|RV Parks and Campgrounds
RV Parks and Campgrounds: The valuation of campgrounds and RV resorts is not well understood in appraisal and banking circles. That's why it is crucial that the appraisal of these facilities involves Credible Analyses.
So, each of our Recreational Analysts' campground reports begins with our special "Overview of the RV Camping Industry, and the Forces That Drive It" We ask and provide answers to the pertinent questions.
Then we demonstrate How Your Resort Fits Into The Picture. Through various resources at our disposal, and a lot of digging, we find out.
Valuation - We Are Primarily Talking Income Approach Here
In a nutshell, it's
a) market data (your rental and other revenue rates vs the competition),
b) market data (your operating line items vs comparable resorts), and
c) more market data (cap rates derived from comparable sales).
Overview of the RV Camping Industry, and the Forces That Drive It
(Do you think your bankers know the answers to these questions? Do you wish they did?)
- What exactly is an RV (don't laugh), and how much does one cost?
- How many are sold each year, and is the industry on the upswing?
- How many are out there, and what kinds of people own them?
- Why do people go Camping/RVing in the first place?
- Where do RVers travel, and where do they like to stay when they get there?
- What do RVers expect at the campgrounds, regarding site improvements and amenities?
- How far do RVers generally travel?
- What does camping cost?
- What is a Park Model, and what is the significance of Cabins?
- How about condo site sales, or memberships - when are they viable options?
- Outdoor Recreation In America - who is participating?
- What activities are people participating in, and which are the most popular? (RV camping is right up there.)
- How much are people spending on recreation? (Would you believe hundreds of $Billions?)
- Where are Americans going for outdoor recreation, and what age groups are involved? (Those age groups are growing.)
How Your Resort Fits Into The Picture
We want to know:
- What draws campers to your resort in your location? Is it convenience, traffic exposure, scenic beauty, bustling attractions, great amenities, or is it simply the peace and quiet that only remote access can offer?
- How many RV-owning households are likely to lie within a two-to-four-hour drive of your property?
- What do campers find when they get to your place, and how does that compare with the competition? (back)
If you are a banker, wouldn't you like to know the answers before you make a lending decision? More specifically, wouldn't you like to know how viable the industry is, and how the subject campground stacks up and fits into these niches?
a) RV camping is one of the most popular and strongest sectors of the recreational economy, and
b) the best campgrounds are not necessarily the newest, fanciest, or most lavish. Rather, they are the ones that best meet the needs, wants and pocketbooks of campers who come to their given locations.
- Following a thorough survey of the competition, we compare your camping rates and occupancy versus what is happening in your marketplace.
- We examine your financial operating history, and try to make credible projections for the future. We do this by relating your operating line items to industry standards. We have assembled pools of comparable data from lots of other resorts to help us do this. If adjustments are called for, we make them.
- We select and apply income multipliers and capitalization (cap) rates that we get from the marketplace, to arrive at an estimate of value for the basic campground.
- We add any contributory value that may lie in excess land, or in business enterprise (e.g.- RV sales and service), and arrive at a total value estimate for the whole going concern.
Obviously, it can get a lot more complicated than that, especially if you have a membership resort, or if you sell condo sites or park models. But you get the picture.
If a professional valuation of your resort (or the one on which you are about to make a loan) makes sense, call us for a free and confidential conference. We are friendly and love to talk about campgrounds.
Excellent references upon request.
Lots of formats for lots of appraisal purposes.