOA franchise agreements call for 10% franchise fee on all site rentals that are less than 1 year. There is also an upfront franchise fee. Contrary to some posts you read, there IS corporate good will value to KOA. How much is something you will have to research in the area your are looking at. You need to get an idea of the occupancy of similar quality parks in the area. Are they as full or even fuller than the KOA at any given time and priced similarly? If so, the KOA franchise is not adding value in the area. If the KOA does equal or more business, and supports a higher rate, then the franchise is adding value. KOA is very good at helping the franchisee maximize rental incomes. Their nationwide reservation system is an asset, and they have agreements with many RV rental companies that help drive traffic to their franchises. They also provide training and have a support staff to help the business move forward. All that being said, several park owners told me they were more comfortable having a recognized corporate name, they felt it gave them added credibility in the market. About an equal amount of owners felt they wanted to be completely free of any corporate yokes and wanted to do whatever they felt benefited their business and didn't want to feel like they were being watched. Therefore, I guess it is both a financial decision and an emotional one.
kcmoedoe
QUOTE(rgatijnet @ Sep 27 2009, 11:38 AM) *

I would think that to some extend a campground is not much different than any other business. The value of the property, as a business, is based on the amount of income that it can generate. There are standard tables used to figure the value of a business based on income. IF the property MAY be redeveloped into something else, other than it's current use, than many other factors must come into play. For instance how much to demo the existing use structures? How much to modernize/rebuild or construct new structures for the new business? Now, you take all of those total costs, and see IF the anticipated income makes it a viable business proposition.
Down here we have many many businesses that CANNOT be sold as a profitable business. They were started when the cost of real estate was lower and the long term owners are the only employees with a small mortgage payment. Once sold, at even today's reduced real estate values, the business can no longer generate enough income to support the new larger mortgage, and the new owner's salary and other payments.
You are absolutely correct on every point. I want to point out, however, that valuations of businesses based on income may not apply directly to campgrounds and other property dependent businesses. You cannot buy a hotel, an office building or a cattle ranch for example at 4 times annual earnings. A business that relies on rented space (or can be run without commercial space) is usually valued at 3 or 4 times earnings multiple PLUS equipment, inventory and possibly goodwill. A campground is closer to commercial real estate valuations. You could do the same type of calculations (3 or 4 times earnings) but then you will have to add in the market value of the real estate, the value of improvements and the value of the of the living quarters. As you explained, there are many businesses where the real estate valuations have exceeded the income valuations. That is why I have always preferred the income approach to valuation when financing a business. I wouldn't approve any loan for a business where the selling price exceeded the ability of the property to generate the income needed to pay the loans and provide free cash flow for the owner. Any difference in valuations would need to be covered by additional down payments, which usually becomes an insurmountable hurdle to the buyer. In situations where the business valuation is less that the real estate valuation, the business value is lost unless the business can be relocated or the property footprint reduced. However, there may still be value to a business that will cashflow the property allowing the owner to hold the real estate for even further appreciation.
pogoil
My wife and I are in our 40s and 5 years ago we bought a park on the Oregon It is a small park, 4 acres and 48 sites. We moved out of California with our 2 children and we have never looked back. The park is a perfect fit for us. We can run it as a family and get away as we have a tenant that is retired look after it when we need some down time. You will not get rich running a small RV park. It is hard work and you become a fix it man. That was no problem for us we are hard workers. But the change from a city of 70,000 to about 2,000 has been a good one. Hopefully when we get older it will be worth more, or one of our boys will want to run it and we can travel more. Time will tell. We have built up a good base of returning retired folks that stay for the summer we have some long term people and have some over night stays. It is a good mix.
I am not sure how a seasonal park can make it but they seem to. We also have 4 rentals on the property that help pay the bills which can be considerable. Cable, water, sewer, electric and insurance. We would not have it any other way. Fuel seems to be what we worry about the most. I tell my wife it would be a shame to do everything right and have fuel cost take us down because people will travel less. But I cannot control that. By the way in the 5 years last year with fuel costs the highest we have ever seen we had our best year and this year has surpassed last. We as Americans like to travel.
Lindsay Richards
One thing you must remember in any small business is that many people take cash out of it unreported. This trend has gotten a lots smaller now with so many people using debit and credit cards. People may or may not try to fool you on this point indicating that the park actually generates a lots more than reported. It might and then again, it might just be BS. If the buyer is getting a mortgage, the only income able to be used is from the last several years of tax returns. This skimming is not legal of course, but it is a fact of life and must be taken into consideration. It does open up a big fudge factor for the crooked seller to over inflate the value of a lesser property. Be careful.
kcmoedoe
QUOTE(Lindsay Richards @ Sep 28 2009, 03:01 PM) *

