While many new RV Park investors are self - conscious until they have that first property under their belts, the truth is that the “newbie” investor has certain advantages over the seasoned players. In this RV Park Mastery podcast we’re going to unlock the strengths of being new to RV Park investing and why fresh investors often beat out their more professional adversaries.
Episode 140: Why Seasoned Investors Get Beaten By "Newbies" Transcript
A lot of people entering the RV park industry think they're at a disadvantage because they're new. They're what we call a newbie. That's a name that people have used for a long period of time to describe someone who is basically new to RV park investing. And these investors believe that they can't really compete head to head against the pros or the experienced investors, that they're somehow at a disadvantage. But that's not actually true. This is Frank Rolfe with the RV park mastery podcast. We're going to talk about why newbies are not at a disadvantage to their more seasoned and experienced investors out there. The first thing is that newbies move very carefully because it's new.
They know that they don't know a lot of things. And as a result of that lack of self-confidence, they take very measured steps, typically based on real stats and facts that they're comfortable with. And when a deal looks kind of sketchy, they're smart enough to hit the brakes. But a lot of professional, experienced investors are a little bit too cocky often. They'll jump over certain steps in due diligence. They may even take a leap of faith on something they should have never gotten involved in, because, gosh darn it, they're a pro, they're experienced, and they don't have to do all of those little baby steps that the new investor does.
And so they'll just jump right to the ending and sometimes buy the RV park, and it's a mess. Another thing that newbies are better at is, they're much better at being liked by moms and pops. And we call this bonding. And what bonding is, is when mom and pop like you, and as a result of liking you, they're willing to bend over backwards to give you a better deal, better pricing, perhaps carry seller financing for you. And everyone likes new people more than those old, experienced investors. Because most individuals in America love the underdog story.
Someone who's just starting out, that's the one that we all like, that we all naturally bond with, but you don't typically bond with a larger company. It just doesn't really work that way. Moms and pops like people who are like themselves. And a typical mom and pop RV park owner owns just that RV park. They don't own some kind of conglomerate. And when you are the more seasoned, more experienced investor, you typically want to jump over all the formalities. You want to go straight to, here's my offer. What do you think? But the newbie investor is going to want to spend more time talking to mom and pop trying to learn from them.
And as a result, they'll bond better with them. Because that's how you get bonding, is you listen. So once again, head to head when it comes to bonding with mom and pop, getting those better prices, the newbie is pretty much always going to win. Also, newbie investors tend to negotiate harder on RV parks than their more seasoned alternative. And that's due to economic necessity because a lot of new investors do not have a lot of capital. So as a result, they're going to work harder to get a price that they can afford. And where the more experienced investor might not be as tough, might not cling to that price, might not make the plea that, oh, come on, can't you make this a lower price? That's all that I can afford. As a result, the newbies typically always get better pricing than the more experienced buyers do.
And again, part of that is bonding, but part of it is they're harder negotiators, and they're harder negotiators because there's a line in the sand that they can't cross. In the same tone, newbies are also better at getting seller financing because once again, they know their limitations and they're worried if they go to the greater banking community, they won't be able to get the loan. So they're going to push harder for seller financing from mom and pop. And as a result, mom and pop is also going to be more likely to oblige them because they like them better, going back to the bonding. So as a result, the newbie is able to get seller financing when the larger operator can't. We had that happen to us on a deal once. There was a guy, he wanted to sell the property, he wanted two, $300,000 down.
And while people were all pondering this property and we were no different. Somebody jumped in there who had never owned an RV park ever, and was able to get the thing under contract at a crazy low amount down, like $10,000 down. And the reason was that mom and pop liked that young new person, but didn't really like us or any of the more seasoned investors, just didn't bond with us. But he bonded with that young person and as a result was able to give them much, much better terms. Also, newbie investors are not afraid of heavy turnaround deals. And often those heavy turnaround deals are just more profitable, because they know they probably can't compete on the big fancy RV parks, and they know that they probably can't compete when it's just a matter of price.
But when it comes to those properties that are aesthetically challenged, that have bad financials, inconsistent financials, issues like that, too much vacancy, that newbie investor realizes that those are the kind of properties that offer them the most promise. They'll have the less amount of competition from other investors. And these are all things that they can get in there with their own hard work, elbow grease, hands-on philosophy. They can fix it. And they can do so at a fraction of what the big seasoned investor would have to spend. And the good news is that on those heavy turnaround RV park deals, those are among the most profitable. Now, the big companies, the more seasoned people, they just don't want to do them. They probably started off that way, but as time has gone on, they don't feel the economic necessity to get involved in them anymore.
So they'll skip them. And that creates great opportunity for the new investor who's not afraid of them and more than willing to take them on. I will add that everybody in the RV park industry, every single person, started out as a newbie. The late Sam Zell, who is the largest owner of mobile home and RV parks in the US, he didn't own any until the mid-1990s.He was, in fact, a newbie. There's certainly nothing wrong with being a new entrant into RV park investing. It's not going to hold you back. If anything, it's going to give you better odds. So if you think that being new to the business is harming you, it's not. It's actually helping you. This is Frank Rolfe of the RV park mastery podcast. Hope you enjoyed this. Talk to you again soon.