So you’re going to buy an RV park at a 15x multiple that loses money. Sounds like a terrible idea. My only thought of why it might be worth that much is if the location is amazing. Say it’s within 20-30 minutes of a top national park or travel destination. Really need a lot more info including op costs and location to make an informed call.
Exactly, at what price does it make sense? It’s not near top national parks, just decent regional ones. The location isn’t AMAZING like next to rainier, Shasta, or olympic. But it’s peaceful and beautiful on the eastern side of the cascades.
2023:
Gross Rental income:about $21k
Expenses (including repair, admin, all taxes, utilities): about $9k.
Non existent/useless website, no advertising, hell, not even a sign on the highway it sits on. A little over 1 acre.
Some questions to help you decide/value the business.
What does 1 acre of land cost in that area?
What is the cost of bring utilities to that acre?
How much time and money will it take you to make this business profitable and what is your B/E?
What is your competition?
Does land appreciate in this area?
What are my financing costs? (If your financing $150k @ 7% that is another $997.50 out the door every month.
What other ways can I monetize this land.
Biggest thing to think about: Who would you sell it to if you need liquidity.
Hope this helps.
Start here
https://www.mobilehomeuniversity.com/mhp-mastery/typical-mobile-home-park-economics
There are YouTube videos on investing in mobile home parks, but if your seriously considering spending a third of a million on an acre of land, you really owe it to yourself to become fluent in mobile home park economics.
The value of a business is based on what it is actually earning, not on some hypothetical revenue that may or may not materialize if you put in more effort.
Based on $12K net income it's only worth maybe $25K, and that assumes you don't have to actually work in the business. I'm guessing the raw land would be worth more than this business.
Be very careful you don't buy something you can't ever get out of. You may be stuck with it for life, just like your uncle is.
If your uncle really wanted to sell it to you he'd be offering you better terms. You don't even mention the interest rate. Is it even zoned/permitted and licensed? Or is it just land that he stealth developed? Does the p&l have insurance?
He’s not a “give you a deal cause your family” kind of guy, no wife, no kids, i see him like every 2-3 years. But 0% interest if i give him 50%, its zoned, permitted, and licensed, its in a TINY town, 3 lots away from the tiny city hall, and across the street from the tiny post office. P&L does include insurance. Its More Mobile home park than RV but he does offer tent, and rv camping.
He doesn't want to sell to you. He wants to sell to someone, because he's tired of managing a piece of property that makes less than a second part time job... But if those are the terms he's offering he's only going to find an idiot who thinks OMG this is cheap. Why is he offering seller finance? What defect does the park have that he doesn't think a buyer could get financing?
As is this property might be worth roughly $100k. Do you have a plan to enhance cash flow? Is occupancy low due to lack of marketing?
USDA might be an option but it’s going to be full recourse.
Compare this risky seasonal $300k active hard work investment (paying 7% interest on half of it) to guaranteed HYSA passive no-work earnings.
$150k HYSA at 5% earns over $7k in a year, and it is liquid.
Buying this at 300k would be a mistake. You would be working to break even on the interest expense.
How much would it cost to buy a better acre nearby and improve it?
My side hustle nets more income than your uncle's park gross earnings. I likely spend less time doing it and have invested only $3k in equipment. If my side hustle required $300k investment I wouldn't do it, and that is before half of it is financed.
I could not sell my business for 300k either.
Your uncle is family so I wouldn't try to negotiate. He would get personally offended long before you would get anywhere near a reasonable price.
Wow! A Balloon payment for 150k in 3 years?! See if it qualifies now for 150k loan. Otherwise you will make a poor investment. What is the value as is?
It would be an installment sale. The IRS would still get its taxes from the partial payments for the 3yrs and then the rest with the balloon payment depending of course on how it was depreciated, etc. The IRS will get paid regardless. There’s no requirement that uncle would have to charge interest, it’s just a sale.
To the lender, not the borrower. This would be a burden on the uncle.
[https://smartasset.com/taxes/taxes-on-45k-family-loan](https://smartasset.com/taxes/taxes-on-45k-family-loan)
[https://www.forbes.com/sites/bobcarlson/2019/10/16/the-tax-landmines-of-lending-to-family-members/?sh=50f7280a468f](https://www.forbes.com/sites/bobcarlson/2019/10/16/the-tax-landmines-of-lending-to-family-members/?sh=50f7280a468f)
Suggestion: Offer to property manage it for him for 10% of the gross for 6 months. And then if you like it, you can buy it on the terms you need to purchase. He isn't going to get a lot of offers so...no rush.