One thing you must remember in any small business is that many people take cash out of it unreported. This trend has gotten a lots smaller now with so many people using debit and credit cards. People may or may not try to fool you on this point indicating that the park actually generates a lots more than reported. It might and then again, it might just be BS. If the buyer is getting a mortgage, the only income able to be used is from the last several years of tax returns. This skimming is not legal of course, but it is a fact of life and must be taken into consideration. It does open up a big fudge factor for the crooked seller to over inflate the value of a lesser property. Be careful.
AMEN!! Beat the tax man, and you will eventually lose to the resale man or the loan man. If income doesn't exist on the books, it doesn't exist. Period, end of story.
Gunship Guy
What a great topic. The replies were all very informative. Pogoil, good luck with your park. Nice to hear things are going well.
pogoil
QUOTE(Gunship Guy @ Sep 28 2009, 10:02 PM) *

What a great topic. The replies were all very informative. Pogoil, good luck with your park. Nice to hear things are going well.

Gunship Guy,
Thank you for the kind words.
Pogoil.
coacbcps
QUOTE(Gunship Guy @ Sep 28 2009, 11:02 PM) *

What a great topic. The replies were all very informative. Pogoil, good luck with your park. Nice to hear things are going well.

My thoughts exactly! kcmoedoe you are an extremely good teacher. I have absolutely NO business background but was able to understand everything you said. Putting technical stuff into plain English is a gift. You must have been a very savvy bank executive!
campinngal
Pogoil,
Thanks for your insights. Am curious if your park is situated near any big attractions or is it a destination on its own. Also, would you recommend a small park or a spendy, big, established one in a tourist area?
pogoil
QUOTE(campinngal @ Sep 29 2009, 11:08 PM) *

Pogoil,
Thanks for your insights. Am curious if your park is situated near any big attractions or is it a destination on its own. Also, would you recommend a small park or a spendy, big, established one in a tourist area?


Well had we been able to afford it when we started to look we probally could have ended up in any location with an over night type park. We wanted to be along the coast some where because we have as a family always gravitated toward the coast. But we did not have unlimited funds. So we found a small older park in a small town on the coast. The park caters to nightly, weekly and monthly folks. We have a mix of long term as well. They are all wonderful people many retired full time RV people. When we bought the park we were not aware of how many people enjoy the full time RV lifestyle. We are like a small community. Some return year after year for the summer months and most are retired. We are active with potlucks, ice cream socials and coffee and social hour daily and some side trips as planned activities.
In my opinion the Oregon coast is a destination in it self. It is beautiful and the climate is mild all year long. But many of my guests follow the sun. There are no big attractions here but all the natural beauty one can stand. Hiking, biking, kayaking, fishing, crabbing, storm watching and so on.
In my opinion, situate your choice in the right location, large resort or small mom and pop and you should do well if the price of fuel stays reasonable.
Good luck in your choice.
Lindsay Richards
Keep in mind that if you live on the property, many of your normal expenses will be taken care of by the campground. Much of this is supposed to be prorated for tax purposes, but for folks like me who have actually been in a similar business, many, many people do take advantage of these savings and they should be considered when evaluating the pros and cons.
wantacampground
I would like to revive this topic as I am currently looking to purchase a campground and there was a lot of good information being written. I am also looking for insight on best places to find campgrounds currently for sale. If you are an owner and are looking to possibly sell in the Southeast...NC, North GA. please feel free to send me a message directly.

I am also looking for buyer resources. Items I should be looking at when visiting a potential campground.

Thank you all for any and all wisdom you can provide.
kcmoedoe
QUOTE(wantacampground @ Jun 13 2012, 11:36 AM) *

I would like to revive this topic as I am currently looking to purchase a campground and there was a lot of good information being written. I am also looking for insight on best places to find campgrounds currently for sale. If you are an owner and are looking to possibly sell in the Southeast...NC, North GA. please feel free to send me a message directly.

I am also looking for buyer resources. Items I should be looking at when visiting a potential campground.

Thank you all for any and all wisdom you can provide.

Best place to start is www.rvparkstore.com Many individuals and brokers post their listings on that site.
wantacampground
QUOTE(kcmoedoe @ Jun 13 2012, 01:55 PM) *

Best place to start is www.rvparkstore.com Many individuals and brokers post their listings on that site.



