I've learned many lessons after my 1st season at my RV park/campground.
Some of these may be obvious to you #SMBTwit guys and gals but I am just a simple RE guy trying to run a seasonal campground.
Here goes:
(2/12)
1. If you're buying your 1st park and have never managed 1, manage it yourself for a season.
You should know the park & ops like the back of your hand b4 u expect anyone else to do it effectively.
Unless u r a seasoned pro with an ops team, u should do it yourself 1st.
(3/12)
Furthermore, this is especially true if you are buying a park in an area that you are not already familiar with. Don't rush 2 hire someone b4 closing.
Get situated at the park, meet neighbors, network w/ local biz owners. You'll likely find a better manager that way.
(4/12)
2. Put cameras up monitoring the entrance, the store, any critical infrastructure, and any common areas.
For obvious reasons, you want to be able to see what is happening at the park when you are not there.
Your customers and managers will notice and act accordingly.
(5/12)
3. If you are not present, make sure your manager sends you video recordings of critical tasks being completed.
I implemented this when I found out my mgr told me he winterized our ๐ง lines and well pumps and I came back to 2 ruined pumps and a bunch of broken ๐ง lines.
(6/12)
4. If possible, hire on a trial basis b4 you allow any1 to occupy ๐ on the property.
Firing any1 who occupies your ๐ is messy and will drag things out.
Even if they are cooperative, it will take them time to find another place and move out, delaying your next hire.
(7/12)
5. Hire slow, fire fast.
If u r like me and intended to buy a park w/o managing it yourself, manager turnover is your enemy.
It is far better to plan to spend โ upfront taking over and learning ops @ the park than to unexpectedly have 2 jump in & manage down the line.
(8/12)
6. If u r new to the business, determine what size park is right for you, and buy one 50-100% bigger.
Unless very high-end or in a premium location, small parks (under ~75 sites) don't make enough cash flow to pay a good manager and pay yourself handsomely. Go bigger!
(9/12)
Small parks will be harder to sell down the line at a premium to what you paid unless you are buying a total junker at a good price and making it nice and DRASTICALLY increasing income, like 2-3x.
You want to sell to a professional investor, not a hobbyist.
(10/12)
Larger parks sell at a premium to better buyers.
Especially if you are a first-time buyer, you don't want to sell down the line to another first-time buyer. You want to sell with a high probability of execution.
(11/12)
7. Unless you are experienced in construction and confident you can perform due diligence on your own, bring in a professional to inspect each system.
Septic, sewer, waste water treatment, well water chlorination, electric, and all buildings. Have them all inspected!
(12/12)
There are many more lessons learned (and to learn still) but these are the top ones I could fit in 12 tweets. Let me know your thoughts!
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Operating expenses on seasonal campgrounds/RV parks
I've been working on a proforma (forecasted profit & loss) for a portfolio of campgrounds for discussion purposes with investors who are interested in getting involved in such a venture.
What does this look like? ๐
(2/8)
First, let's describe this hypothetical portfolio. We're talking about 1,000 sites across ideally 7-10 seasonal parks located in ME, NH, VT, MA, RI, CT, NY or PA. The parks will average 80-90% full-season campsite rentals (vs. transient) on private water and septic.
(3/8)
Expense categories:
General & Administrative:
$125 per year per campsite
This category includes office expenses and supplies, software/tech, licenses and permits, etc.
(1/14) A large learning curve for me when I opted to buy an RV park was familiarizing myself with the unique facilities and infrastructure at an RV park.
This thread will cover enviro, water/sewer/septic, electrical, and facilities
(2/14) Enviro
This goes for virtually any piece of commercial property. GET A PHASE I! This is a high level report you can have an environmental firm run for a few thou. If they find any problems and you want to to pursue the deal, you will have to for further on-site testing.
(3/14) Enviro cont.
In RV parks and campgrounds, your main environmental concerns will come from any hazardous surrounding properties, underground storage tanks, any unacceptable sewage/septic systems, and any RVs disposing of waste inappropriately.
(1/15) Much like other real estate asset types with heavy mom and pop concentration, RV park books are often a mess.
First, let's dive into auditing income using an RV park deal I recently acquired.
These books were definitely a mess!
(2/15) I was sent 3 yrs of tax returns, a pile of receipts, reservation slips, and a spreadsheet put together by the seller to try and make sense of it all.
Tax returns provided nothing more than context, because the income was drastically underreported and expenses overreported
(3/15) This required me to reverse-engineer a P&L using all of the raw data provided and the tax returns as context.
This park had roughly half seasonal and half transient income. We were able to substantiate the seasonal income through copies of check/bank records.
(1/8) Letโs talk about financing RV parks. This is one of the great inefficiencies in the industry that stops a ton of investors in their tracks, but also creates a lot of opportunity.
There are a few obscure national banks out there who will lend on RV parksโฆ
(2/8) that will lend at up to ~65% LTV, 20 yr amort, and interest rates in the 5โs. However, theyโre likely not going to lend to anyone that doesnโt have a track record in the industry.
Next stop, local banks located near your target RV park: certainly worth reaching out toโฆ
(3/8) but youโll quickly find they either โget itโ or they donโt. You may find better terms here if theyโll lend on RV parks, because they simply have a general commercial loan product they slap on everything.
Any of these bankers you come across may be thinking of pushing you..