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This issue of the RVParkStore.com Newsletter
includes:
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Article:
The Problem With RV Park Appraisals, by Frank Rolfe
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Article:
Environmental Due Diligence FAQ Part 1, by David
VerSluis
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Opportunity for
Additional Income
-
RV Parks and Campgrounds For Sale
-
Comments
-
Featured Listings
-
RV Park and Campground
Memberships For Sale
-
RV Park Employment
-
Tell us what you think and send
us your articles!
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The Problem With RV Park Appraisals
The recent auction of the Seibt Desert Retreat RV Park in Nevada
is the perfect example of the problem with RV park appraisals.
Most recently appraised for $8.12 million, it sold at auction
for $4 million – and even at that price there was only one
bidder. So how can an appraiser be that far off in valuing an RV
park?
They do not understand the asset class.
An RV park is a very unusual asset for an appraiser to determine
the value on. Unlike most forms of real estate, it has a
clientele that comes and goes daily, not monthly like apartments
or annually like office buildings and shopping centers. As a
result, they are not sure how to evaluate the revenue, or the
vacant spaces. In addition, they have no experience in valuing
it. An appraiser may only do a handful of RV parks in their
lifetime. They do not have any real-life concepts of what makes
a deal a winner or a loser, and cannot spot the subtle
differences in location or amenities that may have a drastic
effect on the real value.
They are often corrupted by the lender.
Many appraisers have learned that to get repeat business, they
have to deliver what the customer wants to hear. If a bank wants
to do a loan, and it needs a $2 million appraisal to close, it
will exert influence on the appraiser to hit that target. I have
had loans that received mysterious jumps in value on the
appraisal after one or two calls from the loan officer to the
appraiser. If an appraiser wants to eat, he needs clients – and
soon the reality of making a living takes over the esoteric
thought of being accurate. Just look at the horrible value
casualties since the sub-prime meltdown began. Clearly, factual
reporting was not the #1 concern of most appraisers.
They are fairly illiquid, and hard to sell.
When the appraiser makes his opinion on value, it is based on
his expectations of selling and the pipeline for buyers. Unlike
single family, multi-family and all the other real estate
classification, RV parks serve a much smaller, niche group of
buyers. As a result, even though an appraisal might appear
accurate, the truth is that on any given day the value might go
up or down 50% just because there are no buyers present. The
business model is very unique at many RV parks, and requires a
lot of management. Some buyers are, in fact, looking for a
lifestyle in buying the RV Park that transcends just dollars and
cents. As a result, the sheer number of potential buyers is
small – and so is the potential for a quick sale.
Don’t bet your future on just the appraisal.
An appraisal is an interesting and necessary tool to obtain a
loan, but that’s about all that it is. It is not a negotiable
instrument. When you are buying an RV park, make sure that you
have used proper due diligence. Come up with your own ideas of
value, based on income and the prices of other parks that have
sold. You will be amazed at how much more accurate your
assessment will be than the appraiser’s version. And, if you
have done your homework, your own perception of value is the one
that will prove to be the winner.
So, was the Seib Desert Retreat RV Park an $8 million or a $4
million deal? Clearly, a $4 million price is all it brought, but
there are some pretty big variables. Was the marketing of the
sale any good? Did they reach all the potential buyers? Was the
sales packet accurate and appealing? I don’t know the answer to
these questions, but I do know the answer to valuing an RV park
– you have got to leave in your numbers plenty of room for
variables that don’t go your way. RV park valuation is normally
just a guideline, and you should never take it too seriously.
Remember the old Boy Scout saying “better safe than sorry”.
That’s pretty much the key to successful RV park appraisals.
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Environmental Due Diligence: Frequently Asked
Questions: FAQ Part 1
This article contains responses to
Frequently-Asked-Questions (FAQs) for MHP & RV Park
Investors. We will be following up on this initial FAQ
in the next newsletter with “FAQ Part 2”
Are there any requirements to have an environmental
site assessment?
Depending on the lending institution that you are
dealing with, an ESA will probably be a requirement for
financing, typically based on company-specific
guidelines and risk tolerance. In general, the Federal
National Mortgage Association (Fannie Mae), Department
of Housing and Urban Development (HUD), major commercial
banks (typically), Small Business Administration
Commercial Loans, and others all require a Phase I ESA
or comparable investigation prior to granting new
mortgages.
If I am not required to have one, why should I have
an ESA on the property I am purchasing?
Simply stated, for your protection. Most purchases of
real estate are for one of two reasons--as a residence
or as capital investment. One wants to be reasonably
certain that they purchase an asset and not a
liability--and certainly not a health hazard. This is
true for residences and investment real estate, either
residential, commercial or industrial. Remember that a
properly executed ESA can be a another tool when you
come to the bargaining table. A seller also benefits by
being able to offer an inspected property to the market,
particularly where corrective action has been
implemented. Just as important, lenders can confidently
make a loan on property where they know that their
clients will not be saddled with fines or clean-up costs
that may inhibit their ability to repay the loan.
Further, if foreclosure is a possibility, then the
lender must know whether past activities have resulted
in problems that could be inherited.
What is a Phase I Environmental Site Assessment?
The purpose of a complete Phase I Environmental Site
Assessment (ESA) is to determine the likelihood of
hazardous substances or petroleum products being present
that could result in a future liability. It may involve
an existing release, a past release or the possibility
of a future release that could have an impact on soil,
groundwater, surface water, or structures
on the property. Although a standard Phase I ESA (per
ASTM standards [discussed below]) typically only
addresses CERCLA liability, other environmental issues
(e.g., asbestos, lead, radon, and wetlands) can also be
included within the scope of the assessment.
