Funny numbers should raise red flags

Because I try to keep up with the buying and selling of campgrounds and related businesses, I get a fair number of emails hyping RV properties for sale. Every now and then I get one that is especially striking, and today’s attention grabber was a doozy: a sales pitch from an outfit called The Campground Marketplace for a Florida RV park for which the asking price had been reduced–to just $9,900,000. Wow!

Even in this period of excessive prices, that kind of number catches one’s attention. There aren’t many RV parks looking for an eight-figure purchase price, and when they do go on the market, they typically get shopped to, and bought by, one of a relatively small circle of deep-pocketed investors. A $10 million dollar park would have to be huge, with a minimum of 300 sites; it would have to be jam-packed with amenities; and it would have to charge market-leading rates to underwrite all that real estate. What premier RV park was suddenly on the auction block, why was it being sold in this proletarian fashion–and if $9.9 million is the reduced price, what had it been listed at originally?

The answers weren’t hard to find. Big Oak RV Park is just outside Tallahassee, and while my email said it is now available for $9.9 million, The Campground Marketplace still has it listed at $12 million. So just by reading this post you can save $2.1 million you might not have learned about otherwise–assuming, of course, that you want to buy an attractive 11 acres (yes, just 11 acres) that is home to 156 RV sites (yes, just 156 sites–maybe), plus two bathrooms, a covered pavilion and a rec room.

Or maybe not.

Indeed, the more closely I looked at the listing, the more inconsistent–and incoherent–it became. For starters, there’s the site count: while the listing says there are 156 sites, it also specifies that 20 are wired for 30 amps and 125 for 50, which raises the question of what happened to the other 11. (There apparently are no tent sites to pad the total count.) Elsewhere, the listing states that there are only 117 full hook-up sites (more on that in a second), but the Big Oak RV Park site map quite clearly shows just 113–total. That’s 25% less than the number highlighted in the listing.

Who is on those sites? According to the listing, 109 are occupied by seasonals–which, if the full hook-up count is to be believed, means there are all of eight available sites for overnighters who want water and sewer. Of course, given the site map count, even that number is questionable.

Meanwhile, all this figures into the math a potential buyer will have to do when examining gross sales and net operating income, and the news on that score is even more out of whack. According to The Campground Marketplace, gross sales in 2021 were $820,348 and net operating income was $451,191. That’s about what you might expect from a campground filled almost entirely with seasonal and long-term RVers, since Big Oak’s rates are $800 a month and $350 weekly, but those revenue numbers are nowhere nearly sufficient to support a purchase price of even half the “reduced” asking price.

(For the numbers junkies out there, the capitalization rate on a $12 million sales price would be 3.8, or 4.6 on a sales price of $9.9 million. This in an industry in which a very attractive [for the seller] cap rate would be 8, and in which 9-10 is pretty much the norm.)

None of this is to say that the Big Oak RV Park isn’t an attractive piece of property for what it is, which is a reasonably priced home for RV full-timers. It’s clean, has handsome large trees and provides the basics, such as dish satellite service and wi-fi, a fenced dog run and a laundry room with four washers and four dryers. But it doesn’t have a swimming pool, a playground or other amenities sought by vacationing families, and with a daily rate of just $58, clearly isn’t generating a lot of overnighter income.

I can’t begin to guess why The Campground Marketplace took this over-the-top marketing approach, or why it obviously couldn’t be bothered to check that the numbers it’s throwing around are both consistent and accurate. But just this one example of its handiwork would prompt me to look at anything it’s trying to sell with a jaundiced eye–if I dared look at all.

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Author: Andy Zipser

A former newspaper reporter who worked at a variety of newspapers, from small community weeklies to The Wall Street Journal, I finished my "normal" work life as the editor of The Guild Reporter, official publication of the union representing newspaper workers. On retiring, I and my wife bought a campground in the Shenandoah Valley and--with the help of our two daughters and their husbands--operated it for eight years, first as a KOA franchisee and then as an independent family-owned RV park. We sold the campground in May, 2021, and live in Staunton, Virginia, a short walk from our grandsons' home.

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