How can an RV Park or Campground owner be informed about the financing in the deal?
The buyer has been aware of what he/she needs to do to obtain financing (unless you are one of those lucky sellers whose buyer pays all cash). You may not know, however, all that the financed RV Park buyer knows as you start into the process of selling your park or campground to them.
Your paperwork will spell out the terms of the financing, but you may not always know the source of down payment if that isn’t disclosed to you. Knowing that the buyer has the cash down payment in a liquid account is vital knowledge you need. Sometimes the buyer has other assets that they are pledging against the loan. There’s nothing wrong with that and it shouldn’t be an obstacle to closing if the bank is ok with having that pledge as a part of the deal. However, you wouldn’t want to be caught in a situation where the buyer thinks he can use his other assets as collateral, but the bank doesn’t agree with that!
Note to Sellers: Disclosure is always best. Ask your buyer or Broker to determine if the down payment is all cash, or if other assets are involved. If they are, ask for documentation from the bank that they will accept other property as collateral or consider it as down payment.
Understand RV Park appraisals and the impact on the deal!
As to appraisals, this can be such a tricky area!
An appraisal is an informed decision made by an expert appraiser who has credentials to provide a commercial appraisal suitable to the bank. It is a subjective final decision amount made by the appraiser as to the value of the property and the appraiser will most likely value it based on the financial viability of the RV Park business.
Note to Sellers: Have your ducks in a row! Be able to provide (at the least) your most recent 2 years of income tax returns. Be ready to answer questions from the buyer regarding the expenses, payroll taxes, and so much more. If you sometimes take cash for goods/services and that cash does not show up in the bank records, you need a Cash Statement that you maintain showing how much money you took in. You may be hesitant to do this, but it could save your deal to show the buyer just how much cash comes through the business. The bottom-line income you keep will be something that will affect the buyer’s decision on what to offer for your park. Remember, if the park is being financed, the buyer is also looking at debt service for them, which will differ from any debt you carry on the park.
It’s not just about the RV Park Buyer finding the right financing…it’s also the Property Survey!
And, then there’s the Survey! If you have an existing survey, all that might be required (depending on the financing) is an update of it determining that all boundaries on the existing survey are clearly marked and no changes have been made. The bank will require this documented survey as a part of the financing to make sure they are loaning on exactly what is being sold.
Note to Sellers: Surveys can be the last “monkey wrench” thrown into the deal! Make sure you know what you’ve got so you don’t lose time or the deal entirely.
If you’d like to chat more about the process of selling, RVParkSales.com can offer a telephone visit to discuss your park. Because all parks are different we may have additional specific suggestions for you if you are considering selling. Feel free to phone 850-970-2128.