Real Estate

The “Underrated” Assets That Offer HUGE Cash Flow & Multiple Income Streams

Do you want an asset that offers a TON of cash flow? Multiple income streams? How about forced appreciation? Today, we’ll introduce you to an often-overlooked investing strategy that has something for everyone!

In 2018, Dylan Kidd was diligently climbing the corporate ladder. But a grueling schedule meant his family was getting his “leftovers,” and something had to give. Fortunately, he discovered real estate investing at the perfect time. Within only a few months, he had become passionate about small multifamily and bought several properties. But eventually, he saw that these smaller deals could only take him so far, which is when he pivoted to commercial real estate—a move that unlocked all types of investing opportunities and helped him amass over 200 “units”!

In this episode, you’ll hear about an “underrated” asset class that offers enormous cash flow and various revenue streams. The best part? This niche has low competition, making it easy for rookie investors to claim a piece of this profitable pie! Now an experienced broker, Dylan will not only show you how to find, analyze, and finance these deals but also teach you the art of sourcing and nurturing leads!

Ashley :
This is Real Estate rookie episode 417. Today we’re talking about investing in an underrated asset class that you should consider over multifamily. I’m Ashley Care and I’m here with Tony j Robinson.

Tony :
And welcome to the Real Estate Rookie Podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today’s guest is Dylan Kid, a real estate investor out of South Carolina. Now, he climbed a corporate ladder after finding his dream job, but then he started investing in multifamily real estate and now he’s pivoted to a strategy that’s different than multifamily and into an asset class that we almost never talk about on real estate rookie. We’re excited to dive into what that is. So Dylan, welcome to the Real Estate Rookie podcast.

Dylan :
Thank you, Tony. Thank you, Ashley. Happy to be here.

Ashley :
Dylan, welcome to the show. So from my understanding, you started out as a real estate investor in multifamily. Is that correct?

Dylan :
That is correct. Small multifamily to be exact.

Ashley :
Okay. Give us a little bit of how you even got started into that.

Dylan :
Yeah, so my journey kind of dates back. I think I have kind of a stereotypical story. Went to corporate route, graduated college, did everything that I was told to do right? Went to undergrad, met my wife. We moved away, started our fairytale journey together. She actually went to law school, which was pretty cool, but I got my corporate job, started working in the sales with a lot of folks and then ended up climbing the ladder there, got promoted and said, you know what? This is the golden ticket. I’m going to climb the ladder and life will be great. And then about six months into that position, I realized pretty quickly that this was not what I thought it was cut out to be. And it wasn’t that the job was bad or the people I would work with were terrible. It was just really simply the fact that I felt I was spending all the best hours of my day at work and then my family was getting the leftovers.
And for me, that wasn’t the life that I wanted to live, and so to create some different asset or really look to create some different income streams so I could really just hang up my job. And fortunately for me, I had a friend that worked in the same office as me that had recently rented out his house after getting married, and him and his wife had bought a new house. And so I was like, oh, that makes a ton of sense. He actually recommended the BiggerPockets podcast than me, and so I started listening religiously. I’m talking like every day. I tell people all the time I turned my car into a studio. So I listened at a 40 minute drive to work with my wife, and she frequently got annoyed with this, but instantly, as soon as we would get in the car, it was just podcast, right?
Podcast after podcast to and from work every single day. Then I told my wife, Hey, you know what? This year we’re going to spend educating ourselves on real estate and then in 2019 we’ll start investing. And she was like, all right, that sounds great. That’ll give us some time to get our feet wet, learn. And then fast forward two months, I was shooting out offers on properties, and then my wife was like, whoa, whoa, whoa, whoa, whoa. But then by June of 20, bought our first investment property and that was duplex. That was really the jump into real estate.

Tony :
Dylan sounds like a whirlwind bit of an experience for you guys, but kudos to you for actually taking action because a lot of people get stuck in that analysis paralysis phase, but it sounds like you’re able to break through that. But something you said that I want to circle back on because it was such an impactful statement that you made, but you said, I feel like the best part of my day was going towards my job. My family was just getting the leftovers. And man, does that resonate right? I can think back to when I was still working my day job and I had the Sunday night scaries. It’s like every Sunday night on my dreading going back to work on Monday and you get home, you’re exhausted, you’re unhappy, and it’s a different lifestyle. So it was just such a profound statement. I wanted to make sure that we circled back on that because I think for a lot of people, that’s what actually drives them to want to get into real estate is to be able to control their time a little bit more.

