Many of the best RV park deals involve sellers who are the original builders of the RV park – and these are commonly known as “mom and pops”. But what makes them unique and what do you need to know about working with this select group? In this RV Park Mastery podcast we’re going to review the typical attributes of mom and pop sellers, and how to position yourself as a buyer for maximum success. These are the people who built America, and they are interested in helping you – if you approach them properly.
Episode 22: Understanding Mom And Pop Sellers Transcript
The Greatest Generation, the solid generation built most of America, and if you know how to work with them they can also help build your financial future. This is Frank Rolfe of the RV Park Mastery Podcast series. We're going to talk all about understanding moms and pops, what they're looking for, what their goals are, how to create win-win relationships with this certain type of seller.
Now let's first define what a typical mom and pop is, they're all of two age groups. The first are called the Greatest Generation. That is defined by those born between 1901 and 1927. These are the folks who served in World War II. They're also the ones who are commonly thought to have built most of America, probably about 70% of the America we know today, whether it's post offices or museums or buildings or houses, they were built by the Greatest Generation.
The second generation after them called the Silent Generation, born between 1928 and 1945. The Silent Generation's a little different than the Greatest Generation. Greatest Generation was more bold because they served in World War II and they were there when America went from agricultural to city. The Silent Generation was born during the depression, so they basically were a by-product of the depression and World War II so they're very, very cautious in what they do.
But the bottom line on both is they make for wonderful, wonderful sellers if you work with them properly. So what's the first thing you need to know about working with that type of mom and pop seller? Well the first is, obviously, based on the biology of time, they're all getting older and as you get older, your priorities tend to change.
One big mistake that many buyers make is they don't realize that that older seller is not just about the money. They'll think they can simply outbid another buyer by offering a little bit extra money and that suddenly they'll take it. They become frustrated if they can't do a, hey, I'll give you a thousand dollars more than that guy and have them just pounce on it, because what's at issue is they're not all about the money, there's other factors involved.
The big factor is what we call bonding. That's basically when the seller likes you. Sellers, when they like the buyer, they're willing to bend over backwards to make the deal happen. Why? Because they don't care about the money. They care about helping those that they like. So if you want to bond with a seller, the first thing you need to do is time with them either on the phone or in person.
One of the best ways to start a conversation with a mom and pop is to simply ask, "So how did you come to own this RV park?" The answer could take hours, and it's a fascinating journey when you understand how they came to build it. You'll learn a lot about the RV park too. You can only get bonding, but you also get to learn more about the asset itself.
I have a million bonding stories, all of them are similar. Basically it's story after story of where I spent time with a mom and pop either on the phone or in person. As a result, they just gave me a phenomenal deal, assets for less than what I had expected to pay. Seller financing, which we'll talk about in a minute. There's just so much power. If you ask me what's the number one trait you have to have to succeed in buying RV parks from moms and pops, the answer would be bonding, just getting along with people and having people like you. Because again, they like to work with those they like.
They also like to help people. So again, if they like you, they by nature want to help you. They want to depart the earth knowing they've done everything they can to help the next generation out. So once again, spending time with them in person or on phone, it's priceless. It's incredibly valuable when working with mom and pop sellers.
Next is to understand that they're very proud of what they've built. Even when the RV park is not in good condition, even when it's suffering from not good management, not good marketing, they're still very proud. Remember, they took this and built this thing out of a piece of land and they labored and toiled at it, and times weren't that easy back then. It wasn't that easy to get bank financing to build an RV park. It took a lot of pioneering spirit to break ground and do something that was new and different. So they're proud of what they've got. Even if it's not the best it could be, they're still proud of what they've achieved and they're going to gravitate towards a buyer who appreciates that and wants to take that asset and take it to the next level.
They like to hear about how good the property is. Again, a lot of buyers make a mistake. They tend to criticize the existing RV park hoping that will yield a lower price. All it will yield is no deal whatsoever. If you compliment the RV park owner of how great the RV park is, how great the location is, what a great job they've done, that's how you get what you want.
Don't try to negotiate the price by pretending like you don't like the RV park. They know better. If you don't like it, you would have never talked to them to begin with.
They typically know their limitations. Often they're older in age, they've lost energy over time. They've lost interest. They know this. But still they want affirmation that they didn't waste their time and they want to give this to somebody who understands the value of the asset and has the goal of making it even better than how they left it.
