Joint-blog by Rob Smith (Fortune Real Estate) and Mary Arlington (Industry Consultant)
We are two professionals who carry a passion for excellence in the outdoor hospitality industry. Rob is a broker for Fortune Real Estate, and is also the owner of three Florida resort communities. Mary was a serious investor, seeking a business in need of growth. She purchased and ran one for a decade, and then sold it. Now she consults with Rob Smith and others in the industry.
If you’re thinking about selling your RV resort, campground, or manufactured home community, the good news is now is a good time to do so!
- Buyers are in abundance.
- Bankers have eased their grip.
- Capital gain taxation is still at 15%.
- Interest rates are so low; even lower than before the recession!
- Buyers are more secure with the economic financial offerings of today.
- Overall industry statistics show occupancy is on the rise, with Florida leading the way!
- Baby-boomers, the largest generation, are stepping more and more into retirement.
Rob Smith, broker and President of Fortune Real Estate is dealing with a spike in interest on the part of buyers seeking his assistance in locating income-producing investment opportunities. He and Mary Arlington, an industry consultant who herself has been through the investment purchase and sale process, have teamed together to work with sellers in formulating exit strategies.
Some sellers prefer to consider the option of selling without a broker. You can do that! It’s not impossible. Yet, you might change your mind when you hear more from Rob and Mary, as told below, followed by an explanation of their joint mission, a discussion about some fears on the part of the seller, and some closing thoughts.
Mary recalls her decision to sell her RV park. She wasn’t even looking for a buyer, but that’s another perk to this story. She explains:
My husband and I went into the business with an end-goalf of selling in 12 or 15 years, so we closely monitored the entire process while we were buyers. We looked at over 100 businesses in the years leading up to our purchase. We saw how sellers provided (or didn’t provide) valuable information and operational details. We saw their attitudes, helpful or otherwise. From this we formulated how we wanted to handle our sale, in due time. Therefore, we implemented records to document finances, occupancy statistics, and notes on improvements and maintenance.
A year after buying, when a fast cancer ended John’s life, I carried on with our plan. Years later, although the economy was tough, medical reasons persuaded me to list. With the assistance of my handy exit strategy materials, my broker led me through the listing process to ensure we had a grip on the full sales package we were creating.
Once listed, my primary job reverted back to park operator; not seller! I was prepared to give a prospective buyer my undivided attention, but I couldn’t give it to every walk-in, spontaneous phone call, or Looky Lu. My broker was responsible for qualifying the buyers and for scheduling appointments.
The broker’s job is data-intense. The details they capture from the sellers, for the buyers, multiplied for all the sellers and all of the potential buyers, the data piles high. Brokers carry enormous workloads and expenses to gain the sales they achieve. I just ask you to keep that in mind, business-person to business-person; you can appreciate the effort that one might never see but that must occur for a business to transact (think about the work you perform that your guests never openly realize).
More than a year later, I re-evaluated life and removed the listing. I chose to operate it for another four to six years … until one day, about two years later I received a call from my former broker. There was a prospective buyer. A few months later I became a former park owner.
You see, although my business wasn’t for sale, everything’s always for sale.
Initially, it blew me away that a broker would know a park so well that she seeks a buyer for it even when it’s not listed. Upon further reflection, it made perfect sense. A professional broker who is truly dedicated to the satisfaction of bringing a buyer together with the right business would:
- Know the inventory of properties that are out there, and
- Keep tabs on the statuses of the property owners.
Rob is highly respected in Florida for his work in the RV resort and the manufactured housing industries. Aside from owning three resorts, he’s a broker, helping buyers find Florida income-producing investment properties, and helping Florida sellers find buyers. Unlike Mary’s broker, Rob lists only Florida properties, creating a niche for his buyers and his sellers.
Rob began under the mentorship of Don M. McLaughlin, who began selling in 1970. Not only was he Rob’s boss and mentor, but Don eventually sold Fortune Real Estate to Rob. Rob’s been at this for over 27 years. He’s been to virtually every campground, RV park, RV resort, manufactured home development and mobile home community in the state of Florida. His story about buyers and sellers is this:
Serving this industry has been very rewarding. Between being at the properties, and attending industry seminars and conventions for decades, networking and connecting, I’ve been able to stay current, or as I prefer to say it, “stay ahead of the times!”