Dylan :
Yep. I would agree 100%, and that’s exactly what it was for me. I’ve heard the statement a lot of times that folks that are in corporate America, I think a lot of times we get stuck and one of the reasons people don’t take action is just simply when it’s not bad enough. We get comfortable with the job is good, it’s not great, but it’s something. And so we can kind of get stuck in that. But once you kind of hit the point where it’s like, this is terrible, and it’s not so much the pay or whatever it is, but it’s just like there’s so much more potential or things that I could be doing to live the lifestyle I want, once you hit that breaking point, you got to go.

Ashley :
So Dylan, you buy your first duplex after that, do you continue to grow and scale your multifamily or right away do you decide you need to transition into another asset class?

Dylan :
So I wish I had right away decided to transition, but I did continue to scale that. So I bought the first duplex. I actually had some partners that I took in on that deal. My wife and I bought it, but we kind of syndicated the money for that. And then beyond that, I actually had a coworker approach me. He had heard that I was doing real estate and at the same time I got my real estate license. So fast forward 2019, that spring I got licensed to be a realtor. And so I was like, I’d be a realtor. This guy heard about it. He was vice president, so he was higher up in my company and he was like, Hey, I heard you’re doing real estate, heard you bought some and now you’re licensed. Let’s sit down and have lunch and I’m all for that.
And so sat down, went to lunch with him, and we kind of talked about what his goals were and what mine were and decided to do a partnership and buy some more deals. So we actually ended up buying three more duplexes together that spring. And then beyond that, I partnered with one of my best friends who was the guy who originally got me thinking about real estate, and we bought a handful of more together. And then eventually what I ended up doing was scaling up into some larger asset classes, really not too large, but what would be considered commercial. And so some six unit properties, things of that nature.

Tony :
So I just want to set the table for the listeners, because you said you got the first duplex in 2018 and then you just started rattle ’em off. Hey, I bought three with this partner, another few with this. So what does your current portfolio

Dylan :
Look like today? Yeah, so it’s total units, it’s roughly 209 that is made up of approximately 30 residential real estate units. And when I say residential, I’m referencing essentially anything that’s not commercial or anything that’s not more business related. So roughly 30 residential. I’ve got 106 RV sites. I’ve got another 35 ish RV and boat storage sites, and then I’ve got 42 self storage units or 42 units, self storage facility and one mobile home. It’s tack onto that. So that’s what it’s looking like right now.

Ashley :
So you kind of alluded there to where you’ve made your transition because you have the small multifamily and then there’s the mention of campgrounds, some RV sites and actually self storage too. So I’m really interested to hear more about how you made that transition from small multifamily into campgrounds and self storage. We’re going to take a short break, but when we come back, let’s dive into that transition in your real estate investing journey. Okay. Thank you everyone for joining us After our short break, we are here with Dylan. So Dylan has built up this very nicely impressive portfolio and you decided at some point during your journey that you didn’t want to do small multifamily anymore. Why was that? What was the reasoning?

Dylan :
Yeah, so it was a number of reasons. So one, it was my desire to scale, so I wanted to continually increase my portfolio. When I first got invested with the first duplex, my goal I did talk with my wife about was basically we wanted to double our unit count basically every year. And I modeled that actually after Brandon Turner. He talked about a stacking method where it was like you buy a duplex, you load that to a four unit, you get an eight unit and you continue on. I realized pretty quickly you need to have a fair amount of money or resources to do that, or you can just do larger deals upfront and then you can accomplish the same thing. And so IED or got onto doing the second part of that, which is like, Hey, lemme just do larger deals to begin with. And so that was one part of it. The second part was as I was adding my resident or building my residents portfolio with duplexes, and I realized that I didn’t really like dealing with tenants and toilets as much as I thought I would. And so after countless evictions, flooding, apartments being abandoned, a lot of different things that happened.

Ashley :
Were you self-managing?

