A Guide to Buying a Resort
As you consider various resorts, keep in mind their style and personality and choose a property that will be well suited to you. The resort you choose may appeal to others like yourself and thus your guests will be people to whom you will easily relate.
Resorts can be categorized as Housekeeping (cottages with kitchens), American Plan (lodging with meals), or Campground. A resort may cater to families or business people, or sport enthusiasts in various income brackets. Once you have identified the style of resort operation you prefer, pay close attention to the environment because no matter how much money you may have, you cannot change the environment! It is important to understand, that in purchasing a resort, you are entering into the "hospitality industry". Being hospitable and seeing that your guests enjoy their vacations is the key to success.
Resort Buyers Checklist
- Environmental - Lake, Topography, Neighbourhood.
- Physical Condition - Buildings, Equipment, Furnishings, Utilities
- Income - Expenses - Reservations
- Comparable Properties
EnvironmentLake / River Size:
Does it connect with other bodies of water or waterways?Type:
Sport or Recreation?Fishing:
If so what kind? How well known is the body of water?Area:
Hunting, Fishing, Recreation, Winter Activities, Trails, etc.?Topography of the Resort:
Elevation above the water line is very important for septic systems. What type of tree cover is available? General appearance and landscaping? What direction is the resort facing? Wind is a factor in dock maintenance, boat mooring and ventilation. Sunrise, sunsets and southern views are enjoyable for guests.Neighbourhood:
How well are neighbouring resorts doing? How strong is the resort association? What is the rate structure in the area? Is the area promoted? What other amenities and activities are available? Proximity to shopping and supplies? Look for signs of success with other area resorts.
What is your first impression from the road and from the lake? What could you do to improve it?Buildings:
Inspect each building; look at the condition and general appearance of the foundations, roofs, windows and stoops. Inside, look at the flooring, walls, windows, ceilings, bathrooms, kitchens (especially the fixtures), sinks, countertops, cabinet space and storage. What's your general feeling of the building? Identify all the physical needs for improvements.Equipment & Furnishings:
Check the appliances, furniture and particularly the bedding (how many changes of linen), which is very important in the lodging industry. Are the cottages adequately furnished with pots and pans, utensils, silverware, toaster, coffee maker etc? What kind of tools for ground maintenance are available. Check the boats and motors carefully. Look at the hulls. Are the rivets tight? Are the transoms in good condition? Look at the oars / paddles, cushions, seats, life jackets, cruise a day, etc., are they in good condition and what is the quantity? What are the type, age and size of the motors?Other Equipment:
Minnow Storage tanks, extra refrigeration and freezer space, an icemaker? Is there recreation equipment? Lawn furniture available? Sufficient maintenance equipment / tools? Gas pumps and tanks, docks, boat launch area?Utilities:
Ask questions about the sewer systems and water supply. Water is going to be either a well or lake intake. Is the water purified, chlorinated and pumped to the buildings? Lake systems are very dependable. Ask about being adequate for winter use. There is no visible inspection of sewer/septic systems unless there is an obvious failure. Surface ground water with an oily film could be a sign. Ask the owner about how well the system works, has the tank ever been pumped or treated? The local government agencies maybe able to provide a report for you. The main concern is that the system works well, learn about the size and location of the tanks and fields.
In regards to electrical wiring, one must take the common sense approach. If you can see the condition of any exterior wiring, make a note of it. If the wiring is under ground, chances are it is very new.
Income, Expenses, & Reservations
The next priority when looking for a resort is to have a thorough understanding of the income and expenses of the property you are considering. This is where your common sense will once again play a major role in your decision making.
As you might imagine, in looking at a number of resorts, you are going to be exposed to quite a number of bookkeeping techniques. Some are precise, many are casual. The more casual the system, the greater the potential for error and a less than accurate representation of what the property is generating, but that's where you will have to rely on your common sense, to piece things together.
Analyze all revenue aspects of the resort. What additional revenue departments could be added? How could existing revenues be enhanced or expanded? A major question is does the resort generate enough income to pay all the expenses, cover a mortgage and have a little money remaining.
Most resorts, which are "SOLD", make the above mentioned as a minimum, but not in all cases. Many resorts where the physical, environmental and price were right become excellent opportunities. If the new owner is aggressive, the resort can turn into a real performer in the first few years.
Does it sound realistic? Look at the rate schedule. Look at the reservation book, both current and previous. Take the average cottage per week, then multiply it by sixteen weeks (or the number of weeks in that resorts current season) for a full season. Compare that to the current cottage revenues. Do that for boat & motor rentals and for the store sales, etc.
Being exposed to a number of resorts for sale can serve two primary purposes, Education and Comparing Values.Education:
Seeing a number of resorts offers an opportunity of comparing physicals, rate structures, types of amenities, how the resort is promoted, where the guests are from, operating procedures, guest policies, staffing needs and a number of other needs. A number of exposures added to a buyer's education of the industry and a more informed buyer typically make for a better operator.Comparing Values:
Everyone wants a " fair " deal. In listing a resort for sale we give the owner a price range of what their resort should sell for and on what terms. The only real comparison is actual sales of other resorts. " You make your money in real estate when you buy it ". What that means is if you make the right choice and do the right things you will make the most money.
I have made this information available to help resort buyers make an educated decision on purchasing a resort. When dealing with resort buyers that have done their homework, the final step is structuring the terms of the sale with the needs of the resort, the buyers and the sellers, to achieve a win / win situation.
When purchasing a resort through Sutton Group Incentive Realty Inc. and more specifically through Peter Saretsky, rest assured you are in good hands. We know what questions to ask, how to listen and know resort values. It is important for buyers to be correctly matched to the right resort, campground, marina, etc.
If you are purchasing a resort "not" listed by Sutton Group Incentive Realty we can help you as your agent (referred to as a buyer broker).
As you can see from the amount of information provided, we feel buyers entering the hospitality industry should be well informed. Well-informed buyers become better operators, thus contributing to a better industry. If we can help in any way please call and have a conversation with Peter 1-705-816-0787.