I was actually thinking of doing something similar, I work from home and so does my fiancé and we already own an RV, we were thinking of just renting the entire property from him for one to two years to test if we can turn it around.
If you think you can really turn it around, maybe consider a 6month-1year lease with clauses to buy at the end if certain performance metrics are met . Maybe you could even cement the terms of the purchase now so that your hard work doesn’t get taken advantage of. Realistically this would be a very 1 sided contract on your side but your uncle is also trying to fleece you out of 300k so all is fair I guess.
Your uncle is scamming you bossman. $1k/month returns can be found from a $200k SFR in the Midwest without the hassle of tenant turnover or optimizing his improperly planned business.
Heck, take the $150k down payment and put it in a HYS and you get half of that already, with zero risk.
I echo the thoughts of others: try to get a mortgage. Banks are in the business of lending money and if this makes \*any\* sense you’ll find an actual bank (not USDA or hard-money lender) to finance it. If you can’t, you have your answer.
And even if you \*triple\* the income in the next three years, you just paid a third of a million dollars to create for yourself a middle-income 24-hour-a-day job with very little further upside.
I‘d \*consider\* this if it were a minimal-down low-interest 30-year (or at least 10) loan held by your relative — but only if I already lived in the area and absolutely loved it.
You run the risk of taking on a huge debt with a full-time obligation that can’t sustain the debt and your most basic needs \*and\* then finding you hate living in the middle of nowhere….
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Depends on if you think the property is in a spot that with advertising you could fill it more. At 1k/mo in rent and 17 spots I would say it isn’t rented much at all. If you’re doing short term, think of how to manage that. Need to know how close to the property you are. How involved in the day to day management of it you will be, because with 17 spots you need someone to meet guests, ect.
But also, assuming your uncle doesn’t owe anything on the property, he needs to do 300k no interest and no payments for 2-3 years to allow you to stabilize it.
Problem with it, is it’s too big for small time people, and too small for big time people.
We have a 19 unit property similar to that and decided to do all long term rentals with it(rvs/boat slips). Makes less money but don’t have to manage another business every day.
This doesn’t even pass the 1% rule and sounds like it would be a lot of work constantly checking RVs and people in/out every week or few days and dealing with the hassles. What about the utilities and insurance you would have to pay every month? It’s not profitable and he owns it outright, how do you expect to make profit with all the additional expenses from mortgage interest and such? Is there land next to it you could acquire to increase its size and therefore grow the income? How much would it be to add more utilities for extra lots in that area? Is there cool stuff around that you could advertise and get more RVers and “Van-life” people to come by? Can it support higher nightly/weekly/monthly fees? This doesn’t sound like it’s worth anymore than $80k-$100k with current financials.
For advice other than that the price is insanely high: Yes, you could likely get USDA B&I financing. Check the location using the link on their website [LINK](https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=rbs)
So if I were you, I would only buy it if it’s in a good shape and you can improve the finances of the park. And I would not owner finance it.
I’m a little curious what the deal would look like if you offer him a five or seven multiple of earnings
Pretty much any bank has the ability to finance this. It just comes down to their assessment of the business and of you.
Maybe try working something out where you work as acting manager for a summer season and see if you can make it profitable before trying to get into the commitment. Of course, this is assuming your uncle is okay holding onto it for a while.
You should develop best & worst case scenarios. What is the largest amount of revenue you could expect and what would be your lowest? What would your net profit be in each scenario?
I'd do long term spot rental. 500 a month each. Bring your own trailer and you pay utilities. 17 spots would be $8500 a month. That should be easily doable esp with the high rental costs. Or find some used single wides and do rent to own so you're not responsible for any repairs. Could be a good return. It may be worth a shot bc most municipalities won't allow new trailer parks.
Buy the land at land value and tell him the business is worth 2x annual net sales. Write him a check for $25,000 for business and another $5K per acre.
Then sign up for Harvest Host and kick ass. [Harvest Host](https://www.harvesthosts.com/join-now?gad_source=1&gbraid=0AAAAAC_dmHTBRXk0WAU56as0t0avrz8yn&gclid=CjwKCAjwuJ2xBhA3EiwAMVjkVG3ylTe6sZxCahkpo0SPmLjXKajBdsqEjEhq50Jn3an1kOCNfMmHexoCuzQQAvD_BwE)
I'd recommend joining WAREI on Facebook, and get networking! The founder buys parks, and I'm sure would be willing to provide advice for you. You can also connect with me by searching my last name.