Dylan :
Yes. So I started off self-managing. Then I had the bright idea to create a property management company, which was like, okay, that served me pretty well. But yeah, then eventually I ended up passing it off to some third party management, which has been the best, but it still hasn’t avoided the issues entirely. Right.

Ashley :
Oh yeah. You’re still responsible for all the issues that come up for paying for all those issues. Yeah,

Dylan :
Exactly. Exactly. Somehow I end up always being the one that’s cutting the check at the end. So that hasn’t stopped, but that was really, it was a headache. And one thing that set me over the edge is I partnered and I bought a six unit building that was older and I got a really good deal, negotiated owner finance and everything went really well with it, and we renovated that property for quite a bit of money. And then after the renovation was finished, we leased it all up, more issues just kept happening continually. Even to this day, I still have this property in my portfolio for now, but it’s just one thing after the other kind of went wrong with it. I was like, I do not want to take part in this. And then simultaneously I was scaling up out of my realtor role. I didn’t want to do residential real estate in that market as well. So I went to commercial and then that shifted my entire mindset around, Hey, I should probably invest in these

Tony :
Dylan. So one follow-up question, because we’re making the transition from traditional multifamily over to RV parks, campgrounds, et cetera. For listeners who are maybe unfamiliar with what an RV park is, what exactly is an RV park? And I guess yeah, maybe lean into the differences between that and traditional multifamily.

Dylan :
Yeah, for sure. The RV world’s kind of unique, but there’s essentially multiple different destinations is what I would call them. So you’ve got traditional RV parks, which is something you drive by on the highway and maybe you just go on an overnight trip across the country and you need a place to stop off and stay. That’s one option. You’ve got RV campgrounds, it’s more like, Hey, I’m going to go hang out here for a weekend and enjoy the nature. You’ve got destinations or resorts, which would be like you’re going to this place to have a good time. It’s probably got water parks and amenities and things that are going to keep you and the kids busy. And then you’ve got places that kind of blend all those things. You also have RV communities, which would be more like a long-term model similar to a mobile home park, which can serve people really well too.
But that was kind of my thought. I saw all of those and said, there’s aspects of each one of these different models within that RV world that I like. And so that’s kind of what drew me to it. One other thing was I thought it was fun. So I think there’s a lot of potential to create income streams differently or different ways in the RV world. And it’s more fun to multifamily to me versus where I’m just talking about talking to a property manager dealing with tenants and toilets, or I can be talking to my employees at my campground about what event we’re planning next or what fun thing we’re going to be doing. It’s not so dreadful. And so that was kind of the transition for me. And not to mention there’s a lot of cashflow. And so that’s another draw.

Tony :
Well, let’s talk about the cashflow a little bit, right? Because we had Heather Blankenship on and she talked about one of the reasons that she loved RV parks was because of the different ways you can generate cashflow. So what have you seen on your park still, and I guess how many different income streams are you able to recognize?

Dylan :
Yeah, so I think there’s multiple, and that’s one of the things, the benefits, if you have an imagination, you’re willing to put in some work, you can literally create as many income streams you choose, that’s your campground. So for us, we have more of a long-term, a mixture, really a hybrid, but it’s more a long-term base. We like to do a weighted toward the long-term tenants. When I say long-term, I’m not talking about people that just live there, but we do have a monthly guest list where folks are staying 1, 3, 6 months at a time that provides a stable income for us. But then outside of that, you can have camp stores, you can have laundry, you can have tubing. If you have a water feature, you can charge for fishing, you can have events. And for us, firewoods an easy one. Ice is easy or camp store, you can sell basically anything you like out of it.
Propane’s easy. I’m saying easy. These are more low hanging fruit, not necessarily easy, but it’s simple. And so those are just some of the items. One of the other things you can do is just different site types where maybe you have a standard site where it’s just a gravel pull in with full hookups, but you could also pay the site and charge a premium rate or add a nice fire pit or add a swing. And that’s all different ways to generate additional income outside of just standard, Hey, you come and stay here and pay me a base rate. So that’s one of the reasons I like it.

Ashley :
When you saw this first property. So I guess I want to know what came first, that chicken or the egg? Did you just come upon a campground or did you come across the idea of a campground and then research it and then go and find one?

