Resorts & Lodges For Sale in the Ozark Mountains
Bull Shoals Lake ~ Norfork Lake ~ White River ~ Missouri Ozarks
Gary Cooley, Realtor Resort/Tourism Specialist

Most of the people contacting me about buying a resort are families. No doubt about it, owning and operating a resort can be a very rich and rewarding family project. Many resorts in this area are owned and operated by families. However, due to soaring real estate prices, resort ownership for families is not making as much sense as it used to.

The Problems
The reason is simple. Few resorts make enough profit every year to support a growing family. If you have children to put through college, if you will be paying for your family's health insurance, and if you wish to invest for retirement, its all but impossible to do all of these things with the annual profits from small resorts. And what about improving or expanding the property? There will be no money for that after family expenses.

Another common problem is that most small resorts do not have an owner's home large enough for today's active families. The majority of these resorts were constructed from the mid 1950's to the mid 1970's. Back in those days the typical family residence was a lot smaller than today's home.

Most owner's home will need an addition to accommodate today's family. Or you can convert the owner's home into a rental and build a new, larger home - if there is vacant land available on, or near the resort. Yet building an addition or a new home means spending money that could otherwise be used to increase the resort cash flow through expansion.

There are only two sensible ways for families to own profitable small resort operations.

Put More Down
The first solution is to make a sizeable down payment. Instead of putting down just 20 percent, put down 50 to 60 percent of the purchase price. This reduces the mortgage payment to a sensible level. High mortgage payments devour profit. Unless the mortgage payment is reduced, you won't prosper. With many small resorts you'll make a sensible living if you don't have an alligator of a monthly loan payment.

If you are looking at buying a $700,000 resort this means a down payment of some $350,000. That is a big chunk of change, something that few families have. But assume you do. Then the next question becomes, "Well, is buying a resort the best way to invest that much cash?".

Maybe, maybe not. Let's compare. Assume that you take that same $350,000 and invest it in some type of financial instrument with relatively low risk. Let's say that instrument yields an average of 6 percent per year, and let's say you compound it out five years.

At the end of that five years your $350,000 has turned into $468,378, a gain of $118,378, call it $23,675 a year. That is a nice college fund! Can a small resort generate the same gain? In some cases the answer is yes, and you'd make more to boot. In most cases however, the answer is no, you won't even come close. And therein is the challenge. How do you know which resort will pay off well?

The answer is different for each family. It depends on what your idea of a good lifestyle is. If your family has a strong interest in owning a small resort, contact me by telephone and we'll talk it over. I can tell you quickly whether or not a small resort makes sense for your family. It is not a real difficult thing to determine once I know your individual expectations.

One Spouse Gets A Job
If one spouse works full time in a position paying a salary with health insurance benefits, you can make the small resort idea work. Since a family of four can expect to pay anywhere from $10,000 to $13,000 a year for health insurance, a job that provides health insurance can save you a bundle.

Next, banks are far more willing to set up a revolving line of credit if one spouse is gainfully employed full time. The extra income, plus the savings on health insurance makes profit generation much easier. With that revolving line of credit you can add new units or otherwise make improvements that allow your cash flow to expand.

When it comes to qualifying for a commercial loan to buy a resort, the bank will not take into consideration a future job. You may find that you would need to move here first, get the job, then apply for the loan to buy a resort.

During the busy summer high season it takes two adults to smoothly run a resort with more than 8 or 9 units. If one spouse works full time chances are good that you'll need to hire part time help on weekends. That can eat into profit. However, the cost of part-time help is not high and you will still come out ahead. If you have a couple of children who enjoy resort work, you pay them instead.

Low Season Work
Most small resorts do not stay open all year. They close in November and reopen in April. Thus for five or six months out of the year there is not a lot to do at the resort. If the second spouse takes a part time job in the off season, that helps out too. I know some resort owners who take a job in off season just to have something to do.

Conclusion
As you have seen, it takes either a big block of cash or second jobs to make a small resort work for a family. If you are still interested in a small resort for your family, phone me and say you read this article and want to discuss it further. I'll be glad to help.

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