Buying a resort property is tempting to many. While, owning a resort property is a lot of work, it comes with significant upside. From hotels and bed-and-breakfasts to RV parks, campgrounds and fishing lodges, there are many different types of resort properties to buy. Each type of property will have its own unique set of considerations. Yet, the freedom to own and operate your own resort may be reason enough.
For the purposes of this article, we have assumed that you are considering buying a resort property comprised of buildings and facilities located together that provide lodging, entertainment and other amenities for visitors. With this in mind, let’s weigh the pros and cons of purchasing one.
Being Your Own Boss
One of the most valued aspects of buying a resort property is being your own boss. As the owner of the property, you set the rules and hire the workers. You are in charge, which allows for more freedom than you typically have as an employee.
Being your own boss can help push you to perform to the best of your ability. It also allows you to set your own salary and gives you permission to do basically anything. However, there is also a drawback to being your own boss: the stress of running your own business. If you are the sole person in charge of your resort property, you will have a lot of details to keep organized. Hiring other workers, maintaining a proper budget, and keeping everything in order and running correctly will certainly lead to more stress than you might be used to.
Having greater income potential is almost always a good thing. In particular, increased income gives you the ability to hire others to take care of some of the aforementioned stressors. Overall, as your business grows you will be able to hire more people to take care of tasks that you might have otherwise performed on your own.
While buying a campground or other resort property will cost you money in the beginning, the pay-off can be quite lucrative. As you learn the ropes, you will be able to make improvements with a view to increasing revenue. As revenue increases so too will your income.
Access to the Landscape and Facilities
If you own an RV park or other resort property, you will have access to the surrounding landscape. This may include lakes, rivers, and hiking trails. Experiencing your resort’s beautiful surroundings will no doubt bring you great joy and inspiration. Even if the resort property is not particularly scenic, you will have the ability to create your own piece of paradise.
If you are an active person or otherwise enjoy resort-style amenities, buying a hotel or other resort property will give you the opportunity to utilize the facilities. Swimming pools, tennis courts, and other sporting areas that are otherwise difficult to access are now in your backyard. Rather than paying hundreds, if not thousands, of dollars a year to be granted access to these types of facilities, people will now be paying you to utilize these areas.
Buying a bed and breakfast or other resort property will not only give you a wonderful location at which to host friends and family but also provide a reason for doing so. Whether its conversations over a morning coffee or campfire sign-along, social interaction is never far away. Not to mention, owning a resort is a great conversation starter!
If buying a resort property seems like it will be an easy venture, you might want to think again. While there are many benefits to owning a resort property, there are certain drawbacks that you will want to consider as well.
For instance, if you dream of earning a truly passive income then buying a resort property may not be for you. Owning a resort property is active work, literally as well as figuratively. It can be grueling at times and enjoyable at others. Be sure that you are prepared to play an active role in the management of the resort before jumping into buying a resort property.
A Seasonal Job
Very few locations are perfect for vacationing year-round. Because of this, almost all resorts are seasonal. In turn, this makes your job seasonal. Once your resort has been established for a few years, it may make enough money for the seasonality of the job to not be an issue. However, for newly established resorts or those with prolonged slow seasons, you may need to have a second job or otherwise preserve cash in the slow season.
The reality is that you will be solely dependent upon the success of the resort and the travel industry in general. Largely, the travel industry depends upon the economy. When vacationing families are doing well economically, they will visit your resort often. However, when the economy is in a downturn, you will almost certainly experience a loss of visitors and therefore a loss of income. Similarly, worldwide pandemics such as COVID-19 can put an abrupt halt to travel.
While this can be expected, it is difficult to predict. Be sure to maintain adequate savings in order to keep your resort running throughout economic downturns or other adverse events.
A drought, prolonged rainy season or other irregular weather occurrence can impact the number of visitors. Even during the mild season in your area, there can be unpredictable weather occurrences. Storms and other undesirable weather conditions can cause guests to cancel their visit (or not schedule one in the first place).
Even worse, natural disasters can cause damage to your resort property. This can result in a need to shut down the resort for an unknown period of time, resulting in loss of income from lack of guests as well as repair costs.
Repairs and Maintenance
Last but not least, when thinking about buying a resort property you will need to consider the burden of repairs and maintenance. A 30 unit hotel with a pool will have much different maintenance requirements than a small bed a breakfast. Similarly, a small campground will have much different requirements than a waterfront fishing lodge.
Importantly, before you buy the property understand the scope of repairs and maintenance. If specialists will be required, or the scope of the work requires more than one person, then you will be dependent upon qualified staff. If, on the other hand, you can handle the repairs yourself then you will need to be prepared to do the necessary work annually.
Ready to Buy a Resort Property?
Now that you have taken these pros and cons into consideration, you are ready to buy a resort property! Well not quite. Be sure to conduct proper due diligence on the resort property, including a careful review of the financial records. Hire properly qualified advisors to assist with the purchase, including legal and accounting. If you need financing, talk to your bank early in the process and be prepared to submit a detailed business plan.
After completing necessary due diligence, getting input from your advisors and considering the above, you can confidently purchase a resort property and feel good about your decision.
Visit our website again soon for more tips and resources on buying, selling and owning a vacation property.