When it comes to selling a campground or RV park, owners typically think they’ve got two choices.
They can sell their property to outfits like Kampgrounds of America Inc. (KOA), Leisure Systems Inc. (LSI) or Equity Lifestyle Properties (ELP), typically generating about $10,000 per site, depending on location. Or they can sell to a developer who will, in turn, bulldoze their property and convert it to more lucrative uses, anything from a shopping mall to a hotel or condominium complex.
But there’s a third option that growing numbers of park owners are currently pursuing: Converting their parks into condominium-style associations, which enables them to title and sell each campsite directly to RV enthusiasts. With this approach, RV park and campground owners are finding that they can earn two or three times as much money for each campsite as they could by simply selling their parks in one fell swoop.
“Typically, if I’m going to buy a commercial campground, I’ve got to make sure I make enough money to pay all of my mortgage expenses and other debts,” said Tom Zuidema, a campground industry consultant who works with Reston, Va.-based David Gorin & Associates. “But the guy who buys a lot is not buying the business. He’s buying a form of recreation for his family. That’s why he pays more for it. He may pay $25,000 for that lot (that would typically sell for $10,000).”
While statistics regarding the number of parks that have converted to condominium-style developments are not readily available, there are at least 150 parks that fit this profile today in Florida and Texas alone, according to park owners and campground industry consultants who help parks undergo these kinds of conversions. At the same time, growing numbers of park owners across the country apparently are quietly laying the groundwork to sell their campsites directly to consumers during the next five years.
“It certainly has become a trend that park owners are looking at,” said David Gorin, former president and CEO of the National Association of RV Parks and Campgrounds (ARVC) who now runs his own namesake consulting business. Gorin’s company is one of several across the country that help parks convert their operations into condominium-type developments. “Florida is certainly a very active market (for campground conversions),” Gorin said. “(So is) Texas, New England, California, Arizona, Utah. We’ve got clients we’ve been working with in South Dakota who are looking at this.”
Indeed, in Texas, more than 70 parks have converted to condominium-style developments in the Rio Grande Valley alone, Zuidema said. Additionally, more than 80 parks in Florida have implemented condominium conversions in recent years, according to Bob Little, a member of the Florida ARVC board of directors and owner of the 400-site Vacation Inn Resort in West Palm Beach, which also offers RV sites for sale to consumers. Like Gorin, Little has also developed a consulting business and advises park owners on how best to prepare their parks for these kinds of conversions.
While the concept of selling RV sites has been around for more than three decades, this approach has historically only been successful with the most luxurious, high-end resorts, such as those developed by Bermuda Dunes, Calif.-based Outdoor Resorts of America (ORA).
But now that growing numbers of Baby Boomers are entering their prime RV buying years, competition for high-quality RV sites is on the rise in the Sunbelt and in other sought after destinations across the country. And many Boomers have the financial resources to purchase their own sites in these locations, thereby guaranteeing that they will have nice places to park their rigs.
“The competition is really getting fierce,” said Rocco Santilli, 66, a full time RVer who recently purchased a campsite at the Great Outdoors RV Resort in Titusville, Fla., near Cape Canaveral. “The RV parks (in Florida) are getting fewer and fewer. And the nicer ones are getting to be even fewer than that. That’s what drove us to purchase a site. It’s almost impossible to get a decent site (in Florida) unless you own it.”
And parks that sell their lots as real property are having success with this approach, partly because consumers can often obtain lender financing for these lots. On the other hand, Zuidema, added, individuals often can’t obtain financing on lots marketed through long-term leases.
Park owners also find it attractive to sell their RV sites individually because it gives them a financial incentive to stay in the outdoor hospitality business. Indeed, in places like Florida, giving parks the ability to sell individual campsites is perhaps the only thing that keeps developers from buying up even more parks.
Of course, given Florida’s skyrocketing real estate values, even this approach doesn’t always work. In 2005 alone, Little said, 20 Florida parks were sold to developers and converted to other uses. “Some campgrounds are resisting the urge to sell, but most of them are being offered such fantastic prices that they can’t deny it,” he said, adding that the phenomenon of private parks selling out to developers is happening all over the Sunshine State, from Key West to Jacksonville and Tallahassee.