Dylan :
Yep. That is a great question, Ashley. And it was the idea first. So we went to a conference and Atlanta actually, and in that conference I elected to go to a breakout session that was focused on RV campgrounds in the RV industry. And so I left that breakout session with roughly 15 pages of notes and I was like, we’re missing something here. This is the asset class we need to focus on. For all those reasons, I think you can hedge against, it doesn’t really matter the economic environment as much. I mean, you can treat it like multifamily, you can treat it like a mobile home park. You can treat it like a business if you like. You could run it multiple different ways and have all different income streams on it. And it’s more fun, like I said. So had that idea there and then brought that back home to my brokerage and said, Hey, we should focus on this in the brokerage world. And got started there. And then as I was brokering some of the campgrounds, that’s when I said, Hey, you know what? I originally had just been focused on multifamily, but I’m really seeing the benefit of jumping over into this asset class. And so that’s what I did, and it really came through the brokerage arm where I really decided what I need to invest in this.

Ashley :
Is that how you are sourcing deals then too, is through your brokerage or have you been able to find them other ways?

Dylan :
Yeah, so my primary way is me. So a lot of it does come through me just being a broker and doing my normal tasks. So a lot of cold calling, a lot of in-person meetings and things of that nature. Conferences I’m attending anything that’s in the southeast basically for campgrounds. And so I’m able to dig up deals that way. But outside of that, you could, I mean, it’s kind of like driving for dollars. You can do that in any asset class in my opinion. And so in my everyday life, my family and I go out to the lake or something, we drive past tons of RV parks and campgrounds and things like that, and I would make a note of that in my phone or market and then give those folks a call. So if I was not a broker, I would probably reach out to a broker, but since I’m might as well help myself here. So that’s it

Tony :
When it comes to finding those deals, right? Sure. There’s a lot of people, Dylan, who are listening to this episode who are now going to go best places to buy an RV park and they’re going to stumble upon a bunch of different lists that they come across from the internet, but we specialize in short-term rentals. And when people do that, it oftentimes takes ’em to markets where there’s a lot more competition, pride points a little bit higher, they’re going into the beaches of Florida or maybe Disney or name the big city. I guess what are your thoughts, Dylan, on the kind of big hotspot markets for investing in when it comes to RV parks and maybe some of the smaller up and coming or secondary markets?

Dylan :
So I think there’s opportunity in those hotspot markets, obviously that’s why everyone is flocking there, but you do have to be aware of the bear’s entry and there’s generally higher than they would be in a secondary or tertiary market. And so if you analyze your own situation and you say, I don’t have millions of dollars in the tucked under the mattress to play with, or I don’t have a handful of investors lined up, then you may want to spend a little bit more time looking at the secondary markets or the tertiary markets because they ultimately, if you choose correctly, they can become a primary market or they’re just a secondary market in a large MSA that works well already. And so for me personally, my mindset and my kind of strategy has always been more of a value add investor. I like to buy things that are not already a plus and performing at their max peak ability.
I want to be able to drive some of that value, which I mentioned earlier, forcing appreciation. And so I prefer a secondary market, but I would say just look inside wherever you’re comfortable. But obviously you can go to the southeast is an excellent market, but outside of that, if you can get within an hour or two of any major MSA you should do. Okay. And then be aware when you are looking into a hot destination market. Tony, I know you own in the Smoky Mountains in Tennessee there, I’m not far from there. I look at deals in that market too. That’s an excellent market to be in based on the history of it. But you just got to be aware, yeah, the price point’s going to be higher there, but there are markets 20, 30 minutes outside of there that you could also go into that are going to bring traffic because of that hotbed destination. That would be where I would say rookie, maybe if your capital’s not your best friend, I identify that secondary market there.

Tony :
Is there a balance or I guess where do you draw the line, Dylan, on maybe going too small because sometimes I’ll be talking to someone and they’re looking at an Airbnb or something in a say where there’s like four of them and I’m like, I don’t know if that might be too small. So I guess how do you draw the line between secondary, tertiary, and then I don’t even know what comes after tertiary, what’s, how do you say fourth and that same line, but you know what I’m saying, whatever the fourth smallest city is, how do you strike that balance?