My career surrounds me and puts me in conversations daily with:
- Professionals who are tracking the population’s demographics, demands and trends,
- Masters who bring advances in technology to my level of understanding,
- Bankers who are in sync with current financial standards and practices,
- Upcoming newcomers who are filled with exciting new ideas, and
- Highly respected professionals who have been running their businesses for sometimes multiple generations.
Listing an income-property isn’t something I strive to do once and then move on. I prefer to maintain relationships so that I might gain the opportunity to bring that same property its newest owner when the right time arrives.
When I meet a new buyer, my mind races through the inventory in my mind; not just the current listings showing on my website, but the plethora of properties I’ve seen or I’ve sold before. My mental inventory has been known to amaze many past buyers who then became my new sellers.
I am fortunate to have 70-80% of my clients as people who have either used my services in the past or who are referred to me from former customers and industry associates.
My job doesn’t end with the sale. When a buyer becomes the new owner, I invite them to consult with me. I can suggest or pave the road toward state of the art advancements, and offer current statistics on trends, all to increase the value of their business.
One such client purchased in 2001 at $1,192,000. Just six years later, in 2007, his property appraised at $3,500,000. That’s a three-fold increase in six years, after implementing a lot of improvements outlined through our consultation efforts. He more than doubled the cash flow for that business, that fast!
Two other points I want you to consider when thinking about listing your business.
- A deal works only when it benefits both parties, so asking $6M for a package that’s worth $3M will mean long periods of inactivity. All the effort exerted by the seller will be for naught.
- Time is valuable to the buyer, the seller, and the broker, but I can’t satisfy the requests of a buyer without your input and assistance. The longer it takes me to respond to buyer requests, the more unsure or unsettled the buyer may become about your listing.
Rob’s Fortune Real Estate has properties for sale, and it has a database of buyers. In recent months, that database has grown like a fertilized spring weed!
Rob and Mary are focusing on reaching out to owners who are interested in selling so that Rob can satisfy the needs of his buyers while also achieving a satisfying transaction for the seller. Fortune Real Estate’s motto is: We help plant, grow, and harvest fortunes! Fortune Real Estate is interested in your financial well-being, from purchase through eventual resale.
Listing a resort is not like listing a single residential property! Go back to Mary’s story about the sellers who did or didn’t provide valuable information and operational details. Even with an exit strategy, implementation requires intense effort.
Mary has begun assisting with the task of assembling the pieces so that Rob can create a listing and help a seller locate buyers. (For the record, they work separately, so Rob may certainly take listings without recruiting assistance from Mary, and she may help an owner regardless of broker selection.)
Their joint efforts have begun but the first obstacle was that Florida property owners were deeply engrossed in the winter snowbird season. With the arrival of March, now they are now more able to connect with property owners. Other obstacles they are facing are in easing or dismissing of typical fears.
Non-Exclusive Listings: Some sellers don’t want to give exclusive listings to one broker.
Rob’s View: I can work with this arrangement. Fortune Real Estate has Sales Agreements, Open Listing Agreements, and Agency Listing Agreements, and each are not exclusive agreements.
That being said, let me clarify. For the motivated, serious sellers, an Exclusive Listing Agreement, at market value, ensures the greatest amount of advertising, email blasts, mail outs, etc. by my team, to ensure the highest price with the shortest sales completion time period. Keep in mind, the seller must be committed to this entire process.
Mary’s View: I see nothing wrong with keeping your options open but I also understand that when one agency controls the listing, it can work beautifully. With an exclusive listing, there is one agency dedicated to finding the best buyer for your business, and their efforts are an orchestration. Imagine a band with 4 conductors on stage. When marketing tools are being put into place by Rob, and the activity level is increasing, another broker or your desire to change gears can have a dramatic negative impact on the buzz that Fortune Real Estate has been creating.
Anonymity: Listing a place invariably comes with a sense of hesitancy to publicly announce that the business is for sale. Sellers often want a buyer yet they don’t want anyone to know that the place is for sale.
Rob’s View: We can work around this. Your listing can be listed with minimal details. We have a generic picture we can drop into place, rather than using pictures of your place. Having your listing means I am allowed to act upon the notion that this buyer I’m visiting with just might be looking for your place, so I’ll take a listing under anonymity terms if that’s what you require.
