Purchase a Resort Property In Minnesota
Realty Sales can assist you in finding resorts for sale in Minnesota. At some time or another we all get sick of punching the clock, the proverbial “glass ceiling” or taking orders from someone obviously less qualified than you are. Or, maybe you feel you have skills that are not being utilized and that those skills can earn you an income. Whatever the reason, owning and operating your own Minnesota resort or campground can be very rewarding, both financially and from a lifestyle perspective. Historically, Minnesota Resorts and Campgrounds are relatively recessions proof and there is solid evidence that supports this claim. Winter is just too long in our climate for people to cut out their vacation. When the economy is tight, people will make cuts elsewhere before they cancel their summer vacation. They may change locations but they will vacation somewhere.
Purchasing a Minnesota Resort or Campground will take cash. Whether it’s bank or seller financing, purchasing Resorts for Sale will require a minimum of 20% cash down from the buyer, a good credit score, a net-worth statement or letter from your bank describing your current financial health and possibly a form of secondary income. Be advised however; even though interest rates are at all-time lows, you may need up to 30% of the purchase price if you want to purchase a MN Resort for sale. Once you have determined the amount of liquid cash available, multiply it by 5. This will give you a good idea of the price range you are able to purchase in. Also, be aware that seasonal resorts will more than likely not provide enough income in the summer months to sustain you year-round. In other words, don’t quit your day job just yet. In time you will be able to streamline your business and eventually taper off your ancillary income. But, for the first three years or so, we always inform our buyers that being a seasonal resort or campground owner in Minnesota will be approximately 60% lifestyle / 40% business.
Shopping For A Property
Now that you know your price range, identify what aspects of a resort you want to buy that are important to you. Do you want to serve food? Year round or seasonal? Lodge or no lodge? Size of owners home? What location are you interested in? Fixer-upper or turn-key? The most common and easiest way to find Minnesota Resort Listings and Resorts for sale is on your computer. (Google searches will net you a few companies in Minnesota that specialize in this industry.) Look over their listings and identify ones you would like to see more information on. If the Resort listing ads are vague and/or say “confidential listing”, chances are they are fishing for buyers and expect you to sign some form of buyer representation before they provide you information. Proceed with caution at this type of advertising. It could be that the business owners simply want a higher level of confidentiality or there could be no listing behind the advertisement at all.
Shopping For A Resort Broker
Perhaps more important than choosing a resort or campground to buy is finding a trustworthy and competent broker to facilitate your purchase. Chances are you are about to part with a good portion of your life savings, your 401k or the equity in your assets and finding a trustworthy broker with both experience and integrity is vital. Many times it’s just a general feeling of confidence obtained during a phone conversation or perhaps it’s how quickly they respond to your concerns and questions. We all have different ways we rate customer service so if you feel put-off or can’t obtain the information you need in a professional and timely manner, chances are this type of treatment will continue throughout the transaction. Ask the broker how they handle transactions and what services they provide for buyers. Ask for testimonials and the names and numbers of former buyers who purchased properties through their firm. If they won’t give them, find someone who will. At a bare minimum, a Resort Broker should assist with the following:
- Buyer pre-qualification
- Detailed sales portfolios
- Private showings
- Cash flow and financial analysis of the property
- Offer write-up, presentation & negotiation
- Search for financing options
- Referrals to industry networks and organizations
- Closing facilitation
By this time you have probably done a great deal of on-line research into the Minnesota Resort and Campground industry but it is also important to visit several properties and talk with current owners. Most owners I know are happy to discuss the business pro’s and con’s providing they have the time. I would also encourage prospective buyers to join one or both of the Resort Associations in Minnesota: The Congress of Minnesota Resorts and the Minnesota Resort and Campground Association. Both have annual conferences and publications that will give you the inside tips and tricks for marketing and resort enhancement.
The second aspect of research is the individual properties themselves. Work with your broker or financial consultant to identify the business cash flow and historical operating information. Can the business support the debt service? Will there be a return on my initial investment? Is there enough of a “cash cushion” if something unexpected happens? Can I grow the business? On average, new buyers will realize a 10 – 20% reduction in revenues their 1st year of ownership but as they lose current customers, new one’s quickly step in to fill the gap.
Now that you have narrowed your search it’s time to make an offer. Typically, your offer will be accompanied by “earnest money.” The amount of earnest money can vary on the price of the property. More is always better but traditionally, 3-5% of the purchase price is sufficient. Earnest money is included in your down payment and is 100% refundable in almost all cases should the deal not close.
Secondly, often, buyers will hire an attorney to at least read through documents before they sign but it is not necessary. Your broker is already getting paid to do this and if you hired a competent one, the purchase agreement should contain the standard clauses and address your specific concerns. However, getting a second opinion is always a good idea.
Closing The Deal
By the time closing day comes around there should be no more surprises. With a competent broker, everything should be finally negotiated and all parties are well prepared to close the deal and get you moving into the business and lifestyle you always dreamed of.