Dylan :
That is a great question. And I don’t know what comes after tertiary either Tony, but for me, look at, I would say look at the economics of the area. Look at population, look at population growth. Are there jobs, is there a market there for people? Is there a reason for people to come into that? Right? And so for us here in South Carolina, I’m very aware of the macroeconomics here of the state. We’re very popular. People are flocking to the South Carolina consistently is in the top five states of people moving into and two ends of two parts of the state. Really, three parts of the state are very, very like the hotbed. That’s where everyone’s going. You’re either Charleston or Myrtle Beach or you’re upstate, which is Greenville where I’m at. And so if I know that or which you could find out by just researching areas, all you’d have to do at that point is just look to an area that’s a little bit smaller or a little closer to that area, but not in the primary.
So I tell everyone, go within an hour of an Ms a or two hours of an MSA if you have to, but make sure that if you’re going into that area, you’ve got some scale in the asset that you’re purchasing and that you have good help and there’s some sort of demand. In the campground space, I would look for water features because that people like you can get a little bit more rural for a campground, it’s naturally in a scenic area, so you don’t have to be as scared, but just be aware of demand, really supply and demand. You don’t want to get into a market where there’s 75 campgrounds and all of them are renting at 15% occupancy. That’s not a good thing, which does happen in the itself. It’s seen multiple markets like that where there’s nuclear power plants around and people just, they overbuilt while the power plant was being worked on. And now that that job is gone, all of those campgrounds are sitting empty. So you don’t want to do that. But I would say if you can just use some sort of intelligence, and if you are unsure, I would say find someone that has a little bit more of experience, whether that’s a partner or broker or even someone on a podcast. And then you can probably determine this part be a good fit.

Ashley :
So Dylan, now that we’ve identified our sub-market where we’re going to look, how do we actually analyze the campground deal? What are the steps we need to take there?

Dylan :
So there’s two things that I would focus on in due diligence. One is physical due diligence, and the second is financial due diligence. First and foremost, analyzing it, you just want to look and see, you start with your location. Everyone talks about in real estate, location, location, location. You’re looking at that for really two reasons in my opinion. One is to see would there be an opportunity for the asset that I’m going for? Is this a destination that people are going to visit? And then two is what we mentioned earlier, supply and demand. Am I going to be drowned out by everyone else or not? So one of the things that you want to look out for when you’re analyzing or doing your physical due diligence is really the infrastructure of a property. And the reason that I say that is obviously it’s important across all asset classes.
You don’t want to buy 70-year-old plumbing or faulty electric or anything like that. But in the campground industry specifically, the majority of the existing campgrounds are old. So 78% of them have been around, they’re 20 plus years old. The median age of the campground is 40 years old. So that means it’s built quite a while ago and you need to be aware, has an electrical and the plumbing been upgraded? The reason, like I mentioned earlier, why I wanted to get out of the multifamily space is because I purchased a building that had old plumbing, and that plumbing has been nothing but a headache to me. And that can translate over to the campground space just as well. And so you want to be aware of that. But then outside of that, also it’s just simply looking and understanding site sizes because you want to be able to accommodate the newest model RVs.
You don’t want to buy a campground and you think you got 150 sites, and that’s a great scale, but then it turns out you can only fit 75 of RVs that are being built today. So that would be something I would look out for. And then on the financial side, it’s just simply you want to review the numbers like you would any deal. But in the campground space, it’s really going to be boiled down to p and ls, rent rolls and occupancy reports. And so with a p and l, you’re really just looking at what’s the gross revenue that a property is creating based on their current rates that they’re charging, what expenses are they using? What things could I cut or what things would I add in? Are they accounting for a salary for employees or not? And then I can continue just going to tell you the story of are people actually visiting and staying here?
So those are the things that you want to look at. And then when you figure those out, the simple math for analyzing a deal is just taking the gross revenue. So let’s say a property does a million dollars revenue, that’s a million dollars that it makes in a year before they take out their expenses, pull the expenses out, whatever those may be, and then you’re going to be left with a net operating income or an NOI, and then you divide that NOI by cap rate, which can be different in different markets based on asset class, but you can kind of figure that out as well if you have a partner and then that’ll give you a value. So that’s all we’re doing in the campground space to value it.

Ashley :
Dylan, isn’t it some crazy percentage where 80 to 90% of all campgrounds are owned by mom and pops?

