Caravan Parks - The good, the bad and the ugly

Discussion in 'Investment Strategy' started by Melbpositivegeared, 17th Dec, 2017.

Join Australia's most dynamic and respected property investment community
  1. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    114
    Location:
    Melbourne
    I'm looking at the next property strategy for me and I've decided to move toward business real estate.

    Specifically I would like to get into the Caravan Park game.

    Ideally I'd be buying something run down, doing a fix-me-up and maybe adding some extra caravans as well. I'm much more keen on the permanent rental game than short term.

    I'd love to speak with anyone who's gone down this path and hear the pros and cons of what I can expect. Or those that have heavily researched this area and are also looking, or decided not to continue down this path.
     
  2. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,788
    Location:
    Perth, WA
    As in you want to run a caravan park? Or just own the land? Or both?
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,097
    Location:
    Sydney or NSW or Australia
    Become a mobile home slum lord.
     
    Ben_j likes this.
  4. datto

    datto Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    6,675
    Location:
    Mt Druuiitt
    Most of the ones in Sydney that I know of have been sold to developers.

    There used to be a huge one down Sunnyholt Rd near the prison. Don't know if its still there or maybe it become part of the prison. They just built a fence around it and threw some razor wire on top lol
     
    mikey7 likes this.
  5. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,394
    Location:
    Sydney
    Have a search on Somersoft - I seem to recall some discussions about this a while back.
     
  6. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    114
    Location:
    Melbourne
    An existing caravan park, freehold. Something messy I can come in and clean up
     
  7. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    114
    Location:
    Melbourne
    For anyone else following this (I hope this is allowed - please delete if it isn't) - I've copied and pasted an old Somersoft response from 2002, from someone with the username Cathy B in NSW.

    "Hi

    Sorry about the late reply, work, long weekend .... :)

    Caravan Parks are in my view a business - for an owner manager they are very much 24/7. You can lease parks or own the freehold and operate it or a combination of these. You could also run them under management but need to find good people who will work 24/7 for fairly low pay and there are some IR issues around employing / contracting managers. There are many stories of managers employed under the award and who later sued owners for every bit of overtime they ever did.

    Parks are valued on their net operating profit at different rates depending on location - coastal or inland (NSW info - you would need to check on other states). Coastal parks because of their "perceived" lifestyle advantages (If you can get them - while everyone is on the beach in summer you'll be busy cleaning the amenities!) are valued at between 10 and 12 % and inland parks from about 15 - 18% of net operating profit.

    Of course there are all the usual tenant issues to deal with (different legislation in NSW to residential), accreditation, ratings and local government rules.

    If you look at some of the returns on individual vans they can be incredible - we used to have several old vans valued at about $1000 each that returned about $70 per week at 80% occupancy! Tenants were a bit dodgy though.

    The best guests though are generally those paying the least - those with their own vans who pay for a powered site. The baby boomers have hit the road and travelling around for months sometimes years on end.

    You could invest in a freehold and lease the business or perhaps invest with someone as a silent partner if you don't want to do the hard work - I can't give you the leasehold details however there are several good caravan park brokers who deal in parks who have all the financial information.

    We also found it difficult to refinance our park although we had never defaulted and had about 50% equity. So that may be an issue.

    The CCIA NSW may also be a good starting point.

    If you have specific questions I'd be happy to have a go at answering them.

    Cathy"


    I'd love to speak with Cathy if anyone knows of her?

    I'd also love thoughts on whether these cap rates are still relevant 15 years on. I'm finding some parks seem to be running on very small margins as land is worth more and more.
     
  8. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    6,776
    Location:
    ....UKI nth nsw ....
    I know a person that bought the free hold on a caravan park in nth nsw ..300 mts walk from the entry to the beach less then 2 years ago..
    What they did as this park from the front was run down and looked like the Bates Motel from the movie by Alfred Hitchcock movie "Psycho"..

    That park came with a lot of permanent long-term tenants and about 40 plus on site caravans a few buses ect..
    Once they took control,they gave notice to all the permanents and weekends vans ,and now target the grey nomads ,set up a stay 4 nights one night free and have turned that business around but the have their whole family working within that park..imho..
     
  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    It was owned by Meriton of all people. And yes its still there. Its no longer visible from Sunnyholt Rd. Access is around the back. Now its Over 50s and a land lease park with no vans etc. It used to be a tailer park boys site and was a favourite for the nearby prison.

    I wonder for how long. The markets is set to be demo'd for new apartment blocks galore and the Blacktown side of the tracks is prime land for the councillors ...sorry.... developers.
     
    datto likes this.
  10. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    114
    Location:
    Melbourne
    I'm liking the looks of the ones that convert over to manufactured homes and focus more on perms. Keen to learn the market more though. Would love examples of parks you feel are run well