Owning a Campground

[Gig_em]

Does anyone own a campground? I'm a little young to retire, but always thinking about it. I've considered buying campgrounds. Would prefer a destination type campground (no full timers) that is/can be turned in to a premium site. Few questions. I'm sure I'll have more.

Pluses/minuses of owning this type of business?
Staffing/work campers?
Manage from offsite possible?
Biggest problems?
Owning multiple campgrounds?
Other sources on income from campground?
Fair purchase price?
Tax write offs for traveling?
Seminars worth while?
Other advice?

[4X4Dodger]

eichacsj wrote:
Start up with the https://www.sba.gov/ they offer free advise on how to start up any business. Take the time to develop a business plan, It can save you 100'S of thousands if not millions getting started.

Like others have said visit some parks and get an idea of what you want to offer. Add that to your plan.

I have looked thinking I wanted to do this and spot checked in the remote sites of Maine and Alaska. You can buy some for less than a million. But I have to tell you you are dealing with service to the public, I can't think of a harder group to deal with. In our case retail was difficult.

Good luck and keep us posted.

I am not sure you really have an accurate idea what it takes to get ROI on a Million Dollar investment. Run the numbers. Being in a remote location will make it that much tougher. I am not sure the cash flow would be sufficient to even service the debt. Much less pay the electric bill.

[eichacsj]

Start up with the https://www.sba.gov/ they offer free advise on how to start up any business. Take the time to develop a business plan, It can save you 100'S of thousands if not millions getting started.

Like others have said visit some parks and get an idea of what you want to offer. Add that to your plan.

I have looked thinking I wanted to do this and spot checked in the remote sites of Maine and Alaska. You can buy some for less than a million. But I have to tell you you are dealing with service to the public, I can't think of a harder group to deal with. In our case retail was difficult.

Good luck and keep us posted.

[BubbaChris]

parkmanaa wrote:
Wife & I have owned a RV park in Texas for just over 18 years.

Love the dog wash feature!

[4X4Dodger]

Gig em wrote:
Should have said no permanent residence instead of no full timers.

I wouldn't invision having restrictions on type or age of trailer/RV. Would even want a tent area.

I can tell from your post that you are not a business owner. The full time residents are what gives you regular cash flow. All businesses exist on Cash Flow...not profit. Anything you can do to level out the ups and downs of your cash flow is a positive thing. full time residents do just that.

I would only do this if you have some good solid experience in customer service. Truly like dealing with people..even difficult ones. And will be fully capitalized.

It is my feeling that a lot of Campground owners are Hobby-ist business people who have never owned and operated a successful or even more importantly a failed business in their lives and come to it thinking it will be a "Nice way to Retire".

Take it from someone who has been in business for most of my life and who comes from a highly successful family business background: Being in business is a FULL TIME job, 24 hours a day. You are NOT your own Boss, the Bank, the stock market, your investors and the CUSTOMERS are your bosses.

Also keep in mind that I built and operated my own Boutique Hotel in a South East Asian Resort Area and have a pretty good idea what this is all about.

Instead of looking at what YOU want in a business you need to give some thought and some very clear headed and thoughtful and thorough research on what IS successful, what truly works and what the trends are in the RV Park world. Then mold your vision of an RV park around the proven successes out there.

One of the things I would do is to travel the US and set up meetings with other park owners and have them educate you about what you are facing. (be sure to tell them your park is WAY out of their area)

And be prepared to work hard and put up with many challenges and problems and disgruntled people. And a lot of very very nice ones too.

[parkmanaa]

Wife & I have owned a RV park in Texas for just over 18 years. It was to be my retirement project after working for a large international company for 40 years. Turned into a long-term project with 4 of my 5 immediate family members involved.
We were lucky to find this dilapidated RV park for which the only thing going for it was it's proximity to a very large Texas city.
IMHO be very, very careful about the location. It can make or break very quickly. Also, any water attraction (lake, river, etc) helps improve occupancy rates.
Over time, through a lot of very hard but rewarding work, we have turned this park into one to be proud of. 100% full year round, typically with a waiting list for longer-term sites.
We, too went into this venture planning on only over-nighters or weekly guests. Quickly learned that does not pay off. We do a lot of short-term, but found we needed the stable long-term guests to pay the bills. With short-term you are at the mercy of too many uncontrollable factors; price of fuel being one. Amazing how volume can increase/decrease relating to cost of fuel.
I personally would not recommend absentee ownership of an RV park. Also, I would not buy a RV park if I couldn't perform most maint. tasks, i.e., plumbing and electrical repairs mainly. Furtunately, in Texas, unless you are located in a controlling municipality, the laws allow you, as owner, to repair anything, however if you have electrical repairs done by others, they must be licensed in the state.
Our park is in a MUD district; I would not buy a park on a septic
system.
Other moneh-makers: propane, ice, park cabins, a few RV necessities (coax cables, water hoses, sewer hookup needs, etc.)
We are a member of ARVC (National Association of Campground Owners), and a few years ago they published an article on constructing a new RV park. They came up with a figure of $12,000 per site (not counting cost of land) to build roads and all the infrastructure items you need to provide a potentially successful park.
Last item; IMHO the major downside of owning a RV park is the fact it ties you down and makes extended traveling impossible.
I know this is long, but hope it gives you a few more things to think about.

[Gig_em]

Thanks for the help. I'll probably spend some time visiting with owners in parks we visit and see where it leads. Not in a hurry.

[Al_Fresco]

Here is an interesting interview with the owners of the Blackwell RV park in Coeur d'Alene, ID.