A Phase I ESA in the U.S. consist of five basic
components:
(1) A review and evaluation of state and Federal (i.e.,
U.S. EPA) environmental databases that list sites of
potential impact within specified search distances;
(2) A review and evaluation of historical use
information, including aerial photographs and maps
(e.g., USGS, fire insurance, etc.), land title records,
city directories, etc.;
(3) Interviews with owners and occupants of the property
and with government officials, as appropriate;
(4) Site reconnaissance to determine current and past
uses and conditions of both the property and adjoining
properties; and
(5) Preparation of a report detailing conclusions and
findings generated from components (1) through (4) and
presenting appropriate recommendations for corrective
action and/or further assessment (e.g., Phase II).
Any Phase I Assessment should follow the standard
practice for conducting Phase I ESAs as specified by the
American Society for Testing and Materials (ASTM)
E-1527-05 (latest edition) and U.S. EPA requirements as
promulgated in 40 CFR regarding All Appropriate
Inquiries (AAI). Sometimes there are also special Phase
I protocols developed by banks and other lending
institutions, law firms, insurance companies,
developers, franchisers, government, or other
institutions.
Each site assessment concludes with a report that
discusses all activities, findings and information
collected during the assessment, and may include
recommendations for corrective action or further
investigation.
What happens after these assessments?
Often, at the conclusion of the environmental site
assessment there are no reported recommendations for
corrective action or further investigation (and the
transaction may proceed unimpeded in regard to
investigating or addressing environmental conditions).
In some cases, there may be the need for some type of
corrective action ("routine" or "technical") that may
include wastewater discharge permitting, removal of
hazardous wastes, UST closure, etc.
In other cases, subsequent assessment may be warranted,
including: Phase II ESA-This involves site sampling and
analysis with a site-specific scope.
For specific questions on this or other environmental or
private utility issues, please contact Dave VerSluis of
Sierra Consultants at dversluis@sierraconsultants.net or
1-800-769-SIERRA (7437). www.sierraconsultants.net
Mr. VerSluis is a 20-year veteran
of the environmental industry, and is a Registered
Environmental Property Assessor (REPA), a Certified
Environmental Strategist (eS), an NSF Certified On-Site
Wastewater System Inspector, a NEHA Certified On-Site
Wastewater System Installer, and is the Vice President
of the Michigan On-Site Wastewater Recyclers
Association. Mr. VerSluis is a frequent speaker and
advisor on behalf of MHPS.com & RVPS.com clients,
specializing in MH & RV communities nationwide.
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Would you
like to make an extra $100 per week at your RV park, and
make your customers happy at the same time? Now you can,
with one of our "$20 Old Tyme Photo" systems.
You can
provide your guests high-quality old tyme photos, in
historical outfits tied to your local attractions, using
green-screen technology, for the incredibly low price of
$20, which is about 66% less than normal old tyme photo
studios. So they're happy. And you have margins of about
85%, so you pocket $17 after expenses. Only one per day
would give you over $100 per week in additional income.
The cost for
the turn-key system, including all equipment, costumes
and three-day training at our facility near St. Louis,
Missouri, costs under $10,000.
If you are
interested, call me at (573) 535-0206.
I look
forward to hearing from you.
Sincerely,
Frank Rolfe
RV
Parkstore.com |
RV Parks and Campgrounds For Sale
We currently have over 500 RV
Parks for sale and the list is growing daily.
If you are looking to sell your RV
Park or Campground you can do so Risk FREE. Find
out more about
Selling your RV Park.
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I just wanted to let you know that the owner of the
West Glacier KOA which I have listed with you has
taken this property off the market. I will need to
cancel my listing with you. I have lots of response
from your site. Thanks for your help.
Randy Zoesch,
Realtor, GRI
Realty Executives Flathead Lake / Northwest Montana
Kalispell Center Mall
20 North Main Street, Suite 136
Kalispell MT 59901
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Featured Listings:
RV Park
For Sale in New Mexico
Beautiful, Ultimate
Retirement Location! Right off Highway 64 at the
entrance to the Eagle Nest Lake State Park with great
views of Eagle Nest Lake.
Find out more about this RV Park For Sale Opportunity!
RV Park For Sale In Southern
Pennsylvania
Pennsylvania - LOTS of recreation and PLENTY of
tourist activities bring campers to this family RV park.
Find out more about this RV Park For Sale Opportunity!
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I was amazed at how many calls I received on my membership
for sale. I sold this in less than one month after I placed the
listing. I received 3 to 4 calls a week.
Ole
RV Park
and Campground Memberships For Sale:
This section of RVParkStore.com is growing quickly. Memberships are being listed and sold quickly. With about
200
memberships currently for sale, this continues to be the prime outlet
to buy and sell campground memberships.
Best of all, when you are selling your membership,
we do not charge you up front to do so. You only pay us if you are
successful in finding a buyer from RVParkStore.com.
Find out more about
Selling your Campground or RV Park Membership
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RV Park Employment
Listings:
Are you
searching for good quality employees or looking for a position with an
RV Park? Then be sure to visit our ever growing employment listing
sections.
All listings in these sections are
FREE!
Check out
the Help Wanted Section
Check out
the Work Wanted Section
Post your FREE Listing Here
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Tell us what you think!
We'd love to hear what you think of this issue!
We need your articles - send your articles to
perry@rvparkstore.com to be included in
upcoming newsletters (this is a great place to promote your company for
FREE!). Please send your comments, questions, articles, and ideas for
upcoming issues to us at:
perry@rvparkstore.com
Your feedback matters to us!
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Until Next Time,
Dave Reynolds
RVParkStore.com
18923 Highway 65
Cedaredge, CO 81413
PH: 800-950-1364
FX: 970-856-4883
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