Do you believe in miracles? I have for years. But I didn’t see this one coming. I don’t think anyone did.
Love him or hate him. It’s hard not to respect the greatest quarterback of our time. Perhaps all time. Drafted in the sixth round at 24 years of age, 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.
Though Brady was remarkable, he was only one player out of 22 on the team. Owner Robert Kraft and coach Bill Belichick put together a historic powerhouse with stars in almost every position. When the nearly-too-old Brady was traded to the less-than-mediocre Tampa Bay Buccaneers, no one imagined he could take them to the Super Bowl in the first year. Let alone win.
The Buccanneers beat the Kansas City Chiefs, 31-9, in Super Bowl LV. Their first playoff appearance since 2007.
Brady is proof that one dynamic leader at the helm can change everything.
So 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’re an operator doing your own deals, I’m referring to your REALTOR®, your contractors, your banker, your business partners, investors, and more. You may be one key hire or 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!
As I said, I have 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 one!) But I experienced a miracle of sorts when I met Ben, my business partner at my real estate investment firm.
Ben Kahle was only a junior at Liberty University when he reached out to me for advice nearly a decade ago. He came to my home, and I spent hours with him. We stayed in touch, and a year later, we met for hours again, and I convinced him to join us as an intern in his last semester of college.
Fast forward to 2022. Hiring Ben was the smartest move I have ever made in three decades in any business. After learning the ropes for a few years, Ben transformed our company. Since making him a partner in 2018, Ben implemented systems that grew us from a struggling little team chasing one-off deals to the manager of six diversified commercial real estate funds with almost $100 million in investor equity 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 getting this right.
Miracles for Passive Real Estate Investors
I recently published an article on why I believe most people, especially those with full-time careers or retirements, will enjoy the best lifestyle and generate the most wealth by passively investing in real estate.
If you decide to invest passively, you must choose the right team to invest in. We talk about due diligence all the time, and I’ve written on it at length. Thankfully, BiggerPockets published Brian Burke’s wonderful volume to assist passive investors in their diligence process: The Hands-Off Investor. I highly recommend you digest and utilize this information before making a passive real estate investment.
Please do yourself and your heirs a favor and take the time and effort to carefully analyze the syndicator/fund manager’s team, track record, technology, and more before making any investment.
If you’re investing passively, finding the right syndicator or fund manager operator may be like your own Tom Brady story. You may be one syndication or fund investment away from passive income and growth to start your passive real estate journey.
A Recent Example of a Miracle
I’ve widely discussed my belief that it’s possible to get great deals in any economy if you know how to add value. Our firm is on a constant search to find recession-resistant asset classes and operators who provide us with this opportunity. Our most recent investment is in a new and up-and-coming asset class for us: RV Parks.
There’s a lot to say about RV parks, and I will talk about them in future articles. But for now, I’d like to tell you about our RV park operating partner.
In fact, our new RV park operating partner reminds me of Tom Brady’s Tampa Bay story. His company has a long track record of transforming mediocre commercial real estate assets into something special. And quite profitable.
We’ve wanted to invest in RV Parks for years. Even before:
- Covid helped launch RV sales and park demand to record levels.
- Outdoorsy and RVShare’s Airbnb-style rental programs gained widespread adoption and allowed any RV to double as a rental unit. Which potentially multiplies the demand for RV park rentals.
- Apartment and mobile home park syndicators began scrambling to figure out how to enter this suddenly intriguing asset class.
We’ve partnered with one of the rare non-public national operators who is an expert in acquiring wonderfully located mom-and-pop parks and revolutionizing them into something great.
Like their recent Branson, Missouri, acquisition, this previously undervalued and under-managed park is only 20 minutes from one of America’s favorite family destination cities.
Like Brady transformed the Bucs, our operating partner is transforming this asset into a world-class family recreational park. (One of their parks was just named America’s #1 RV Park by USA Today.)
Here are a few highlights of the Branson park we invested in:
- Expanding from 61 to 161 RV spaces
- Adding 30 park model units (deluxe rental RVs) 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 (that rent for $75 daily), and much more
The acquisition cost for this park was $3.35 million. The all-in cost with improvements is over $17 million. The projected year-five value at a conservative 7% cap rate is over $31 million, and the projected net investor year-five cash flow is 15%.
Note that this is not the Branson RV park, but a developed/stabilized park from the same operator.
Our operating partner plans to refinance back most or all of the investor principal at year five, and investors will stay in the deal with the same ownership after that. This will be a win-win for everyone if it works out!
Conclusion
In my opinion, investing in RV Parks right now is a rare opportunity to get in early on an asset class that feels to many like self-storage in the early ‘90s. I’m quite giddy about this asset class, and I think many of you will be, too. More to come!
This operator is like our firm’s 2022 Tom Brady. You may be one syndication or fund investment away from investing in passive real estate opportunities like this yourself.
What about you? Have you found the right partner, employee, or syndicator? Getting this right could make all the difference in your life, your wealth, and your future.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.