There’s no doubt in anyone’s mind that the RV park industry is poised to show huge gains in occupancy and revenue. In addition, the mom and pop owners are getting older every day and wanting to retire. So for many buyers, the challenge is finding that correct park to buy. Any successful RV park buyer will tell you that the secret is explained in one word: volume. The more offers you make, the more deals you look like, the greater the odds of finding the correct one. Bear in mind that the “correct” RV park is not the same for every buyer. Everyone has a starting spot of dollar size and management requirements that is different. But no matter whether you are looking for a 40 space park or a 400 space park, the secret to finding the perfect deal is the same. It’s volume, volume, volume. And, of course, before you start gearing up the volume, you have to know what you’re trying to find and how the whole business model works – that’s what the information products we provide are for. But even if you know everything there is about the RV park industry, you’ll never find a great deal unless you turn over a lot of rocks.
Memo From Frank & Dave
To Find A Good Deal You Have To Be Persistent
Nobody thought that England could survive the attack of the Luftwaffe in 1940. At that time, the British Air Force was limited to around 1,400 aircraft vs. around 5,000 for the Germans. However, the British defeated the Germans through one simple trait: persistence. The British would simply not give up. Their pilots would fight all day, refuel, and fight all night. Their airbases worked around the clock, and made do with a lack of ammunition and fuel, yet they would take off again. Eventually, the Germans realized that, although the British were hugely outnumbered, they simply would not quit, and ended the campaign. Buying a great RV park is a very similar endeavor to the British.
Identify the goal
The British had one simple goal, to stop the Germans from having air superiority. Similarly, you should have one simple goal of finding an RV park that meets your needs. To accomplish this, you need to think through how much money you have for a down payment, where you want it to be geographically, and how much time you have to devote to it. You need to engineer the “perfect” park based on this loose framework. Only when you can say in one sentence what you are looking for like “I want at least a 50 space RV park in the southwest that requires a down payment of not to exceed $100,000” are you really ready to start looking. And without that goal, you’ll never be specific enough to find anything of value.
Be relentless in pursuit of the goal
Once you have decided on your goal, it’s time to start pouring as much raw material as you can into that “sorter” using every available method to find deals. We use a combination of internet listings on RVParkstore.com and Loopnet.com, constant calling and emailing brokers for leads, cold-calling on RV park owners, and sending direct mail to RV park owners. Our goal is to be looking at hundreds of deals simultaneously, and not just the hand full that some shoppers think is sufficient. There is no question that the greater the volume of deals you look at, the greater the quality of the deals you will find. If the British pilots could relentlessly pursue their goal without food or sleep, then there’s no excuse for you.
The British knew the importance of building alliances, so they already had the U.S. helping to provide equipment before 1940. Any good RV park buyer knows that they also need to start building alliances in order to be successful. The #1 alliance you need to build is with the RV park brokerage community. You can find a complete list of RV park brokers on RVParkStore.com. You need to take this list, augment it with any brokers you find that are not on that list, and start building a team of “pickers” that will let you know when they find something that meets your parameters. You should also start building alliances with lenders and any other person or group that can help you in your search or in closing the deal.
Be efficient in your efforts
The invention of radar greatly helped the RAF (Royal Air Force) in the Battle of Britain. By knowing where the enemy was coming in from, they did not have to waste time and fuel looking for them. For you to maximize your search for the perfect RV park, you also need to “work smart”. You need to learn enough to know an “opportunity” from what is not an opportunity. You need to use lists and a calendar of when to call back moms and pops that want to think about your offer to buy their RV park. You need to watch everything you do and evaluate what works and does not work as well, and cut loose things and behaviors that are not getting you closer to your goal.
There are thousands of RV parks out there you can buy. The key is finding exactly the right one for you. You can improve your odds by working smart, building alliances, knowing your goal, and applying massive persistence. And the odds are in your favor. If the British could do it, so can you.
How To Avoid Danger In Buying An RV Park
Everything in life has risk. In driving to the store you risk having an accident, as well as your car breaking down. You cannot eliminate all risk in life – even if you sat in a chair you whole life and never moved, a meteor could land on you. So the key to a successful life is trying to minimize risk. And, in buying RV parks, there are certain strategies that allow you to hedge your risk and mitigate it.
Benjamin Franklin once said that “Diligence is the Mother of Good Luck”. Franklin was 100% correct. You make your own luck with applying proper due diligence. But what does that mean? It means that you start with a blank sheet of paper, and you prove out the revenue and expenses based on third party statements (like utility bills) and three bids on any item that is not included. It means verifying that the permit is valid and all inspections are correct. Essentially, due diligence is the mechanism that removes all doubt of being deceived by the seller.
Understanding the Business Model
Before you buy an RV park, you must understand well how the business works. You can attain this knowledge through the RV Park Investing Home Study Course, available at RVParkUniversity.com, or at least by gleaning what you can from the internet. But regardless of how you obtain the information, you should never invest in any RV park until you know the drivers to profitability and the potential risks to protect against. It is not enough to say “I want to own an RV park and I have the money for the down payment”. You must first earn the right to invest in an RV park by immersing yourself in the business model until you are a competent investor in that asset class.
Having Reasonable Reserves
If you have $100,000 to invest in an RV park, you would never want to utilize that entire amount in your down payment. You would want to hold back significant reserves for a rainy day. Real estate is a capital-intensive business, and you have to be prepared to step in with your check book when required. In addition, make a list of where else you can get short-term capital in a worst-case scenario, such as friends and family or other investment holdings. You can never be too prepared for the worst case scenario.
Having a Plan B for Every Risk Issue
One reason that commercial planes crash so rarely – while private planes crash all the time – is that the big, commercial jets have multiple back-up systems to every emergency. If the engine goes out, they have one or two more that can safely get the plane home. If the rudder control brakes, they have a back-up control. You need to be like those commercial jets and have multiple back-ups to every potential problem. List out what those potential risks are, and then brainstorm a couple plans for each one.
Using Reasonable Financing
Never get in a financing bind. We see that all the time with RV parks. Here’s the most common scenario. You buy the RV park with seller financing that runs for three years. Two and a half years in, you try to get bank financing and find you can’t get it. You have been trapped by the seller, who will now foreclose and take your down payment. Any loan you obtain should be at least 5 years in length, which gives you an acceptable amount of time to improve the property, season the financial statements, and obtain a real loan. In addition, when you obtain seller financing, still run it by a bank to make sure the property is “bankable”.
Buying and operating an RV park does not have to be a scary situation. You can minimize the risk if you just use these basic concepts and work smart. Let that wild animal jump on some other unsuspecting buyer – you can defend yourself from danger if you work at it proactively.
RV Park Home Study Course
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