💰Maximizing the Worth of Your Campground 💰

Methods to Value a Business

When valuing a campground or RV park, there are several methods commonly used, including:

1. Gross Sales Multipliers: Some industry experts may suggest using a multiplier of 2.8, 3.8, 4.5, or 5 times the gross sales to determine value.
2. Cash Flow Approach (NOI): This method bases valuation on the property’s current financial performance (your books) and is widely regarded as more accurate than gross sales multipliers.

While gross sales multipliers are simple and fast, they fail to account for the unique characteristics of each campground. No two properties are alike, and basing value solely on historical sales doesn’t fairly reflect a campground’s worth. This is why we prefer the Cash Flow Approach, focusing on NOI, to evaluate a park's true value.

Why Adjusted NOI Is the Right Way to Price Parks

Net Operating Income (NOI) represents the campground’s income after operating expenses but before taxes and financing costs. Here’s why it’s the best method for valuation:

• Reflects Actual Performance: NOI is calculated based on how you, the seller, currently run your park. It considers the operational efficiencies, expenses, and revenue streams unique to your management style.
• Excludes Personal Bias: This method separates personal expenses (e.g., health insurance, groceries, or travel) that may have been processed through the business but don’t contribute to its financial performance.
• Accounts for Non-Recurring Expenses: Significant one-time investments, like adding new sites or installing a pavilion roof, are excluded from regular expenses. These improvements enhance value but shouldn’t detract from the property’s profitability.
• Protects Seller’s Hard Work: Sellers shouldn’t bear the burden of adjustments based on how a buyer plans to operate the park in the future. A fair valuation ensures the seller’s efforts and investments are properly rewarded.

Understanding EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is another commonly used metric for valuation. While EBITDA provides insight into a property’s cash generation potential, it’s less focused on essential expenses. NOI, by contrast, directly relates to the operational health of the campground and is a more accurate tool for pricing.

Steps to Establishing Value

When pricing your campground, RV park, or resort, follow these steps to ensure a fair and accurate valuation:

1. Collect Financial Documents for the Past 36 Months:
   • Income Tax Returns
   • Profit and Loss Statements
   • Documentation of Personal and Non-Recurring Expenses
2. Remove Personal Expenses:
   • Health insurance, groceries, and other non-business costs should be separated to reflect true business performance.
3. Exclude One-Time Investments:
   • Improvements like paving roads, upgrading amp power, or adding sites should be documented but not included in ongoing expenses.
4. Analyze Market Conditions:
   • Research current trends and compare similar properties in your area.
5. Highlight Growth Opportunities:
   • Document ways the park can generate additional income, such as through glamping accommodations, high-end sites, or improved amenities.

Ways to Increase Value Before Selling

Sellers can maximize their park’s value by making strategic, one-time investments that generate long-term or recurring income. Examples include:

• Adding glamping options, tiny homes, or cabins.
• Installing high-end amenities like concrete pads, upgraded utilities, or faster internet.
• Offering new services such as golf cart rentals or miniature golf.
• Implementing a reservation system and enhancing online presence through social media and a professional website.

These improvements not only attract buyers but also increase your park’s bottom line, leading to a higher valuation.

Maximize Your Campground’s Value with Expert Guidance

Pricing your campground using Adjusted NOI ensures you’re rewarded for your dedication while providing buyers with a transparent and accurate picture of your property’s value. Unlike gross sales multipliers, NOI highlights the unique aspects of your park and delivers a fair valuation based on its actual financial performance.
 

Taking the time to prepare detailed financial records, separate personal expenses, and highlight growth opportunities puts you in the best position for a successful sale. Remember, your park's value should reflect your years of hard work, not just the buyer’s future plans.
 

With 54+ years of experience selling campgrounds, RV parks, and resorts, we’ve perfected the art of fair and effective valuations. We offer free consultations with no obligations and no pressure—just honest, expert advice.
 

Let us help you achieve the best outcome for your sale while honoring the investment you’ve made. Contact us today to learn how we can guide you through the process!

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