Hey bigger pockets world! I’ve had an off market deal fall onto my lap that is out of my comfort zone. There is a lakefront campground with 90 powered lots that is leased yearly to tenants that spend around $3500-4000 on each lot per year. There are also 4 cabins and a small convenience store that are rented out separately. The owner does not owe anything on the property and is looking to retire and not have to deal with managing the site anymore. The owner is asking 2.75 mil.
Pros:
-The lake is located less than 1 hour from a major city.
-Tenants usually stay long term ~ 3 or more years.
-No other campgrounds on this lake have beachfront access (usually have to go to a public beach or cross a road, etc)
-Chance to do something creative with owner (off market)
-Already licensed and room to add another 20 sites.
Cons:
-Needs some upkeep and improvements on preexisting sites.
-Hard to evaluate as there are not many comparable properties.
-In seasonal climate so owners can only use from Late May to late September (4 months a year) however can store their RV’s/ Trailers year round.
-Current owners live at the property to manage all of the tenants and run a small convenience store. We would have to set up on site management and yard maintenance.
Long story short is my partner and I were looking into giving the seller some cash upfront with him carrying some financing. We would come in and do some Reno’s and then offer a 30-40 year lease on the lots for 40k to the current Tenants to pull out some cash to pay out the rest of the deal. This way we get ownership for the property and be able to pull out our initial investment and still rent out the cabins to generate cash flow.
Has anyone done a deal like this and have some advice?
What big things are we missing that might make this a bad deal?
Any comments are Much appreciated.
