Many RV Parks are owned by partnerships – two or more individuals who get together to buy and operate a property. But is that the right fit for you? In this RV Park Mastery podcast we’re going to review the positive and negative attributes of partnerships.
Episode 143: Good And Bad Things About Partnering Transcript
I've owned RV parks all on my own and also in the form of partnerships. And I can tell you that I'm much happier operating as a partner than I am individually. But being a partner is not something that everyone is cut out for. So here are some of the things to consider. If you thought, well, maybe I should partner with someone buying an RV park, here are some of the things I want you to think about. Number one, some of the good attributes of being a partner. There are groups out there that have been landmark successes in American history, and they're through partners.
One of the best known right now, of course, is Apple. Apple was a partnership of Steve Jobs and Steve Wozniak. Jobs was the ultimate marketeer, Wozniak the ultimate computer brain. And when they were separate, they weren't that great. Jobs without Wozniak probably would have gone on to be a successful car salesman. Wozniak without Jobs would have continued what he was doing, which was selling circuit boards at weekend fairs. But when you combine the two together, it was magic. And you see that in all forms of life, in entertainment, in business, you see all around you situations where two people as a team are stronger than they were individually.
And when you partner with someone, you have that ability to create that magic. So if you're gonna partner with somebody and that creates a more powerful force than two of you individually, that's a great reason to partner. Normally that happens because one person is strong in one area but weak in another. And then this partner complements that strength and weakness. They're strong in the area that one person was weak in and weak where that person was strong. And so when they get together, there's no kink in the armor. It's a very, very solid product. Also, when you partner with someone, you get to pool your cash, and by having more cash at hand, allows you to buy bigger and perhaps better properties. So that's another aspect of partnering is typically it gives you more additional capital base, and that's a positive. It also can give you moral support. And moral support is priceless. Sometimes it makes life a lot more enjoyable. When you have a partner, you have someone you can bounce things off of constantly, and it just makes you happier. You know, Harvard did a landmark study. It went on for about 80 years.
They were trying to find what makes people happy. And in the end, they found it was relationships. That's what makes us happy. It's not how much money you make. It's not what you achieve. It's how you fit in with other humans. If you have happy, strong relationships, you died happy. And if you didn't, despite how much money you had, you died unhappy. And partnering often gives you that relationship, which can be so very priceless. Also, you can get a whole lot more accomplished when you have a partner because you've got two people. So you can go theoretically twice as fast, right? You can get a whole lot more territory covered when there's two people going at it than there's only one. Or you can split responsibilities. You can have one person who's in charge of, let's say, finding properties to evaluate, and then you do the evaluation. So sometimes by partnering, we're allowed to increase our rate of speed, the volume of deals we can look at. And as we all know, the more deals you look at, the more offers you make. The more offers you make, the more successful you can be in finding that correct RV park.
But there are some things that you need to also think about that are technically drawbacks. The first one is that people tend to change over time. So whenever you partner with someone, you always have that element of risk as far as are they gonna change? And is your partnership actually gonna be more of a detriment to you than a positive? Is that possible? And the answer is yes. People have changed dramatically over time. I've seen it myself. You've seen it. The person who is very conservative who suddenly turns into kind of a beach bum. That's not atypical. But what if you're partnering with that person when they change? That would be the real issue. So that is one element of risk with partnering is you've hitched your wagon to another person, and to some degree, you are at risk if they kind of derail. Also, what if your partner decides they want to accept more risk than you do? I've seen that happen before. People start off with that first RV park, then maybe they buy a second RV park, and then suddenly their partner wants to take on more risky projects.
Then you may say, wait, I don't like the direction this has taken me because I don't like that level of risk. See, we all have different levels of risk and what we're comfortable with. And sometimes it can cause a problem in a partnership if one person is more risk-averse than the other. And similarly, what if your partner doesn't want to continue to grow and yet you do? If you watch those programs on TV that show how great food empires were made, there was a whole series, I think on the History Channel. There was one that was based on Dunkin Donuts. It was one of the ones I remember. In the case of Dunkin Donuts, you had the two guys that started Dunkin Donuts and they had like two stores. And then the guy was like, okay, let's do store number three. And the one partner said, no, I don't want to do store number three. I'm happy just with these two. I think the two are great. I'm able to afford the lifestyle I enjoy. I want to be able to go home and play with my kids and go to their school sports. I don't really want to have a third unit. And so that caused a huge problem in the partnership.
It ended up being that the one who wanted to grow had to buy out the other one because they no longer were a very good match. In fact, on the issue of Dunkin Donuts, they interviewed the people, the partner that was bought out, and even though his stock would have grown to be very, very valuable if he'd stayed in Dunkin Donuts, he really harbored no grudge because he really didn't want to do that. He was really happy the way his life turned out by basically just staying small. But the one thing you can do on all those bad stories I just told you, which will allow you to bridge the gap with partnering, is you can solve a lot of that with good partnership documentation. And this is where a lot of people screw up. They don't have any kind of partnership agreement. And that is a terrible idea because a good partnership agreement, in the event that you were no longer a healthy team, would allow you to break up the band without any bad consequences. Typically, these resolve in things like buy-sell agreements.
That's pretty typical. But you need to have something in writing that declares what happens when you no longer want to partner. I get calls on a frequent basis from people who've partnered with others on RV parks and now suddenly they don't want to, but there's nothing in writing explaining how they can get out. And if you don't put any kind of partnership document signed and fully executed to bed, what's gonna happen is there really is no roadmap to do it. It's one of these strange items. It's kind of unlike a divorce. A divorce, there is some kind of case law or precedent, but in partnerships, there often isn't. If you're in that thing 50-50 with no explanation of what happens if one wants out, well, you're pretty much stuck in that thing.
Unless you can convince the other person that they want to go ahead and liquidate, then you could be partnering for an eternity. The bottom line is that partnering for many people can be a wonderful idea. For other people, perhaps not as wonderful. But in some cases, if you feel that there's a shot at it, you might want to give it a try. You can partner with someone on an RV park and still buy other RV parks not within that partnership. You could try it, and if you don't like it, you could always just say, I'm not gonna do that anymore. Also, if you've write good partnering documents, you would have the ability, theoretically, if it's all done properly with an attorney, to get out of that agreement. But partnering may be a good idea for you. And if you've never thought about it, you might just consider what could happen if you were to get into a partnership. This is Frank Rolfe for the RV Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.