“There were five (parks sold) in Palm Beach County alone in the past two years,” Little said. “Right now, the Destin area seems to have the strongest demand for commercial property.”
While more and more Florida parks are selling out altogether or converting to condo-style formats, Little explained, the number of transient parks in Florida has declined. Consequently, RV site prices have increased as more and more RVers opt to purchase their campsites rather than take their chances making campground reservations. Having said that, many Florida RV sites can still be purchased for less than $100,000.
“I think people are realizing the investment value of owning real estate,” Zuidema said. “If I can own a piece of real estate in a park that I really like, it’s not a bad deal if I do it on a seasonal basis. And if I own it, I lock in the annual costs.”
Moreover, Zuidema said, buying an RV site is the cheapest way for most folks to obtain second homes. “If you take a retiree or a Middle-Class family and they want to have an affordable vacation home, what are their options?,” he asked. “Here you can buy an RV site in a nice facility that you like and put a park model on it or a fifth-wheel or a motorhome or whatever for a fraction of what it would cost to buy a site-built home or condo.”
But while many consumers are obviously enticed by the prospect of buying an RV site, that doesn’t mean every campground or RV park can immediately start selling their sites. In fact, many park operators who have consulted with Zuidema and Gorin now realize they must make additional improvements to their facilities before they can seriously start selling sites to consumers. Some, in fact, believe it could take two to five years before they’re really ready to start selling their campsites.
“If you look at a car to buy or one to rent, you look at them differently,” Zuidema said. The same kind of thinking takes place when a consumer considers buying a campsite. “The guy who rents a site for a night, he doesn’t care if it’s not perfect,” Zuidema said. “But if he buys, he wants nice trees, nice shrubbery, a nice patio. There’s a difference. I tell my clients, ‘You’re not renting a lot to them. You’re trying to sell it to them.’”
In other words, you can’t take a fixer-upper of a campground and sell its sites to consumers. To be successful selling campsites, campground operators have to build their businesses into successful campground businesses.
“The same thing that helps make your business successful will help you sell your sites,” Zuidema said. “Figure out a game plan. You’ll want to get your physical plant as spiffy as possible. You want to build a good customer list. Generate a lot of repeat business. Work on customer relations. Get a customer survey going. Find out what they don’t like about your park and fix it.”
“A campground doesn’t have to offer every amenity,” Zuidema said. “But it does have to be very good at what it does. What you do has to be impeccable. Utilities have to be really up to speed. It has to have curb appeal.”
Park owners who want to sell their campsites often are better off, we should add, if they’re located near sought-after destinations and offer a variety of amenities and recreational pursuits. “You have to have good recreational activities at your campground or nearby,” Zuidema said. “You’ve got to have access to good restaurants, good shopping and good recreational activities, things for the family to do on the weekend.”
“You can’t sell a campsite unless you’ve got people who are there a lot,” Zuidema added. “If you’ve got a campsite on Highway 80 in the middle of Iowa, that won’t work because there’s nothing to do there.”
Zuidema also counsels park owners approaching retirement to start taking steps to prepare their parks for condo conversions now, rather than waiting until they actually retire. “If a campground owner waits until he’s retired to do this, it’s too late. He needs to get to work on this now,” Zuidema said.
Condominium-style conversions, of course, aren’t the only means RV park and campground operators have used to squeeze more money out of their businesses. In the 1980s, Gorin said, many park operators converted their properties into campground clubs, but not every park was successful with this approach.
The idea of selling campsites in sought after destinations, however, appears to have merit, especially taking in to account today’s real estate values and the growing numbers of RV enthusiasts seeking high quality parks. “Five years ago,” Little said, “I was getting $19,000 for my lots (at Vacation Inn Resort in West Palm Beach). Now my lots are $85,000 to $120,000. I have a five percent turnover every year and I constantly have resales.”
Nancy Merchant, a sales associate for TGO Realty, which markets RV sites for the Great Outdoors RV Resort in Titusville, is seeing similar demand. “This time last year,” she said, “we had some RV sites selling for $42,000. This year, I don’t have anything less than $75,000.”
Zuidema, for his part, says he likes letting park owners know that they have other options besides selling their parks to big name campground companies or developers. “I’m concerned about the little guy,” Zuidema said. “That’s my message.”