Interested in buying an RV park

Discussion in 'Park Management' started by Scottam99, Apr 27, 2017.

  1. mdcamping

    mdcamping
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    Very scenic area, we have stayed at a few of the campgrounds your way. Just one suggestion if you have not already done so. Maybe consult with a independent certified financial planner (CFP) about your 401K before making any moves, maybe also a CPA

    Mike
     
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  2. newkcmoedoe

    newkcmoedoe
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    You will be paying income taxes on that 401K withdrawal, so that $400,000 will net somewhere around $300,000. RV park loans will require between 25% to 40% down payment, so you will be looking at parks selling for between $800,000 and $1,200,000. Funny thing about RV park pricing is there is no premium attached to the price of either a seasonal or year round park. Because of that, I would gravitate to a seasonal park, why work year round when you can make the same income working only 7 or 8 months. For me, there are four things to consider when evaluating a park for purchase.
    1. Net income, not gross revenues or any other metric. A park usually sells for between 7 to 11 times net.
    2. Deferred maintenance how much more money do you have to put into it to make it as it should be. I subtract this amount from the value I get from item one.
    3. Potential for improvement on the net income. This is what determines the multiple in item one. The more potential, the higher multiple I am willing to pay.
    4. Do I want to be in that area. Personal preference, but relates to item one.
     
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