Dylan :
Yes. Yes, you’re correct.

Ashley :
So how much of the accurate financials are you really getting?

Dylan :
There’s campground to campground, but the majority of them, yeah, you’re probably not going to get great financials if you find a, I would say the best deals out there, some of the best deals that I’ve seen don’t have the best financials because it is a mom and pop owned operation and it’s been around for a long time, and they just have their set way of doing things, which you’re exactly right, Ashley, 78% of campgrounds that exist are privately owned, meaning private owners like you and I, not national parks or government. And then within the privately owned sector, 90% of those are mom and pop family owned campgrounds, which presents a huge opportunity. But then again, when,

Ashley :
Yeah. What are some of those advantages? The AJ Osborne has always preaches like you want to find the self storage that doesn’t have a website or whatever. What are some of those advantages with a campground that going after that large majority of mom and pop owners could be a benefit to you to finding a deal?

Dylan :
I would say number one is owner financing opportunities, which is probably that’s critical across all asset classes, but specifically for campgrounds, owner finance opportunity is there, and then two, it’s the exact same thing. So with it being mom and pop, a lot of times they don’t have either the ability or the help around to operate and market it at its full potential. And so what we’re doing as a value add investors we’re looking and saying, okay, here’s where this is baselining now and it’s performing pretty well. What could we come in and do that may be pretty simple to us, but a mom and pop owner might not be thinking of today, and then let’s do that. And that could be as simple as a website. You’d be shocked at the amount of properties we see that don’t have a website at all, but they stay full.
And so we’re like, okay, if you were to just market a little bit, turn on the marketing machine for this property, how much more occupancy could you drive up or increase or probably the number one thing I see with mom and pops is they’re not great at staying on top of rates, so they’re not good at rate growth. So you might get a property, this happened in the duplex, my very first duplex all the way to my last campground. And so stuff is underpriced. And so that presents a large opportunity for people to come in, execute a business plan where maybe you make some improvements, build a website out, increase, add some landscaping or whatever it is that you see fit for the property, and then you’re able to raise the rates, which ultimately raises your revenue and NOI and makes the value of that property go up. And so those are some of the simple things that I would mention.

Ashley :
Dylan, we’re going to take a short break, but when we come back, I want to talk about the first deal that you purchased, and this wasn’t a mom and pop, this was a son and pop deal. So after this break, let’s hear the breakdown of how you made this deal happen and what the numbers looked like. Okay. Welcome back from our short break. Thank you everyone for taking the time to check out our show sponsors. We are here with Dylan who is going to deep dive into his very first campground deal. So Dylan, how did you find this deal and what did it look like?

Dylan :
Yeah, for sure. So this one came from, again, my brokerage arm. I was doing some cold calling in a specific market about 30 minutes outside of Asheville, North Carolina, if you’re familiar with that. And so ended up calling this gentleman one time and spoke with him. He owned a property that I called on and connected and turned out he didn’t want to do anything, asked that he was looking to buy or sell at that point, did not want to because he had actually just entered the venture with his son. And so the idea was he was going to be the money partner, the son was going to operate the campground, and then they were going to build it up and make it perform better than it had been in the past. So at that point I was like, okay, I mark them down, put ’em on my call list to continue following up with, ended up circling back about six months, eight months later, and the tone had changed a little bit, the second conversation, and this time it was like, oh yeah, actually maybe we should talk.
And come to find out, I ended up setting a meeting, going to meet him in person, doing all that, which I highly recommend for any rookie out there. If you can get phone time with a person, that is great and you’re 50% of the way there, but if you can get FaceTime with a person, it’s going to make all the difference. And so that’s what I did, sat down with them. And then come to find out, the son who he had partnered with had decided that he really decided entrepreneurship was not for him, and he said, I want to pursue my actual corporate job as a CPA, and he was going to move away, and he kind of left the dad out to drive. And so the dad was like, well, now I’m not trying to run this property. I just retired a couple of years ago.
I’m not trying to get back into the job, so I’m actually down to sell. And so that was the sourcing of it and then sat down and I told him, Hey, I love the property. I think it makes a lot of sense pending reviewing your financials, but if you’re down to owner finance, we can absolutely dive in and kind of look at that. And so turned out the guy was open owner financing. There’s a lot of benefits there for a seller to do that, and so chose to go that route. We ended up negotiating the deal. It ultimately started off as just a campground, and we were kind of figuring out the pricing on that. And then I learned that this guy also had a self storage facility, which I mentioned earlier. About five minutes from there, you had a six unit apartment building that was adjacent to the property, and then in the very front there was an additional acre that was boat and RV storage. And so I ended up negotiating all of those things into the deal, and my partner, two partners and I ended up buying it, we’re also partners in my real estate team. And so we ended up going together. We negotiated a 3.6 million purchase price, basically 5% down, so $180,000 down with a five year term and a 5% interest rate. And the first year was interest only, so got excellent terms on a deal, it was basically too good to pass up. And so that was really the finding and the negotiating of it.