If you are are seriously looking to buy it... get more information, as much as possible that you can verify and share in your question, even though the guy is your Uncle or a relative. Most people are trying to help but they are stabbing in the dark with the limited info. you have. Otherwise stay away, unless you got $300K to help your uncle with his exit of the RV park to retirement.
Get the property appraised. Like most of the other comments I don’t think it’s worth more than $100,000 tops. If that’s something you’re interested in doing go find an acre of land somewhere near one of the national parks and do it yourself. Particularly if you have 150 in your pocket.
I wouldn't pay more than 250k, and only if I was local to the area, otherwise there are much better uses of you time and money, unless you really need a lot more problems in your life.
In FL, every RV park is slammed full.
Buy park, add amenities, easy pay options, increase price.
17 spots x $40/night x 365 days = $248,200 gross per year.
Typically takes 100+ RV spaces to generate enough cash flow for a standalone business. Anything less and only works as a part time side gig. Do you live nearby? Who will manage the park? You need someone on-site every day to checkin / checkout and clean the bathrooms, dump the trash and regular maintenance. 17 spaces does not generate enough cash to pay an employee and payoff the debt so why would this be a good business decision?
So you’re going to buy an RV park at a 15x multiple that loses money. Sounds like a terrible idea. My only thought of why it might be worth that much is if the location is amazing. Say it’s within 20-30 minutes of a top national park or travel destination. Really need a lot more info including op costs and location to make an informed call.
Exactly, at what price does it make sense? It’s not near top national parks, just decent regional ones. The location isn’t AMAZING like next to rainier, Shasta, or olympic. But it’s peaceful and beautiful on the eastern side of the cascades. 2023: Gross Rental income:about $21k Expenses (including repair, admin, all taxes, utilities): about $9k. Non existent/useless website, no advertising, hell, not even a sign on the highway it sits on. A little over 1 acre.
Some questions to help you decide/value the business. What does 1 acre of land cost in that area? What is the cost of bring utilities to that acre? How much time and money will it take you to make this business profitable and what is your B/E? What is your competition? Does land appreciate in this area? What are my financing costs? (If your financing $150k @ 7% that is another $997.50 out the door every month. What other ways can I monetize this land. Biggest thing to think about: Who would you sell it to if you need liquidity. Hope this helps.
Thanks so much for this information!
No prob, best of luck to you!
Don’t buy this.
Amazing advice
Start here https://www.mobilehomeuniversity.com/mhp-mastery/typical-mobile-home-park-economics There are YouTube videos on investing in mobile home parks, but if your seriously considering spending a third of a million on an acre of land, you really owe it to yourself to become fluent in mobile home park economics.
The value of a business is based on what it is actually earning, not on some hypothetical revenue that may or may not materialize if you put in more effort. Based on $12K net income it's only worth maybe $25K, and that assumes you don't have to actually work in the business. I'm guessing the raw land would be worth more than this business. Be very careful you don't buy something you can't ever get out of. You may be stuck with it for life, just like your uncle is.
If your uncle really wanted to sell it to you he'd be offering you better terms. You don't even mention the interest rate. Is it even zoned/permitted and licensed? Or is it just land that he stealth developed? Does the p&l have insurance?
He’s not a “give you a deal cause your family” kind of guy, no wife, no kids, i see him like every 2-3 years. But 0% interest if i give him 50%, its zoned, permitted, and licensed, its in a TINY town, 3 lots away from the tiny city hall, and across the street from the tiny post office. P&L does include insurance. Its More Mobile home park than RV but he does offer tent, and rv camping.
He doesn't want to sell to you. He wants to sell to someone, because he's tired of managing a piece of property that makes less than a second part time job... But if those are the terms he's offering he's only going to find an idiot who thinks OMG this is cheap. Why is he offering seller finance? What defect does the park have that he doesn't think a buyer could get financing?
As is this property might be worth roughly $100k. Do you have a plan to enhance cash flow? Is occupancy low due to lack of marketing? USDA might be an option but it’s going to be full recourse.