Mary’s View: Rob is reassuring since he stands to gain with any agreement, but I’d like to give you a few morsels to chew on before you sell yourself on the anonymity idea.
First, remember that even though your business will be listed online, it isn’t listed in a manner to be found by your guests. For example, your property won’t be discovered through search engines. Fortune Real Estate doesn’t list the name or city of the business (responsible brokers work this way). A guest at your place would have no reason to seek out Fortune Real Estate’s website unless they happen to be in the market to buy a resort, and even then there are no names provided. Pictures, yes. Details, yes. But name and community, nope!
Think of the buyer! If your buyer is sitting in Manchester, New Hampshire, on a cold and snowy Sunday evening, and all he can see about your listing includes some numbers, a sentence or two, and a default picture, what is going to motivate them to remember your place the next morning?
Now, imagine that the same buyer lands on a listing, showing 10 or 15 pictures of palm trees and people wearing sunglasses and shorts, and a nice home with a fantastic living room, cool looking RV spaces and maybe some interior shots of the rental units, and then another shot of an inviting pool! Then the buyer reads that the seller has ideas for improvements they haven’t implemented, so now this buyer is sensing opportunities for growth. What if he also sees at least a partial listing of the equipment? OK! The value is starting to sink in to his bones! I bet this buyer dreams of that listing tonight!
Another morsel is this. If you treat your guests with utmost respect, assuring them that the business is listed but that truly every business is always for sale, adding in that you are doing all you can to ensure the buyer understands the current clientele, this could ease or minimize their anxiety. Reassure them that a buyer needs the current clientele’s continued financial support so they can meet their new, higher, mortgage payments. Add that since the buyer needs the financial support, the new buyer would likely do all they can to please the current clientele. Tell them, “Don’t move-out on an assumption of fear!”
P.S. If you plan to partially finance the sale, you will really want to encourage your current clientele to continue patronizing your business!
One final morsel: Rob can take your listing as ‘top secret’ and later change it to a fully marvelous listing so, if this is still unsettling, you can sleep on the idea until you feel reassured to let Rob post genuine pictures and, perhaps, even more elaborate details.
Seller Financing: Some sellers don’t want to have anything to do with seller financing, while others are very amiable to it.
Rob’s View: If you don’t want to have any part of seller financing, you are certainly allowed to seek only buyers who have the ability to afford your property without your assistance. Before you close the door on this idea of seller-financing, please consider this:
Seller-financed properties bring the highest price, and they satisfy the largest percent of buyers. Cash sales actually lower the price because of the cost of financing, and they hinder the ability to leverage the money.
Simple Example: If a buyer has $500,000 cash for the purchase (not counting his funds to cover start-up costs) and is qualified to finance 500,000, the buyer is limited to a sales price of $1,000,000. If a seller is willing to finance part of the deal, the buyer can now afford to buy a higher priced business, dependent on the amount the seller is willing to finance.
Mary’s View: I bow to Rob.
- Not all buyers are prepared to enter into a purchase agreement today, although many are well-prepared to act as soon as the right property is located. Is your place the place of their dreams? Maybe!
- Historically, some listings are out there for a few years, while others were purchased within a matter of weeks or months. A major part of this is the full sales package.
Financial Sales Package is comprised of the price, sales structure, terms, down-payment, and the flexibility of the seller in assisting with the financing.
Operational Sales Package could include the amount of land, equipment list, retail inventory list, current reputation, desire of the buyer to maintain vs evict the former clientele, retention of current employees, location, surrounding area, availability of opportunities to expand operations, and so forth.
- Some buyers will only entertain waterfront parcels, while others demand urban settings. Rob’s job is to match his buyers with properties, and to achieve satisfaction for the buyer and the seller.
- At no other point in time over the past 27 years has Fortune Real Estate had this volume of potential buyers in the database!
- It’s wiser to list before one reaches burn-out (a property tends to only go downhill from that point!).
- Mary’s park wasn’t listed when her broker found a buyer.
- If Mary’s broker hadn’t become intimate with the full package earlier, she wouldn’t have called Mary when the particular buyer came along.
- Rob invites you to a blog to which he refers his clients. It’s Mary’s blog on the topic of selling (actually, it’s what inspired him to call upon Mary for her services on this project).
Rob Smith (941) 755-1339
Mary Arlington: (605) 222-4839