Kcmoedoe - thank you for your reply. I have read a lot of your posts and appreciate the knowledge that you have. I have been on the rvparkstore and others. I am trying to find some of the parks out there that might not tied to a broker or agent....not that there is anything wrong with this....but I am trying to find that hidden gem.
Lindsay Richards
You might consider scheduling an appointment with a psychologist first. I say this having retired from 10 years in the lodging business. It is truly a 24/7/365 business.
wantacampground
QUOTE(Lindsay Richards @ Jun 13 2012, 03:17 PM) *

You might consider scheduling an appointment with a psychologist first. I say this having retired from 10 years in the lodging business. It is truly a 24/7/365 business.



Lindsay,

I will book the appointment right away! biggrin.gif

Would you say being in the business was good to you?

Thank you for your comments.
kcmoedoe
QUOTE(wantacampground @ Jun 13 2012, 12:01 PM) *

Kcmoedoe - thank you for your reply. I have read a lot of your posts and appreciate the knowledge that you have. I have been on the rvparkstore and others. I am trying to find some of the parks out there that might not tied to a broker or agent....not that there is anything wrong with this....but I am trying to find that hidden gem.

I am not sure you will unearth a lot of hidden gems. Most owners who are looking to sell are going to be advertising their businesses. If a park is not for sale, the owner will likely only be interested in a price that would make it attractive for them. As the saying goes, everything is for sale at the right price.
Brokers will offer you some advantages. First, RV park brokerages are a very speciality business. They survive on their reputation. They will not knowingly sell a park with undisclosed problems, a park where the numbers are falsified, or even a park where the price is assuring that the enterprise will fail. The brokers I have known will turn away overpriced listings, they don't want to waste their time or the sellers.
Another source for parks for sale is Loopnet. They will require a subscription fee, but it is considered the top source for commerical real estate. Good luck.
wantacampground
QUOTE(kcmoedoe @ Jun 13 2012, 09:25 PM) *

I am not sure you will unearth a lot of hidden gems. Most owners who are looking to sell are going to be advertising their businesses. If a park is not for sale, the owner will likely only be interested in a price that would make it attractive for them. As the saying goes, everything is for sale at the right price.
Brokers will offer you some advantages. First, RV park brokerages are a very speciality business. They survive on their reputation. They will not knowingly sell a park with undisclosed problems, a park where the numbers are falsified, or even a park where the price is assuring that the enterprise will fail. The brokers I have known will turn away overpriced listings, they don't want to waste their time or the sellers.
Another source for parks for sale is Loopnet. They will require a subscription fee, but it is considered the top source for commerical real estate. Good luck.


Once again, thank you for the great information. I have to say the brokers that I have been working with thus far are as you have stated...very upfront about what they think of the parks that I am looking at.
Lindsay Richards
QUOTE
Would you say being in the business was good to you?


We bought an old house in the down town of a resort town in Florida and spent 5 months converting it to a B and B. We ran it for 10 years living onsite. We enjoyed it very much because of our personalities, but I might add that innkeepers have a high divorce rate. It is a 24/7/365 business. You mind is there even if your body is not.The business supplied all of our needs such as food, shelter, electricity, insurance, gas, utilities, ETC and we were able to put away money for retirement. Our real financial success came when we sold as we had taken not much and made it into a money generating business. I think you make you money by buying right. It is very hard to sell a property for more than it is worth (banks and professionals are involved), but it is easy to buy a property for less than it is worth. (or can be worth). The fun of a business is growing it, not maintaining it. Start with the idea of expanding in the future. That's where you can make your money. There are also factors that you have no control over. My wife grew up in a motel business in Florida. They were right on US 41 which used to be the main route in Florida. A new bridge was built which bypassed them by 1/4 mile. Really hurt their business. Dealing with people can be bad with that 5% or so who can be jerks. People who cancel reservations at the last minute when you have turned away others can drive you silly.
kcmoedoe
If you are willing to wade through a bunch of dead ends, unreasonable prices and false leads, you might want to post your inquiry on www.rv.net in their forums. It gets many more views than these forums. But you never know, something that would work for you might pop up.
SASMITH
wantacampground, Thanks for reviving this thread, it has some very good info for me as we just purchased a piece of property in middle ga for another purpose, but found that it was once a campground (2 acres, 52 spaces in pecan orchard with I-75 frontage). Though the property was originally bought for another purpose it has such great potential as an RV park I decided to look into putting it back into operation. We considered reselling it, but was told by CG brokers that fixer up parks don't sell. Any one have any ideas on this? Thanks, SASmith
Lindsay Richards
We go by there on most trips as it is about 4 or 5 hours from our home. Not a lot of campgrounds as I remember. How far from an exit? That is a big concern for folks. That area is very pretty and I remember years ago (pre I-75) that there were pecan groves through out. Good Luck on your new venture. You can start with a smaller number of sites and finish the rest as you go.
Lindsay Richards
I was going to college in Tampa from 1962 to 1966 and my wife to be was in Nursing School in Atlanta. I made that trip many times. Used US 41 and then parts of I-75 as it was being built. We have stayed in that area many times. Generally in Perry at several of the parks or at the Wal-Mart. It is about half way to my wife's sister or to my brother's. Makes a great stop for us. We like to limit traveling to about 5 hours or so. That is a beautiful area. We sometimes stop and eat lunch at the Perry Hotel. Food is great, but it is getting run down. There is certainly a lot of traffic on I-75. There would be a winter and summer season also. I have a nephew that is stationed at Warner Robbins Air Force base. My brother just bought a new coach at the Camping World in that area.
Texasrvers
SASMITH,

