Do you believe in miracles? I have for years. But I didn’t see this one coming. I don’t think anyone has.
Love it or hate it. It’s hard not to respect the greatest quarterback of our time. Maybe all the time. Drafted in the sixth round at age 24, Tom Brady led a great team, the New England Patriots, to nine Super Bowls over nearly two decades. The Patriots took home the Lombardi Trophy in six of them.
While Brady was remarkable, he was only one player out of 22 on the team. Owner Robert Kraft and coach Bill Belichick assembled a historic powerhouse with stars at nearly every position. When the almost-too-old Brady was traded to the less-than-mediocre Tampa Bay Buccaneers, no one imagined he could lead them to the Super Bowl in his first year. Not to mention winning.
The Buccaneers beat the Kansas City Chiefs, 31-9, in Super Bowl LV. Their first playoff appearance since 2007.
Brady is proof that a dynamic leader at the helm can change everything.
And what? What does this have to do with real estate investing and why did BiggerPockets publish this article? Brady’s story reminds me of the importance of picking the right players when designing your real estate investment strategy.
Miracles for active real estate investors
If you are an operator doing your own deals, I mean your REALTOR®, your contractors, your banker, your business partners, investors and more. You may be one contract or key partner away from success or disaster. So choose wisely.
If you’re looking for an all-star, investor-friendly real estate agent to fill out your team, check out Agent Finder.
Like I said, I’ve believed in miracles since I saw my first one with my own eyes in my senior year of college. (Feel free to ask me about that!) But I experienced something of a miracle when I met Ben, my business partner in my real estate investment company.
Ben Kahle was just a junior at Liberty University when he asked me for advice nearly a decade ago. He came to my house and I spent hours with him. We kept in touch and a year later we met again for hours and I convinced him to join us as a fellow in his last semester of college.
Fast forward to 2022. Hiring Ben was the smartest move I’ve made in three decades in any business. After learning the ropes for a few years, Ben transformed our company. Since becoming a partner in 2018, Ben implemented systems that grew us from a small struggling team chasing one-off deals to the manager of six diversified commercial real estate funds with nearly $100 million in equity investors under management.
Hiring or partnering with the right person could be your miracle story. Your Tom Brady. Don’t underestimate the power of partnering with or hiring the right person to help you get to the next level! I can’t think of anything more important than doing it right.
Miracles for passive real estate investors
I recently posted one article why I believe most people, especially those with full-time careers or retirements, will enjoy the best lifestyle and generate the most wealth passively investing in real estate.
If you decide to invest passively, you need to choose the right team to invest. We talk about due diligence all the time and I have written about it at length. Fortunately, BiggerPockets posted Brian Burke’s wonderful volume to help passive investors in their due diligence process: The Hands-Off Investor. I recommend that you digest and use this information before making a passive real estate investment.
Do yourself and your heirs a favor and take the time and effort to carefully analyze the syndicate/fund manager’s team, track record, technology and more before making any investment.
If you’re investing passively, finding the right syndicate or fund manager can be like your own Tom Brady story. You may be one syndication or fund investment away from passive income and growth to begin your passive real estate journey.
A recent example of a miracle
I’ve talked extensively about my belief that it’s possible to get great deals in any economy if you know how to add value. Our company is on a constant quest to find recession-proof asset classes and carriers that offer us this opportunity. Our most recent investment is in a new and emerging asset class for us: RV Parks.
There is a lot to say about caravan parks, and I will talk about them in future articles. But for now, I’d like to tell you about our caravan park operating partner.
In fact, our new trailer park operating partner reminds me of Tom Brady’s Tampa Bay story. His company has a long history of transforming mediocre commercial real estate assets into something special. And quite profitable.
We have wanted to invest in RV Parks for years. Even before:
- Covid helped launch RV sales and parking demand to record levels.
- Outdoorsy and RVShare’s Airbnb-style rental programs saw widespread adoption and allowed any RV to double as a rental unit. Which potentially multiplies the demand for renting motorhome parks.
- Apartment park and mobile home syndicates began scrambling to figure out how to break into this suddenly intriguing asset class.
We’ve partnered with one of the rare non-public national operators who are experts at taking wonderfully situated family parks and transforming them into something fantastic.
Like its recent acquisition of Branson, Missouri, this previously underrated and undermanaged park is just 20 minutes from one of America’s favorite family destination cities.
Just as Brady transformed the Bucs, our operating partner is transforming this asset into a world-class family recreation park. (One of its parks was just named the #1 RV Park in America by USA Today.)
Here are some of the highlights of the Branson park we’ve invested in:
- Expansion from 61 to 161 caravan spaces
- Added 30 park model units (luxury rental motorhomes) and 10 glamping tents
- Adding a resort-style pool with concessions, a pond with a floating water park, a pavilion and stage, 50 golf carts (which rent for $75 per day) and more
The acquisition cost of this park was $3.35 million. The total cost with improvements is over $17 million. The projected fifth-year value at a conservative 7% cap rate is over $31 million, and the projected fifth-year net cash flow to investors is 15%.
Our operating partner plans to refinance most or all of the investor’s principal in the fifth year, and the investors will remain in the agreement with the same property after that. This will be a win-win if it works!
conclusion
In my opinion, investing in RV Parks right now is a rare opportunity to get in early on an asset class that to many looks like self-storage in the early 1990s. I’m pretty bullish on this asset class, and I think many of you will be too. More to come!
This operator is like the Tom Brady 2022 of our company. You may be a syndicate or fund investment away from investing in passive real estate opportunities like this one.
And you? Have you found the right partner, employee or union? Getting it right could make all the difference in your life, your wealth, and your future.
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Note from BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
