We’ve all heard the rhetorical question: “is the glass half empty or half full”? It represents two different perceptions: 1) optimism or 2) pessimism. It’s a fact that most people fall into one of these two camps. Of course, both have their benefits for self-preservation, but it can also hurt your ability to buy an RV park if you listen to only that one portion of your personality and not moderate it with other viewpoints.
What kind of personality are you: optimist or pessimist?
So if we all fall into either a positive or negative view on matters, which type are you? Personally, I’m definitely a pessimist – I always approach every situation with a worst-case scenario viewpoint. Maybe this is based on past experience, or possibly because I hate disappointment. Disappointment is defined when “the outcome does not match what you expected” and by always being negative if things fail I’m never shocked.
Why all good RV park buyers need to be share both viewpoints internally
If you are an eternal optimist, you will inherently see only the good in deals and make bad choices with a lot of risks. If you are an eternal pessimist, you will never buy an RV park at all and so there’s no real point in even looking at listings. So if you truly want to buy successful RV parks, the only method that will work is to blend these two viewpoints – to force yourself to weigh both the good and bad aspects and not just the one that matches your personality.
How to accomplish this
Here’s a method that I’ve been using for decades to offset my natural negative state, and it works on every RV park deal. You need to come up with three approaches to every acquisition: 1) the best case 2) the worst case and 3) the realistic case (which is a blend of the two). So here’s how it works:
- Best Case Scenario. In this mode you calculate what the best possible scenario and results would be for the RV park. For example, assume you can increase the occupancy massively and even raise the rates. The best case scenario can often result in the revenues potentially doubling.
- Worst Case Scenario. This is when you model what the absolutely worst outcome might be – you get to harness your full pessimistic spirit. You might reduce the revenue down 25% from last year’s P&L, add some new costs, and even throw in a freak weather event or two.
- Realistic Case Scenario. To accomplish this you blend the two absolutes and see where you would end up in that half-way point between the best and worst outcomes.
- Building a Range of Possibilities. Now you simply look at the potential risks and rewards of the deal in terms of the optimist viewpoint (Best Case), the pessimist viewpoint (Worst Case) and the midpoint between the two (Realistic Case). Basically, if you can survive the Worst Case, would be elated with the Best Case and be perfectly fine with the Realistic Case then you should go forward.
Lessons learned from experience
When you analyze any RV park deal in this manner you will find that it not only increases the odds of success, but it also greatly decreases your stress. That’s because whether you’re an optimist of pessimist you also have a bit of concern that you’re missing out on something because of that fact. Deep down, all RV park buyers want to make the right decision, but are held back from a purely scientific approach because of their bias. This exercise of Best Case, Worst Case, Realistic Case fixes that.
There is nothing wrong with being a pessimist or an optimist – as long as you acknowledge this fact and plan accordingly. A Best Case, Worst Case, Realistic Case strategy will help you form good, impartial decisions that hold the best odds of success.