Next, moms and pops hate win-lose negotiating. They despise it. Because what they want to know in their final years, that there was more to life than just money. They want to believe in morality. They want to believe in something higher, a higher purpose, and you bum them out when you try and engage in win-lose negotiating. They hate it.
So what is win-lose? That's where you try and convince them of things that aren't actually true. Problems with the utilities, problems with the infrastructure, problems with banking that don't exist. They despise that. If you get a reputation for being a win-lose deal maker, I can guarantee you, you will have very few deals to even look at.
Instead you want to be a win-win person. A win-win means that the seller and buyer are both happy at the closing. Yeah, you didn't get the best price ever. Yeah, you didn't get to rip them off. That's not the way you buy RV parks. Maybe that's how you buy cars, I don't know. But that's not what this industry is about.
You want that seller at closing and later, years later, to be willing to write a recommendation to another seller of what a wonderful person you are, and win-win just means that. Be truthful. Be honest. Don't manipulate the facts. Tell it like it is. But make sure that the seller is getting a good deal, because at the end that little extra difference in money between the good deal and the bad deal for the seller is going to have a huge impact on your career.
Also, be inclusive. Moms and pops love inclusive buyers. Now what's an inclusive buyer? Inclusive buyers say things like, "Here's how I see the numbers on this. What am I doing wrong?" Things like that, where you get their opinion in it. There's nothing wrong with a mom and pop seller to say, "After I run all the numbers, it still just isn't compelling. How can we make it more compelling for me?"
Be like a consultant when you talk with them. If you want to tell them, there's something wrong with the property, don't say there's something wrong with the property. Do the research, get some bids, tell them what it will cost to fix. They like that. They liked to feel like you're a team. It's all about team building, that's what win-win is about. Both people happy. They have a shared commitment to getting the deal done, so be on their team. Include them in the decision making process itself.
Also, give them VIP treatment. If you're supposed to meet a seller at three o'clock on Saturday, what time do you show up? Well the answer is about 2:45, maybe even earlier. Because if you come in late, they will lose all credibility and they will no longer think that you can be trusted because you make commitments and you don't meet them. Therefore, they don't like you as much anymore.
So make sure whatever you do, whenever you talk to that seller that they are priority number one. If you make a commitment, you got to meet it. Because if they feel for a minute like they're not your first priority, then they don't much like you anymore and the deal is going to be harder to get done.
Finally, sellers, moms and pop sellers, are well known to carry paper. Carrying paper means seller financing. Now why do you want that? Well you want that kind of financing because it's the easiest to obtain.
There's none of the pressure or the stress of getting a bank loan, making a bank proposal, going out to the marketplace. In this case if the seller likes you, you're approved, you don't have to make any applications and you save lots of money. Terms are typically better than banks offer and they don't require a lot of expensive third-party reports. Don't have to have as in depth of a survey. You don't have to get an appraisal. Don't have to get a property condition report.
So it can save you thousands and thousands of dollars and is virtually stress free. That's why you want them to seller finance, but why did they want to do it? Why does the mom and pop seller want to seller finance?
Well, mainly because it makes sense for them. You'll typically pay an interest rate on a seller financing deal today of around five percent or so, and that's about five times more than they can make in a CD. So financially for the seller to carry, there's no other first leading real estate asset they can get that they know, and if they understand like their own RV park that pays interest rates even close to what you're offering them. So it makes complete sense.
But additionally, they over the years grew to hate banking, because RV park banking until modern times was very, very difficult. They already have a very negative attitude towards banking, and they're more than happy to get around the whole process because as much as it freaks you out, it freaks them out too. They don't like the stress of knowing if you'll be approved. They don't like the stress of all the third-party reports and questions from the bank.
Now do make sure if a person does carry paper that you've done your own homework, because the bank has typically a safety valve to make sure you don't make a mistake. But if you can do good due diligence, seller financing is for most people the best way to go. That's what got me in the industry, Dave in the industry. We have nothing but accolades for good seller financing. Again, only moms and pops who own properties free and clear can even engage in that.
The bottom line is the Greatest Generation and Silent Generation folks are wonderful people. You can learn a ton. You can learn a ton about life through spending time with them either on the phone or in person. And basically if you approach these sellers, these mom and pop sellers correctly, they really can make an unbelievable financial dream for you come true.
This is Frank Rolfe, the RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.