We are glad that you are a member of our website and that you are participating in our forum. We realize you are in just the beginning stages of starting an RV park, and this is a great place to ask for and get advice. However, we do not allow park owners to tell where their park is located as this could be considered solicitation which we do not allow. We have removed your last post as it too closely identified the area where your park will be. Please feel free to continue your discussion about starting an RV park; just please do not mention specifically where it is. Thanks.
SASMITH
QUOTE(Texasrvers @ Aug 5 2012, 01:36 PM) *

SASMITH,

We are glad that you are a member of our website and that you are participating in our forum. We realize you are in just the beginning stages of starting an RV park, and this is a great place to ask for and get advice. However, we do not allow park owners to tell where their park is located as this could be considered solicitation which we do not allow. We have removed your last post as it too closely identified the area where your park will be. Please feel free to continue your discussion about starting an RV park; just please do not mention specifically where it is. Thanks.


SORYY, Was trying to stay away from that by not giving address. Thanks, SAS
wantacampground
QUOTE(SASMITH @ Aug 4 2012, 09:39 PM) *

wantacampground, Thanks for reviving this thread, it has some very good info for me as we just purchased a piece of property in middle ga for another purpose, but found that it was once a campground (2 acres, 52 spaces in pecan orchard with I-75 frontage). Though the property was originally bought for another purpose it has such great potential as an RV park I decided to look into putting it back into operation. We considered reselling it, but was told by CG brokers that fixer up parks don't sell. Any one have any ideas on this? Thanks, SASmith



Sasmith

Sorry, been out for awhile. I think it would be great if you can get the campground backup and going again. I would disagree with the broker that fixer upper parks do not sell...they just need to priced accordingly. I have and continue to look at many parks out there and the pricing ranges a great deal depending on a whole lot of variables. Would be happy to discuss with you if you like?

Welcome to the forum and I hope that you are enjoying your new property/campground - :-)
SASMITH
Sorry, been out for awhile. I think it would be great if you can get the campground backup and going again. I would disagree with the broker that fixer upper parks do not sell...they just need to priced accordingly. I have and continue to look at many parks out there and the pricing ranges a great deal depending on a whole lot of variables. Would be happy to discuss with you if you like?

Thanks for the response, I will say also that I agree that a fixxer up park in the right location could be someones diamond in the rough. Just not sure I am the one to get this one going again. would like your opinion on pricing, but knowing that location plays a big part in this and as this forum does not allow me to give that info, you may want to respond to my direct e-mail asab@windstream.net(if this is allowed by the moderator?) SASmith
Lindsay Richards
I think a fair price is about 5 to 6 times the gross income.
kcmoedoe
QUOTE(Lindsay Richards @ Aug 15 2012, 09:24 PM) *

I think a fair price is about 5 to 6 times the gross income.

Parks are currently selling at between 7 to 11 times Ebidta (earnings before interest,depreciation, income taxes and amortization) That is a much better indication of value than gross income, which can be misleading if expenses are much different that average. You also must factor in any deferred maintance and anything that is out of the ordinary. For example, a quality home for the owner adds value as does any unused acreage. Poor living quarters deducts value. You also must closely examine any market conditions that may fundamentally change the income stream. Lindsay mentioned the property where the new highway bypassed the business. Using the income before the bypass would have resulted in grossly overpaying. Same with parks that earn a lot of income from temporary workers, such as oil field workers. Those workers and jobs eventually move on. On the other side, income may be poised to suddenly rise if a new road is being constructed that will funnel traffic to the park or an attraction is being built or upgraded that will add additional customers. Finally, altenative use valuations sometime come into play. Many RV parks are actually worth more as development property. A person can pay a premium for such parks, use the park's income to pay the carrying costs and eventually sell the park for that higher use conversion and make more money than selling it as an RV park. Just a lot to consider before tossing out or buying any property based on some formula for fair value.
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