Buying an RV Park
Does anyone have experience, private or otherwise, in purchasing an RV park? If so, what types of things do you address on the formal offer that may differ from buying a typical single-family residen...
Forum Discussion
Some people are trying to make a transaction like this way more complicated than it is. An attorney and an accountant would be beneficial, but they will not save you from a bad deal. The attorney is needed to protect you from liabilities incurred by the previous owner and just to make sure all the i's are dotted and t's crossed. The accountant will help you set up the valuations of all the improvements and personal property that is transferring with the sale to insure you can get the best depreciation allowances. The accountant will also give you advice how to structure the business for the best tax treatment of the income and can relay that information to the attorney.
You already are familiar with the property, which is a plus and a minus. You should know what works and what needs work, that is good. You may take for granted some things that are working, but really are just cobbled together, that is bad. An electrical inspector and a trip to the sanitarians office to check on the sewage situation is time well spent.
Upside on the park may be very much over-rated. We don't know why you are buying the park, it very well may be for the income it currently generates and the change in lifestyle. Great businesses change hands for premium money daily that have little to no ability to grow, I mean you wouldn't turn down buying a profitable McDonalds for a great price simply because the franchise agreement says you cannot make the dollar menu items $5.00. If the park makes the money you need in a short season, that works. Be sure to evaluate the downside much more thoroughly than the upside, that is where you can be financially crushed. If the park's last three years were great, but the park was filled with workers on a three year construction project, you will probably have a big problem come next season.
You already have many great suggestions on items to look out for. Let me add
1. Be sure to collect all prepaid rents from seller at closing.
2. Be sure of all commitments made to returning guests
3. Be sure to shut down any and all local charge accounts and let the local merchants know ownership has changed
4. You will need to get a new agreement with a credit card processor, and that will require credit approval.
5. Talk to a county planner to be sure all your buildings are approved, any plans you have for the future can be done and investigate any local or regional quirks. (I.E. mineral rights, water rights, easements etc.)
6. Get a detailed list of all personal property that is being transferred with the sale. You don't want to find out after the sale that the seller didn't include the tractor, the computers or the washing machines when he sold the property
7. Have a transition agreement in place. If you will need the seller's help opening the park or learning to run some item, be sure they are required to do so.
It is almost a 100% certainty you will need to personally guarantee any loan, that is the reality in 2013. Again, that shouldn't be a deal-breaker. Good luck
You already are familiar with the property, which is a plus and a minus. You should know what works and what needs work, that is good. You may take for granted some things that are working, but really are just cobbled together, that is bad. An electrical inspector and a trip to the sanitarians office to check on the sewage situation is time well spent.
Upside on the park may be very much over-rated. We don't know why you are buying the park, it very well may be for the income it currently generates and the change in lifestyle. Great businesses change hands for premium money daily that have little to no ability to grow, I mean you wouldn't turn down buying a profitable McDonalds for a great price simply because the franchise agreement says you cannot make the dollar menu items $5.00. If the park makes the money you need in a short season, that works. Be sure to evaluate the downside much more thoroughly than the upside, that is where you can be financially crushed. If the park's last three years were great, but the park was filled with workers on a three year construction project, you will probably have a big problem come next season.
You already have many great suggestions on items to look out for. Let me add
1. Be sure to collect all prepaid rents from seller at closing.
2. Be sure of all commitments made to returning guests
3. Be sure to shut down any and all local charge accounts and let the local merchants know ownership has changed
4. You will need to get a new agreement with a credit card processor, and that will require credit approval.
5. Talk to a county planner to be sure all your buildings are approved, any plans you have for the future can be done and investigate any local or regional quirks. (I.E. mineral rights, water rights, easements etc.)
6. Get a detailed list of all personal property that is being transferred with the sale. You don't want to find out after the sale that the seller didn't include the tractor, the computers or the washing machines when he sold the property
7. Have a transition agreement in place. If you will need the seller's help opening the park or learning to run some item, be sure they are required to do so.
It is almost a 100% certainty you will need to personally guarantee any loan, that is the reality in 2013. Again, that shouldn't be a deal-breaker. Good luck