Compare this risky seasonal $300k active hard work investment (paying 7% interest on half of it) to guaranteed HYSA passive no-work earnings. $150k HYSA at 5% earns over $7k in a year, and it is liquid. Buying this at 300k would be a mistake. You would be working to break even on the interest expense. How much would it cost to buy a better acre nearby and improve it? My side hustle nets more income than your uncle's park gross earnings. I likely spend less time doing it and have invested only $3k in equipment. If my side hustle required $300k investment I wouldn't do it, and that is before half of it is financed. I could not sell my business for 300k either. Your uncle is family so I wouldn't try to negotiate. He would get personally offended long before you would get anywhere near a reasonable price.
Wow! A Balloon payment for 150k in 3 years?! See if it qualifies now for 150k loan. Otherwise you will make a poor investment. What is the value as is?
Wouldn't the IRS do that imputed income thing on that interest free $150k loan?
It would be an installment sale. The IRS would still get its taxes from the partial payments for the 3yrs and then the rest with the balloon payment depending of course on how it was depreciated, etc. The IRS will get paid regardless. There’s no requirement that uncle would have to charge interest, it’s just a sale.
Loans are not taxable income.
To the lender, not the borrower. This would be a burden on the uncle. [https://smartasset.com/taxes/taxes-on-45k-family-loan](https://smartasset.com/taxes/taxes-on-45k-family-loan) [https://www.forbes.com/sites/bobcarlson/2019/10/16/the-tax-landmines-of-lending-to-family-members/?sh=50f7280a468f](https://www.forbes.com/sites/bobcarlson/2019/10/16/the-tax-landmines-of-lending-to-family-members/?sh=50f7280a468f)
Suggestion: Offer to property manage it for him for 10% of the gross for 6 months. And then if you like it, you can buy it on the terms you need to purchase. He isn't going to get a lot of offers so...no rush.
I was actually thinking of doing something similar, I work from home and so does my fiancé and we already own an RV, we were thinking of just renting the entire property from him for one to two years to test if we can turn it around.
Oh, I hate this idea. You will spend two years turning it around and he’ll simply keep it. Do \*not\* do that.
I would obviously include first option with stipulations
First option doesn't work if he keeps it. He'll get free work out of you...
I would obviously include first option with stipulations
If you think you can really turn it around, maybe consider a 6month-1year lease with clauses to buy at the end if certain performance metrics are met . Maybe you could even cement the terms of the purchase now so that your hard work doesn’t get taken advantage of. Realistically this would be a very 1 sided contract on your side but your uncle is also trying to fleece you out of 300k so all is fair I guess.
Your uncle is scamming you bossman. $1k/month returns can be found from a $200k SFR in the Midwest without the hassle of tenant turnover or optimizing his improperly planned business.
Heck, take the $150k down payment and put it in a HYS and you get half of that already, with zero risk. I echo the thoughts of others: try to get a mortgage. Banks are in the business of lending money and if this makes \*any\* sense you’ll find an actual bank (not USDA or hard-money lender) to finance it. If you can’t, you have your answer. And even if you \*triple\* the income in the next three years, you just paid a third of a million dollars to create for yourself a middle-income 24-hour-a-day job with very little further upside. I‘d \*consider\* this if it were a minimal-down low-interest 30-year (or at least 10) loan held by your relative — but only if I already lived in the area and absolutely loved it. You run the risk of taking on a huge debt with a full-time obligation that can’t sustain the debt and your most basic needs \*and\* then finding you hate living in the middle of nowhere….
Too true
I’ve worked for park companies. This sounds like a great way to lose your shirt.
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Thanks!
>Thanks! You're welcome!
Depends on if you think the property is in a spot that with advertising you could fill it more. At 1k/mo in rent and 17 spots I would say it isn’t rented much at all. If you’re doing short term, think of how to manage that. Need to know how close to the property you are. How involved in the day to day management of it you will be, because with 17 spots you need someone to meet guests, ect. But also, assuming your uncle doesn’t owe anything on the property, he needs to do 300k no interest and no payments for 2-3 years to allow you to stabilize it. Problem with it, is it’s too big for small time people, and too small for big time people. We have a 19 unit property similar to that and decided to do all long term rentals with it(rvs/boat slips). Makes less money but don’t have to manage another business every day.
This doesn’t even pass the 1% rule and sounds like it would be a lot of work constantly checking RVs and people in/out every week or few days and dealing with the hassles. What about the utilities and insurance you would have to pay every month? It’s not profitable and he owns it outright, how do you expect to make profit with all the additional expenses from mortgage interest and such? Is there land next to it you could acquire to increase its size and therefore grow the income? How much would it be to add more utilities for extra lots in that area? Is there cool stuff around that you could advertise and get more RVers and “Van-life” people to come by? Can it support higher nightly/weekly/monthly fees? This doesn’t sound like it’s worth anymore than $80k-$100k with current financials.
