Bunch of questions from a prospective buyer

Discussion in 'Park Management' started by The Part Timer, Jun 4, 2022.

  1. The Part Timer

    The Part Timer
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    I am considering buying a campground. I have been for about 5 years now and the desire is just getting stronger. I am 39M, single, though looking to start a family. The question is largely between a campground or a multi-family apartment complex or mobile home park.

    I am selling my house and will soon have $650-800k cash/liquid. I am looking for parks in the $500k-800k range. Ideal is to own it outright with $100k left in the bank, but willing to have a small mortgage. I also have ~500k in my 401k and I am looking into a "Rollover Business Start-up" or ROBS. I am trying to figure out which would be the better option, say a $300k 401k withdrawal or a $300k loan. My gut always tells my my own cash is more valuable than other people's, but its an option.

    So the best looking properties I am seeing in this range are grossing maybe $120k with a mix of full hook ups and partials / boon docks, cabins and tents with room to expand in a camp friendly state / county. These are seasonal with the season being 19-20 weeks. Quite a few of them sound like they are doing a lot of cash business off books. Wood, ice, store, laundry. Most seem to have minimal amenities.

    I figure I need about 100 hours a week of labor. I think with that amount I would be able to actually slip away sometimes. Like 10-20 hours a week during the season. Like church and weekly grocery shopping on Sundays for 5 hours and 1-3 other trips per week. Is that reasonable? I am assuming $14/hour average after all taxes or $26,600 in annual labor costs. How does camp work labor compare to paid work?

    What amenities do you feel offer the biggest return? One's I am considering include wifi, mini golf, old arcade machines, pool table, horseshoe pits, badminton, volleyball, tennis, and basketball courts, hay rides, camp store, playground with swings and "big toy", pavilion with multiple screens and projector, renting bikes, dirt bikes and quads depending on the space available. hot food, coffee and fountain drinks.
    How much is insurance on pools? Is it that expensive that everyone is keeping theirs empty?
    Anyone ever see a skate park at a campground? Or Laser Tag? Liability on outdoor trampolines?

    What type of customers spend the most on camp store stuff? I assume glampers? The more boujie they are the more they spend? What attracts well do to senior citizens? Do any of you track how much the average camper spends at your store or anything like that?

    What is your experience with season long campers? Do any of you have requirements for camper quality or year?

    Anyone run a youtube channel about their business?

    Thanks all
     
  2. Fitzjohnfan

    Fitzjohnfan
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    I cant speak from a park owner perspective, but from a customer perspective, I say you can easily stock a section of your store with RV supplies, and probably make $$ down the road. sewer hoses and supply hoses can go bad at the wrong time, and having them in your store would be a godsend, us they never spoil.

    I always like seeing old arcade machines in a small rec room at an RV park, but usually they seem broken, so I suspect other park owners have found the rate of return to be too low to keep them up.

    laundry equipment would be a good investment. anyone staying there more than 5 days will probably need to do some laundry.

    you will need to determine why people will be staying at your park. will it be to visit attractions in your area or stay at the park and enjoy tge camping experience. if it's the latter, than the pool idea might be a good expense, but also look at your local climate. if you are in cool mountain air, the pool might not be a necessity to your guests.

    hope this helps. good luck with your purchase.

    regards,
    chris
     
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  3. NYDutch

    NYDutch
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    Be very careful when evaluating potential parks to purchase, preferably with a knowledgeable professional appraiser in tow. Parks in your price range are likely to need some serious infrastructure upgrades, particularly in the electrical and plumbing areas. Building roofs are another area where maintenance is often put off in contemplation of a sale.

    I think your labor numbers are a little off. With 168 hours in a week, working 100 of them only leaves about 9 hours a day for all other activities, including meals and sleeping. One or two minimum wage plus free campsite workers could help with that situation.
     
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  4. weighit

    weighit
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    There was a time once when we first started our full time traveling adventure I had thought why not own a camopground? Looked like easy money, lots of nice folks out there camping, what could go wrong? Talked to a lady owner that looked worn out, and she was on the younger side. She said owning a rv park was like being in charge of a little city, you are the police department, the electrical dept, the sewer dept, the complaint dept, the building repair dept, the HR dept, the finincial payroll dept and the parking police, 24 hours a day your open. Then you have the many time consuming things that everyday life throws at you. PLUS you going to want to make money. Every employee is not going to have the same interests you have in making your park work. Each camper person/couple or family has different desires, and you trying to fill every ones need can become a real nightmare. I would strongly suggest you do some real investigation before investing your money to ensure your going in with your eyes WIDE open,
     
  5. Rollin Ollens

    Rollin Ollens
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    Wise words. We were camp hosts for three and a half summers. As hosts, we did not have a quarter of the burden an owner would have but I can say, at the end of many days, we wondered if it was only our park that attracted idiots. I echo weighit's advice. Try working at a campground before you dive in. I have to add though, for the most part we did enjoy being hosts.

    Darrell
     
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  6. newkcmoedoe

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    Gross revenues is close to meaningless. I could start a business tomorrow and easily gross billions of dollars in sales overnight. But selling hundred dollar bills for ninety bucks isn’t very profitable. Concern yourself with net income and expenses. The net income will give you a more accurate reading on how the business is performing and the expenses will give insight into areas where you might save some money or possibly expose some problems. At our parks we found 90%+ of the guests paid with credit cards. I wouldn’t place any confidence in sellers saying they make a bunch of money off the books. And do you really want to trust the other things the seller is or isn’t disclosing when they openly tell you they are fine cheating on taxes?
    As for all the other things you mentioned to make money, the impacts will likely be negligible on the bottom line but potentially have big impacts on your time.
    We always believed the best way to increase profitability was to make the core business, renting RV sites, as good as it can be. Improving your sites with better landscaping, good power, and level sites will allow you to raise rates which is the most profitable action a park can take. The only cost is the increased credit card fees and it doesn’t require a minute extra of labor while at the same time those site improvements will likely reduce your maintenance and repairs saving time and money.
    Finally, running a park as a one person show will likely lead to a catastrophic failure. Sooner or later you will either burn out, have multiple issues that require immediate attention at the same time or life will intervene and you will be sidelined for a period of time. You will need a plan for those issues and an employee or two is likely the easiest plan to implement. Good luck
     
  7. weighit

    weighit
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    >>We always believed the best way to increase profitability was to make the core business, renting RV sites, as good as it can be.<<

    We were in a rv park may years ago while full time traveling and talked with the owner. His little park had free laundry, washer and dryer. I asked why he was giving away that income producing avenue? He said I make my money on the dirt your parking on, I charge more money in my park for a site than the guy down the street, and my park is full and his isn't. People think they are getting a good deal with a wash or dry and that is fine, I know I'm making ,money when the park is full. They use the machines one day or maybe two, and they stay a week or so, paying me more everyday. It was a good way to make sure his investment was paying off.
     
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