We are often faced with the following question:
"I'm undecided between buying a campsite that includes both the property (building) and the business, or buying a campsite that only includes the business with a lease and rent. As a professional in the outdoor hospitality industry, what are your thoughts?"
Full ownership or the business tool?
When presented with this question, we understand that the prospective buyer is open-minded and seeking understanding, allowing them to make a decision among the available businesses for sale.
In some cases, the question doesn't arise, and the buyer always prefers to purchase both the property and the business together. Indeed, for some individuals, having complete autonomy and freedom through full ownership is crucial. We respect this position, but it's important to note that a portion of the campsite market for sale is not accessible to these buyers. If we look at the portfolio of the GRAVITAO agency at the national level, approximately 250 campsites are for sale, and between 15 and 20% of them are offered as "business only."
Let's assume that you are open to all possibilities, and let's revisit the initial question. Each business needs to be assessed individually, and it is our role to guide you through the process.
If the business is well-equipped, comes with a valid commercial lease, and has reasonable rent, why not consider it?
In such a case, you would have access to a functional operating tool. By examining the accounting, you can understand its performance, and if the business is profitable, you can pay yourself, develop it, increase its value through productive investments, boost its revenue, and be free from bank loans after 7 years. Should you decide to sell, you can expect a positive financial outcome.
What more could you ask for?
Of course, you might have carried out work on someone else's land, and if these improvements were significant, you would have needed permission in accordance with the lease agreement. Nevertheless, you would have received corresponding compensation through increased revenue and a higher resale value compared to the purchase price.
If these conditions are met, it's a "green light" for purchasing the business alone.
However, caution is necessary if the working tool is in poor condition, if the lease has expired, or if the rent is so high that profitability is low. Although such a business may have potential, it's important to address any shortcomings before the acquisition, gain certainty about its development, and negotiate the price effectively based on identified unfavorable aspects.
If you decide to buy both the property and the business together, there would be no lease or rent involved, and you would be solely responsible for all the work. However, a significant amount of money would need to be invested in purchasing the land. Often, the land's value exceeds that of the business itself. This would require borrowing and repayment, which may complicate bank acceptance.
It's worth noting that when reselling, the land's value doesn't usually appreciate significantly compared to the day of purchase, but it does add to the overall cost.
On a positive note, you would recover all the payments made to the bank during the 15-year loan period. Over time, you would have accumulated an amount equivalent to the rent paid over 15 years. Buyers who opt for the "property and business" option often argue that paying rent is money wasted.
Therefore, full ownership can be a good option if you have the financial means from the start. However, with the same substantial resources, you also have the option to consider a more prosperous business, which, due to its profitability and development, could yield greater success.
Each situation has its advantages and constraints.
To make a decision, ask yourself: What is the true purpose of my purchase?
Is it the pursuit of personal fulfillment, freedom, longevity, heritage value
or
social recognition associated with full ownership? Or is it the dynamic performance of a professional business tool over a specific period of your active life?
GRAVITAO®, a renowned real estate network dedicated to facilitating the buying and selling of campsites and hotels
across the globe, is delighted to share its valuable insights and expertise with you.
This venture operates under the esteemed banner of the NOW-W Group.