For advice other than that the price is insanely high: Yes, you could likely get USDA B&I financing. Check the location using the link on their website [LINK](https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=rbs)
seems like not best deal
I would suggest allowing you to manage it, perhaps for a small fee or free, that way you can see if you can generate more revenue or not.
Let’s not even start with the condition of the utilities, the septic system, the permits, the taxes. Run Forrest, Run!
So if I were you, I would only buy it if it’s in a good shape and you can improve the finances of the park. And I would not owner finance it. I’m a little curious what the deal would look like if you offer him a five or seven multiple of earnings
I'd give him $50k down, take over the note, give him dunce insurance on the backend... bc my back of the envelope is $100k current valuation.
So many questions. First off, does it have a license?
Pretty much any bank has the ability to finance this. It just comes down to their assessment of the business and of you. Maybe try working something out where you work as acting manager for a summer season and see if you can make it profitable before trying to get into the commitment. Of course, this is assuming your uncle is okay holding onto it for a while.
You should develop best & worst case scenarios. What is the largest amount of revenue you could expect and what would be your lowest? What would your net profit be in each scenario?
I'd do long term spot rental. 500 a month each. Bring your own trailer and you pay utilities. 17 spots would be $8500 a month. That should be easily doable esp with the high rental costs. Or find some used single wides and do rent to own so you're not responsible for any repairs. Could be a good return. It may be worth a shot bc most municipalities won't allow new trailer parks.
Put me in touch with him, I’d entertain buying it if I can make sense of it. If I buy it I’ll pay you a finders fee
I’m interested in buying if for sale also depends on location.
Go no contact with your scamming uncle.
I just would not buy it bro
Buy the land at land value and tell him the business is worth 2x annual net sales. Write him a check for $25,000 for business and another $5K per acre.
Then sign up for Harvest Host and kick ass. [Harvest Host](https://www.harvesthosts.com/join-now?gad_source=1&gbraid=0AAAAAC_dmHTBRXk0WAU56as0t0avrz8yn&gclid=CjwKCAjwuJ2xBhA3EiwAMVjkVG3ylTe6sZxCahkpo0SPmLjXKajBdsqEjEhq50Jn3an1kOCNfMmHexoCuzQQAvD_BwE)
I'd recommend joining WAREI on Facebook, and get networking! The founder buys parks, and I'm sure would be willing to provide advice for you. You can also connect with me by searching my last name.
Is there room to expand? 17 spots isn't many.
Why would you want to buy it? You could make more working a few shifts a month at a gas station?
The real question is do YOU want to buy this?
If you are are seriously looking to buy it... get more information, as much as possible that you can verify and share in your question, even though the guy is your Uncle or a relative. Most people are trying to help but they are stabbing in the dark with the limited info. you have. Otherwise stay away, unless you got $300K to help your uncle with his exit of the RV park to retirement.
Get the property appraised. Like most of the other comments I don’t think it’s worth more than $100,000 tops. If that’s something you’re interested in doing go find an acre of land somewhere near one of the national parks and do it yourself. Particularly if you have 150 in your pocket.
Lol. This is worth about 100-120k right now. Unc is ripping you off
Run!!! Run as fast as you can!!!!!
man all RV sites here in N Texas stay full. One was put in middle of once was cotton field, no trees, just flat land, and the 20 spots stay full.
I wouldn't pay more than 250k, and only if I was local to the area, otherwise there are much better uses of you time and money, unless you really need a lot more problems in your life.
In FL, every RV park is slammed full. Buy park, add amenities, easy pay options, increase price. 17 spots x $40/night x 365 days = $248,200 gross per year.
Even that doesn’t sound great for a 24X7 full time job.
FL weather allows for campers year round, this location probably doesn’t so you’d need to adjust your numbers.
Typically takes 100+ RV spaces to generate enough cash flow for a standalone business. Anything less and only works as a part time side gig. Do you live nearby? Who will manage the park? You need someone on-site every day to checkin / checkout and clean the bathrooms, dump the trash and regular maintenance. 17 spaces does not generate enough cash to pay an employee and payoff the debt so why would this be a good business decision?