[tpi]

A nod to the post above. Good stuff.

[westernrvparkow]

Pros: Steady, reliable income stream. Bank Financeable. Ownership does not drive the business, so you can buy one and be assured the customers will stay, which is not always the case. (for example, an appliance repair business might only have customers because the owner is known for being a dang good repairman, or a landscape company's biggest clients are people the current owner went to school with).
RV Parks are real estate based, so the value never goes to zero. It requires no special skills, no special training and no special licenses to become a park owner. One big plus is you can live in some great destinations and make money while living there.
Cons: You are dealing with the public and a certain percentage are, how should we say it, the little round area in the south end of north bound mules. Problems need to fixed immediately. No power or a stopped up sewer line cannot wait. Not a get rich quick scheme, you won't suddenly develop a better mousetrap, go public and become a billionaire overnight. Oh, and that great place where you live, you are often too busy to really enjoy all the benefits of living there.
Pricing: Parks are generally trading for between 8 and 11 times NET income. That is the number I look at. Everything else (X times gross less Cost of goods sold, $$ per site, real estate value plus x times earnings etc. are much more subject to a bit of manipulation, for lack of a better term. ) Things that factor into whether or not you should pay 8 times earnings or 11 times earnings are things like deferred maintenance, whether or not there is additional value attached, besides the park (quality owner housing, potential for future change of use to higher valuation, unutilized or underutilized profit centers, special equipment etc.) And since it is real estate, three of the most important considerations are location, location, location.
What to watch out for: Sewerage issues are the number one problem often overlooked. Expansion might not be possible if the park cannot meet the environmental concerns currently in place. A current septic system is probably grandfathered in and fine, but expansion takes it to a new level. Water, be sure it is plentiful and problem free. Situation specific income that may not continue. Oil field workers making up the bulk of the income probably won't continue forever. Don't rely on a one year bump in income without a lot of research. Could be they expanded, improved advertising and now have that business ongoing, or there could have been a big festival or something else that gave them a one time boost.
Other notes: Something I found a bit strange is the fact that seasonally open parks and parks open all year command about the same multiples. Personally, I would pay more for a park where I was only open 6 months than I would for a park that was open all year long. employees are problematic at seasonal parks. You really can't hire full time, so you have a lot of turnover with the training associated with that turnover. The good news is you can usually get great workampers, but there is still a learning curve.
I wouldn't own more than one until you had a great handle on operating a park. Remote management will cost you a great deal of profits. A manager cannot know your mindset, so they will either defer some maintenance to keep profits up, or spend excess money on repairs and the like that could be handled by the staff. It is just too easy for someone to spend your money. In my opinion, except at the big corporate level (and read the reviews about those parks) RV parks are really a hands on venture.
All in all it's a really good business, good luck if you move forward.

[Big_Katuna]

We owned a vacation motel for ten years and have looked at campgrounds. You are married to them.

20% is the minimum amount needed to put down. More like 40%-50%.
Most owners live on the premises and want/need to walk away with enough to start over or buy a house or RV or pay off the note.

[Ivylog]

Oh boy where to begin. Yes I own a campground that I built 20 years ago. It was an instant success after 10 years. Fortunately I needed the right off and now that it is making some money I can use the income. It has not been one of my better projects but there is a long term objective.

You do not say what part of Texas so is it a Snowbird area or a summer time area? Being in the mountains where it's too cold in the winter, we are close for four months. I started out with a combination of seasonal and overnight sites but my short term sites were rarely over 30% occupancy. Several years ago I went to seasonal only partly because there is a Walmart a mile away. Yes, I stay at Walmarts when traveling.

Being closed for several months has some real advantages in that it keeps people from living on the cheap in your park. The phone rings: "How much is it to stay in your park a month?" You know we are closed in the winter and that you pay in advance for the eight months of use and four months of storage? CLICK

Fortunately I had a couple that managed the park for most of the years. He was a farmboy that never learn there was only eight hours in a work day and he was very handy. She was good with people as I probably would've run many of them off. There is a lot more to running a campground and most people think, especially with rigs coming and going at all hours of the day and night and forgetting to unhook from the water and power.

Like Hunt public storage I look at the campground as a temporary use of lake front property that will become very valuable in the future as a 80 unit condominium project. Not in my lifetime, but some day.
Hope this helps. Lake Nottely RV Park

[RGar974417]

If you've never been in business for yourself,be aware you will be on call 24/7.It's alot of work and you're dealing directly with the public.I do work for one local campground and the owner told me he thinks it's best to have both seasonal and transient sites.The seasonal will give you a guaranteed source of income.I would just make sure the 2 sections are seperate and have rules in place so the seasonals don't get filled with junk.

[oldmattb]

If you can, visit the KOA in San Diego. A lot of lessons there. We saw a mix of tents, cabins, church groups, small trailers, huge DPs, some ancient-looking RVs.

They have rental bicycles, pedal carts, a restaurant/snack bar, small store, pet areas, firewood sales, moveable fire rings, propane sales.

Another great one is the KOA near Mount Rushmore - horse stable, live bands, coffee shop, gift shop, etc.

Both of these locations had a lot of going on and they were a fun and festive operations. No hint of permanent residents. I have pulled in and right back out of many campgrounds with barrels of beer cans, makeshift porches, cars on blocks, old tires.

Matt B

[Gig_em]

Should have said no permanent residence instead of no full timers.

I wouldn't invision having restrictions on type or age of trailer/RV. Would even want a tent area.