The following story appears in Woodall’s Campground Management offering results from a recent survey conducted with campground brokers forecasting the selling environment for parks and campgrounds in the coming year.
Tight financing remains the major stumbling block in the buying and selling of the nation’s RV parks and campgrounds.
It’s a pity because there is great interest across the country to get involved in this business and, for the most part, the rate of return on such investments is very good.
That’s the gist of responses to a survey conducted in October among campground brokers who advertise in Woodall’s Campground Management (WCM).
Their take on the state of the industry was almost uniform on these points. But how they’re faring in this challenging environment yielded varying answers.
“It’s hard to tell – these things are so cyclical and seasonal,” said Don Dunton, a veteran broker based in New Hampshire who also brokers deals in Maine, Vermont and New York.
He started the year on a strong note, experienced a soft summer but then noticed an upturn after Labor Day. All in all, he said it was a good year.
Conversely, Waynesville, N.C.-based Darrell Hess, who has brokered more than 270 campground sales in his 29-year career, said his business has been down 50% the past three years, compared to the good years of 2002-2008.
“It still can get worse and quite frankly I think it will,” he said. “We’re in for some tough times. From my perspective two issues I don’t see getting resolved anytime in the next year: it’s the uncertainty in the economy and the banking crisis.”
Hess, who brokers deals in the region including North Carolina, South Carolina, Tennessee, Georgia, Virginia, West Virginia, Indiana, Kentucky, Pennsylvania and Florida, said bankers “are not sure whom they want to loan money to and what kind of risk they want to make. They are in the business of loaning money but they really don’t want to do it. I’m sensing the banking industry has come under tremendous regulations and scrutiny. They’re being watched and being controlled. I had deals turned down this year that were ‘no brainer’ loans, great buyers, great cash flow, and banks still turned them down.”
On the West Coast, John Grant of Park Brokerage said, “Investment sales of RV parks and campgrounds are still very slow due to tight financing in the market. Some of our better lenders in the Southwest are no longer financing RV parks. They had the lion’s share of the business five years ago.”
Lenders that do make loans for park purchases are offering short amortization schedules of 15 years or less in some cases, he noted.
Even the federal government can’t seem to help. The Small Business Administration will underwrite loans for RV parks, Grant noted, but 51% of the guests must be transient or overnight visitors. The vast majority of RV parks in the Southwest get the majority of their income from extended stays, so most don’t qualify,” he said.
To view the entire story click here.