BUYING A CARAVAN PARK
Murray can help you find a way to your new lifestyle
Buying and running your own Caravan Park
Do not be afraid.
Owning and running your own caravan park is not rocket science.
Most parks are purchased by couples buying their first park.
As a couple, you will need to tick a few boxes:
- You’re looking and ready for a lifestyle change.
- You and your partner get on with people. Your guests generate your profit.
- You and/or your partner will already have, or be prepared to learn, some office skills.
- You and/or your partner are reasonably OK doing handyman jobs around the place.
- You and your partner are prepared to work hard to build your business asset.
- You have a price range in mind. As a guide, banks will lend you around 50% of the value of a Leasehold business and 70% if you are buying the business and the land.
Murray will be happy to discuss all of the above criteria with you, if you wish.
Caravan parks are very good businesses. You can earn a good income. You live on site and your day to day living costs are very reasonable. When the time comes to sell your asset, your efforts should be well rewarded with a nice capital profit.
How much might I have to spend?
Caravan parks sell within a wide price range.
Many factors impact the sale price.
The main factor is the bottom line profit, what we call the ‘Adjusted Net Profit’ or ANP.
This is calculated from the business’s financials statements. Gross Profit less Expenses equals Net Profit but adjustments, known as Addbacks, are made to calculate the ANP.
The multiple applied to the ANP to determine a selling price can vary according to many criteria such as location, condition and quality of infrastructure, competition, seasonality of income, occupancy rates and scope for further development.
You could find a leasehold business for around $500,000 or you could pay up to $3 million.
If that same business was a freehold going concern you might pay up to 2.5 times more for it.
What do I get if I buy a Leasehold business?
With the purchase of a leasehold business you will purchase the business goodwill which includes the business name. You also get all of the existing plant and equipment necessary to operate the business.
This includes all structures which are transportable (moveable), items such as cabins and fittings, linen, cutlery and crockery etc, ride-on mowers, gardening tools including rakes, shovels, hoses, spare plumbing and electrical fittings etc. Most parks have an on-site residence. You may not own it but your lease will give you use of it.
You do not purchase the land upon which the business operates. You are a lessee and you rent the land from the landowner, also known as the landlord or the lessor. A lease agreement will exist between you and the lessor. This stipulates the conditions of your lease including the amount of monthly rent payable, the length of the lease and any options, responsibilities of both parties etc. Most leases will give you the first right to purchase the land should the Lessor decide to sell in the future.
What do I get if I buy a Freehold Going Concern?
When buying a freehold going concern, you are buying the business as detailed above and also the freehold land including all fixtures.
In effect, you and/or your related entities, are both lessee and lessor.