Good morning,
Over the weekend a tweet of mine went semi-viral (300+ likes). I bring that up because I believe it hit a nerve in the FinTwit community.
The tweet was simple: I’m choosing rental properties over a 401K for my retirement.
The reason I believe it hit a nerve with so many people can be summed up in one word – control. I feel comfortable buying cash flowing rental properties that I can control. Having a 401k filled with companies that I cannot control is uncomfortable. Which I admit is irrational!
Yet for some people they don’t plan on retiring with cash flowing homes but rather cash flowing pads. It is my pleasure to introduce you to the aptly named ibuyrvparks.
How many doors do you have?
29 apartments and 71 RV/campsites
What got you into real estate investing?
I worked in commercial real estate finance and investments as an employee for almost 10 years and knew I always wanted to do some investing myself.
What market(s) do you operate in?
Upstate NY
How would you describe your portfolio?
Value add, no frills, and growing!
Growth plans are focused around buying more RV parks in the Northeast and then expanding geographically south and west for the long-term.
What are you currently buying?
RV parks and campgrounds.
In the Northeast, these RV parks are typically seasonal campgrounds, open for 6 months per year and predominantly rented to full-season, 6-month campers who maintain their own sites and pay their own electric bills. It makes for a high cash flow, efficient, low maintenance investment vehicle. Campers usually pay for their entire 6-month campsite upfront which eliminates delinquency and nonpayment issues. Evictions are also very rare because these are typically non-residential properties that can’t legally be occupied
Tell us about your biggest mistake in real estate?
Partnering with the wrong people and not clearly setting expectations, roles and responsibilities upfront.
I formed my first real estate investment firm with a 50/50 partner and failed to set expectations properly. I jumped in head first and assumed the role of the more junior partner and took it upon myself to build all systems and processes, from acquisitions to marketing to due diligence to capital raising. By the time I stopped to take a breath, I realized I was doing everything and my partner had no intention to catch up or get more involved. The relationship soured and led to the investment firm being dissolved.
Tell us about your biggest win in real estate?
Acquiring and turning around my first RV park.
I first built a portfolio of small apartment buildings totaling 31 units at one point. I didn’t see small apartments as a long-term fit for me and went to work to find a new niche with more potential scale and cash flow. I stumbled upon RV parks via first looking at mobile home parks, and exchanged my equity in the apartment portfolio for my first RV project that I purchased for $850,000. I put 30% down, and the seller financed the other 70% of the purchase. The property was purchased at over an 11% cap rate based on in-place financials and is a value add project which I plan to invest about $200,000 into over the next 1-2 years. I believe the project will reach a stabilized value of $1.5MM upon completion of the value add business plan.
Outside of real estate what else do you invest in?
60% real estate, 20% 401k, 20% stocks
Books people should read before investing
Raising Capital for Real Estate, Hunter Thompson
Crushing it in Apartments and Commercial Real Estate, Brian Murray
The Real Estate Game, William J. Poor
Raising Private Capital, Matt Faircloth
What advice would you give to a new investor?
Learn how to find good deals and bring them to people with the capital to close them.
If you don’t have immediate access to your own capital or investors, the one thing you can immediately help virtually all other real estate investors with is finding deals. Especially in this market where capital is abundant and finding good deals is the number one challenge for most investors.
Enough Business
It’s never easy seeing someone in pain. Harder still when you know someone is in pain and they can’t communicate it.
Recently Princess took a spill down a flight of stairs. Hit the ground and skidded into a dresser. Miraculously she only suffered a slight break in her front left paw.
She has to be in immense pain – 13 year old dogs don’t bounce down stairs like puppies. But she keeps her pain inside and we treat her as best we can.
Wonder how many people are walking around bruised and broken internally – but never talk about it. Brings to mind the expression ‘my cross to bear’.
Maybe that is something we should keep in mind the next time we see a 10 second video of someone acting irrational. They might have a broken paw they can’t talk about.
See you on Tuesday – Wholesaler Pro with Jordan Santiago
