Buying a dilapidated campground: Where/How to start?

Question

Lessee, how do I make this short 'n sweet. There's a campground somewhere in central Montana where I've stayed a number of times over the years. It's small... only like 25-30 sites. Its current owner is going through a nasty divorce and the place has to get sold. We think we can get it pretty cheap. I have a partner in this... he has $100k cash in the bank and a modest income; I have very little cash in the bank, but I have a good income as a software engineer. We both have credit scores in the high 600's to low 700's (depending on how the wind blows).

Based on what I learned while dabbling in commercial real estate about ten years ago in SoCal, I know we'll need a business plan. My parter, we'll call him Tim (may or may not be his real name) says we need to have an actual appraisal done. I tend to agree. Then we need to get copies of the campground's financials (to build the business plan and ultimately decide if this place is worth going after in the first place). Do we need to get a commercial real estate agent involved? We were going to hire an attorney too. But to be honest, we're both fairly clueless about this and would very much appreciate any info we could get on how to proceed. We just figure that if we have a solid business plan, and can show that to the bank along with an appraisal that's well above our purchase price, it has a chance of succeeding.

Help please? :)

Jerrad Shepherd · Answer

@Robert Glover

We own an RV park in central Nebraska with 108 Rv spots and around 50 primitive spots on a 35 acre parcel around a 10 acre pond. I wouldn’t want to own one much smaller than ours, there are definitely economies of scale for such a business unless you are planning to run it remotely which sounds like a real headache to me.

Keith Miller · Answer

Hey Robert,

Very interesting situation you have here. I'd start by talking to the owner and determining their interest level in selling. If they're open to it, getting the financials is an important first step. Using those as a starting point, you could then start building a business plan. I don't necessarily think that you need to order an appraisal on your own, because when you apply to a bank for a loan, they will order their own appraisal to determine value. They may consider your appraisal, but you'll still have to pay for the bank to get one, and you don't want to have to pay for two. You don't need a commercial agent in my opinion, but you will need a lawyer to help set up an LLC and an operating agreement between you and your partner.

The most important thing that I'm not seeing in your plan is who will manage it. This is the kind of property that likely needs a full-time manager, or at least a very reliable part time worker. I assume that neither of you will be that person, because they need to be local. Based on the challenge of finding reliable help these days, I'd ensure that part of your business plan is identifying that person, or at least coming up with a comprehensive strategy of how to find your manager. You may be able to get a local property manager to do so, but many of them stay away from more management-intensive properties like a campground.

My top priority would be to read several books on managing campgrounds. I would strongly advise against jumping into this deal unless you are far more knowledgeable about how to approach campground management, what the common pitfalls are, common ways to increase income, and the little tips and tricks to help a business run well. This will be a small business, not a passive real estate deal, so the success is far more dependent on your skill and knowledge than anything else. I'd do some Googling for relevant books, and read them asap. Below are a couple examples.

Good luck!

https://www.google.com/aclk?sa...

Robert Glover · Answer

Thanks for the input. It's not a matter of IF it's for sale... it HAS to be sold. It's part of their divorce. So we're trying to grab it while we may be able to get it cheap. It needs a lot of work. We've spent two summers here in a row and have been discussing it for a long time.

We'll be living here to manage it. The guy who is the current manager will stay on-staff; he's a good guy and is reliable. My business partner will live here year-round; I may disappear during the winter months when it's super cold and the only people here will be people willing to live with ONLY electricity... no water, no sewer; bathrooms/showers in the clubhouse. I had suggested shutting down from Dec-Mar but since he lived here last winter, and from talking to others, we can make enough to at least cover expenses.

The place is small, but popular. It's probably 80% booked from April through October.

There are 27 total RV sites and two non-hookup tent sites, though there's room to expand a bit. Only four sites have full hookups, and it's on septic. Water is from a well. It's super scenic... has a good-sized creek running through it, and about half of the sites are on the creek. There's good fishing in the creek too.

The last appraisal done recently was just over $900k... we're looking to come in quite a bit under that. If we can't get it for our price, we'll walk and wish them good luck.

The goal here is to clean the place up, try to expand the number of full hookup sites, add some more tent sites, renovate the "club house" and try to get occupancy up above 90% for at least 7-8 months of the year. And within 10 years or so, sell it and hopefully have a modest retirement from it. Oh... there's actually a small storage facility included with the purchase that has I think 10 or 12 units, all of which are occupied.

Jennifer Caspia · Answer

Robert

You can find campground generic biz plans online and then modify them to your local demographics.

If you need lending, I would try CCF Bank as they work in the camping/glamping space.

Matthew Paul · Answer

I was just camping in lower eastern Va . Campground has 6 pools , 1500 spots , cabins , store , water park , game house , pavilions , live bands on weekends , golf cart rentals . Our first trip this year the campground was similar in size to my previous one and I was told it sold for 79 MILLION . The biggest complaint I heard from the older maintenance guys is they were understaffed by 50% each place .

35 campsites is tiny , you are bacically running a little city , roads , water , sewer , electric , security , pools , and an office/store .

Matthew Paul · Answer

Campgrounds are a LOT of hands on work .

Buying a dilapidated campground: Where/How to start?

Buying a dilapidated campground: Where/How to start?

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