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Writer's pictureLandan Dory

Exploring Your Options: Selling Your RV Park in Texas


This whitepaper is designed to provide valuable insights and guidance to RV park owners in Texas who are considering selling their properties - now or in the future. As a real estate broker specializing in RV park sales, I want to help you make informed decisions. We will explore various selling options, their pros and cons, and offer additional considerations to help you maximize your RV park's sale potential.


Introduction:

Selling an RV park in Texas is a significant decision that requires careful consideration of various selling options. This whitepaper aims to assist RV park owners in understanding the choices available to them, enabling them to make well-informed decisions that align with their goals.


Exclusive Listing with a Broker

Pros:

  • Increased Visibility: Brokers can execute national marketing campaigns, reaching a wide audience of potential buyers.

  • Fiduciary Responsibility: Brokers have a contractual obligation to act in the seller's best interests, ensuring fair negotiations.

  • Broker Facilitates Transactions: Brokers handle the complexities of transactions and negotiations, saving the seller time and effort.

  • Proactive Marketing: Brokers can implement targeted marketing strategies, including online listings, direct mail campaigns, and industry-specific publications, to attract potential buyers.

  • Networking: Brokers often have a wide network of potential buyers, including investors, developers, and individuals looking for RV park investments.

  • Multiple Offers: In exclusive listings, brokers can help create a competitive environment, potentially leading to multiple offers and better terms.

Cons:

  • Publicity: Listing with a broker may expose the park to increased publicity, which could affect privacy.

  • Broker Contract: Sellers must sign an agreement with the broker, which may limit their flexibility.

  • Limited Buyer Pool: Relying solely on a broker may restrict the number of potential buyers if the broker does not share the property with the widest possible audience.


Asking a Broker to Bring Offers from Buyers they Know Off-Market

Pros:

  • Performance: Brokers will most likely bring buyers that they have the highest level of confidence in performing on the transaction

Cons:

  • Misaligned Loyalties: Brokers will bring buyers they will have likely worked with in the past, meaning their loyalties may align more with the relationship with the buyer than the seller.

  • Lower Historical Prices: Off-market transactions often result in lower sale prices. Most buyers won’t go out of their way to have a broker track down an owner so that they can then pay a premium for the property when there are generally 120+ RV Parks already listed for sale in Texas.

  • Negotiation Bias: Brokers may aim for a lower sale price to facilitate a quicker transaction.


Buyer Approaches Seller Directly

Pros:

  • No Broker Commission: Sellers save on broker commissions

Cons:

  • Lower Historical Prices: Direct buyer-seller transactions often result in lower sale prices.

  • Competitive Market: Texas has a large number of RV parks for sale, making it less likely for buyers to pay top dollar.


Cash Sale

Pros:

  • Quick Transaction: Cash sales typically close within 60-90 days, providing sellers with a lump-sum payment.

Cons:

  • Capital Gains Tax: Receiving a large sum of cash at once can expose sellers to significant capital gains tax liabilities.(Talk with a member of our team about how a 1031 exchange can defer your capital gain and depreciation recapture taxes indefinitely)


Seller Financing

Pros:

  • Better Interest Rate: Sellers can offer buyers lower interest rates than traditional bank financing, attracting more buyers.

  • Additional Income: Sellers earn interest payments in addition to the principal amount.

Cons:

  • Default Risk: If the buyer defaults or mismanages the property, sellers may need to repossess a potentially distressed asset.

  • Reduced Cash Flow: Monthly payments may be lower than a lump-sum cash sale, affecting cash flow.


What Else You Need to Know

  1. Preparing Your RV Park for Sale

    1. Property Enhancement: Consider making necessary improvements or renovations to increase the property's appeal and value to potential buyers.

    2. Documentation: Gather all relevant documents, including financial records, property surveys, permits, and maintenance records, to streamline the due diligence process.

  2. Pricing:

    1. Accurate Pricing: Work with your broker to determine an appropriate listing price that considers both market conditions and your financial goals. Making the property available at too low of a price cost cost you in potential earnings. Expecting too much for the property made lead to unmet expectations and ultimately result in a lower price that could be achieved if the property was priced accurately in the first place.

  3. Legal Considerations

    1. Contracts and Agreements: Ensure that all contracts and agreements with brokers, buyers, and other involved parties are reviewed by legal counsel to protect your interests.

  4. Exit Strategy

    1. Assessing Your Post-Sale Plans: Determine what you intend to do after selling the RV park, whether it's retiring, reinvesting in other properties, or pursuing new opportunities.

    2. 1031 Exchange: A 1031 Exchange is a great way to prevent paying taxes on the sale of the property while keeping your equity invested in passive-income producing assets like net lease properties or a DST.

  5. Professional Assistance

    1. Realtor or Broker: Engaging a professional realtor or broker with experience in RV park sales can provide valuable guidance throughout the process.

    2. Legal and Financial Advisors: Consult with legal and financial professionals who specialize in real estate transactions to ensure compliance and tax optimization.

  6. Local Market Dynamics

    1. Understand the unique characteristics of the Texas RV park market, including regional variations in demand, seasonality, and local regulations.

  7. Buyer Financing Options

    1. Educate yourself about the various financing options available to potential buyers, as this can influence their ability to close the deal.

  8. Contingency Planning

    1. Have a contingency plan in place in case the initial sales approach does not yield the desired results. This may involve revisiting your strategy or considering alternative selling options.


Additional Considerations:

  1. Market Timing: Assess the current market conditions to determine the ideal time to sell your RV park.

  2. Property Valuation: Consider getting a professional appraisal to accurately price your property.

  3. Due Diligence: Ensure that buyers are financially qualified and have the capability to manage the park effectively.

  4. Legal and Regulatory Compliance: Be aware of and adhere to all relevant local, state, and federal regulations during the sale process.

  5. Financial Planning: Consult with financial advisors to understand tax implications and financial strategies.


Conclusion:

Selling your RV park in Texas is a multifaceted process, and the choice of selling option can significantly impact the outcome. This whitepaper has explored several options, their advantages, and disadvantages, along with additional factors to consider. Ultimately, as an experienced real estate broker specializing in RV park sales, it is my objective to help guide you through this process and maximize the value of your property. By carefully weighing your options and seeking professional advice, you can make a well-informed decision that aligns with your goals and financial objectives.


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