No Pain No Gain

It was true back when he was a rough rider, true as president, true in all the main decisions we face in our life. It's not that hard to go out and decide between Doritos or Fritos when getting that sandwich, but it's really, really hard when you're doing things that might have a huge impact on your life. Let's start off with the difficulty in finding an RV park.

Now, you may say, gosh, I've been looking for a little bit of time and I haven't found the perfect RV park yet. You don't have to get a million of them. You're just trying to get one. So you can spare a little extra time and effort to get the right one. Remember it is the very fact that RV parks are scarce.

That gives them value. When things are abundant from a supply and demand standpoint, there's very little value to them. So look at it as a blessing that is hard for you to find that perfect deal. Because it's that scarcity that creates the value. And on top of that, don't get in too big a rush. You only really need one great property. Most people who own RV parks just own one. Some own a couple, a few.

A few own a lot, but for most people, hitting your financial targets can be accomplished with just one deal. Also, sometimes it's difficult negotiating. Sometimes some sellers are really, really hard to work with. Again, it's not necessarily a bad thing. They've run off all the other buyers.

As a result, you may be able to get a better price if you just hang in there with them because they aren't aware really of anyone else looking at buying the property because they've scared everybody else off of the whole idea of ever buying the Darvey part from them. So when you have that tough person, you can't nail them down, never will commit, again, that's not bad. It's worth the effort. Keep following them.

We have many, many stories of situations where we've gone in there and attempted to get a deal struck and we go ahead and and spend sometimes months and we've had in some cases even years before we get that deal fully negotiated. So it's definitely worth the effort. Do not look at that as being something where you say, Well, gosh, you know, I I refuse to go beyond beyond five phone calls.

Don't do that to yourself. Teddy Roosevelt will tell you that's a bad idea. Keep persevering on, because often those deals that are most difficult like that can often turn out to be the best. Also, let's assume there's difficulty in getting the city to

to agree with whatever you need from the city for your loan document, certificate of zoning, whatever the case may be. When you have the city that's tough to work with, that again, that can be a good thing because that means again you'll have scarcity. If the city is very, very concerned about R V parks and your R V park and all R V parks, well that's what we'd like to hear. I don't really want to be in a place where the city says, Yeah, you can build an R V park anywhere, we don't care.

I would much rather them have some concern for what's going on. That makes me feel better as the investor as the value of my asset. So once again, Teddy Roosevelt would say, you know, that's okay. Again, that's worth the trouble. That's worth the effort.

On to lending. Sometimes you'll have trouble getting that loan for that RV park. You'll hit some lenders and nothing really materializes correctly. keep going. Lending has always been an issue for all RV park owners because it's not something that most people are out there trying to do. It's not like a single family home. Everyone, probably at some point in their life, has bought a single family home.

And the lending on single family is so, so common. I mean you could even do it online. But RV parks, not so much. There's not that many RV parks in America, not many people own RV parks, and not a whole lot of banks have made loans on RV parks. So if it's more difficult again, don't think of that as something that's bad. It's worth the effort. I don't know of many RV parks that were worthy of buying where the person did not get the loan.

But I knew no many cases where people had to go through many, many different banks before they could find the right one. So it's definitely worth the time and trouble to do it. Do not give up hope. Do not say, Oh gosh, it's so hard to get alone. I'm not gonna continue on or carry on. No, that's the wrong decision. Wrong decision. Yes, it may be difficult.

It's completely worth your time and effort to get that done. Remember when a bank says I can't make the loan, it not necessarily means that the property shouldn't be bought.

Doesn't mean it's not valuable for the loan. It just means it's hard for that banker to fit that loan into what they like to bank. Banks have loan committees. Loan officers like to have a job. If they propose things to the loan committee, the loan committee doesn't much like, well they're probably not gonna push that through.

They're not going to throw their whole career on the line for that one RV park. And maybe you just have a bad matchup between what you're trying to do, what the bank's trying to do. But again, that's all okay. But then let's move on to the big one, the big item of difficulty for most people.

The big item that Teddy Roosevelt would say, okay, now here's a time where we must really, really fight hard, and that is making the actual decision to buy the RV park. And what does it mean when you have trouble making that decision where you agonize over the decision?

That simply means you're smart. You should be agonizing over the decision. It's a really big deal. You're typically gonna write a big down payment. It's gonna be life altering owning that RV park. So how do you get over that? How do you get over the difficulty of making the decision? Well, To me, the best way to do that is through doing a best case

worst case, realistic case scenario. This is to me, that that is the absolute best way that you can overcome whatever concerns you have, and it's very reasonable to have concerns, is by modeling that and letting the math answer the question for you. So how do you do that? Well, first you do the best case scenario. Best case scenario is you say I buy this R V park

Everything goes completely according to plan. I increase my occupancy, I increase the rents, I cut the costs, everything just works perfectly. Okay, great. That's one scenario. Then there's a scenario of the worst case. In the worst case, everything I thought would go well doesn't. Now, if you go too severe on your worst case, you'll never buy anything. Just like driving a car. If you say, Well, if I back out of the driveway, you know, I could just get

T boned by a car going down the street as I back out. So, you know what, I really shouldn't drive my car at all. I'll just have to stop ever leaving my home unless I can go on foot. So you can't go too extreme. But you could look at the revenue of that RV park based on the last three years of financials and then reduce it down. Instead of increasing it, drop it a little if you want. Drop it ten or twenty percent.

Say, okay, let's assume I'm a lousy RV park owner operator, and I can't even do as good as mom and pop, who I thought did a not that great job. But let's just assume I'm not as good as I think I am. All right, well when you then model that out, what happens? Can you still make your note payments? Or would you have to feed it? If you'd have to feed that thing, write a check for negative loss every month, how much would the check be? How long can you go feeding that property?

So look at look at the downside. What really happens when we strain this asset? What is the worst case scenario? Is it just that I don't get my any kind of return on my capital for a while? Or is it that I can't even cover the mortgage? Then you move on to the realistic case. The realistic case basically says, all right, I'm not going to take the assumption of the best and

nor the worst, somewhere in between. So perhaps I could increase the revenue of this property by ten percent. My best case was I was gonna take it up forty My worst case was I was going to drop ten, but let's assume I could just get it up ten. Then you look at all of these assumptions that are somewhere between the toes two polar extremes of good and bad. And then what happens? If you're happy with that realistic case scenario, if you say, Man, this would be great if this worked out like this.

I would be so incredibly happy. Okay, fine. So then let's just read the three gauges. If your best case scenario is spectacular, well that works. If your worst case is, you know what, I could still survive this, I could make it happen, I can still cover the note payments. And your realistic case is this is the best investment thing that ever happened to me in my entire life, then you definitely would want to pull the trigger and buy it.

But if your best case scenario isn't really that spectacular, your worst case scenario is is life ending, completely crushing, can't make the payments on it, ruin everything, and your real estate case just doesn't really have that much power either to make you feel good about what you did, then you shouldn't buy the deal. But the very fact that making that decision is difficult, you should pat yourself on the back for that.

Because that means you're being a smart steward of your money and of your future. There's nothing to be scarier in the world than people who don't worry. who aren't pessimistic by nature, because sometimes they get in terrible predicaments by being too happy, by viewing life in rose colored glasses. So if your biggest, most difficult step in that R V part purchase is making that final decision

Well then I applaud you for that, because that means you'll probably do really well. This is Frank Roth for the RV Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.