Ashley :
Let me ask, how much was that first duplex that you bought?

Dylan :
The first duplex I purchased for 60,000,

Ashley :
60,000 to a three and a half million dollar deal. Wow.

Dylan :
Yep.

Tony :
So much to unpack there. We need three episodes with you, Dylan, because you rattled off so many different things you did here, but I guess a few follow-up questions on this deal first. So was it pretty much ready to go? I know you put down 5%, but did you have to put in anything above that 180 K to make it rentable to your standards?

Dylan :
Yeah, so we’re still in the process of improving that property, but it was functional, right? So it wasn’t up to the standards that we wanted, but the former owner had actually just renovated the office. He had also just built the bathhouse, a brand new one. And so those two things were in our favor. The rest of the campground was just kind of, it was basically a parking lot. And so for us, we didn’t want that to be our, that’s not our business model. We want to make some improvements, have site selections where you can have a standard, a premium, a waterfront sites, and do all different sort of things from that perspective. So we’re still doing that. But yeah, we did put money in over, but also I should say, so if you clever during the due diligence and when you get the closing, oftentimes you figure out ways to get credits on the purchase price.
So for us, 5% was $180,000, that purchase price, we ended up only having to come down or come to the closing table with roughly 150,000. So we saved some money on the front end there just due to credits and preparations and that sort of thing. And then going into it every month since then, we have put a fair amount of money into it, but the majority of that has come through CapEx expenditures or really equipment purchases. So we bought a tractor. Tractors aren’t cheap, believe it or not. I had never looked at one before prior to the owning a campground. But yeah, so that’s several thousand, that’s tens of thousands of dollars that you’ve put out to purchase something like that. And then we’re doing things like having it surveyed all over again so that we can get a site plan built out. That’s thousands of dollars, things of that nature that we’ve had to tack on. But fortunately, when we bought it, we did ensure that it was cashflowing day one, and so we haven’t really had to come out of pocket for those things. The campground’s more so funded itself,

Ashley :
You’ve been taking your cashflow and reinvesting it back into the business then? Correct. Okay. So what does that cashflow actually look like for this property? What are each of those different income strains springing in?

Dylan :
Yeah, so the campground itself does anywhere roughly 75 ish percent occupied, and it’ll crank up on the weekends. Obviously you can get to like 98, 99. This past weekend, there was actually an event in our town called the Bigfoot Festival, and so we were packed out, and so people trying to find Bigfoot. So this coming weekend we’ll be packed out. It’s a holiday. So the occupancy will vary based on that because we have a mixture of longer term, like I said, monthly guests, and then we have short term sites. And so the short term during the week is generally light, but then on weekends, that’s when it fills up. So that’s how that does 40 to 45 roughly. As we continue with the improvements and make our rate increases, we’re shooting to get that to 60,000 and think that that’s pretty feasible by probably mid of next year.

Ashley :
Well, yeah, 50% increase in your revenue. That’s incredible.

Dylan :
And then the six unit apartment building that was adjacent to the property that does clockwork, $7,400 a month, and then the self-storage does anywhere between three to $5,000 a month. And then the boat and RV parking does between a thousand to 2000 a month on that. And same thing with that, something as simple that we just did, we just ordered some of the flyer, the flags, basically the things that you see when you drive past a car lot that just opened or something that flash out. We just ordered some of those things to go out that we think will help increase in the booking, and then making that an option on our website for people that, for guests that book in the campground to park things there, I think that will help. So that’s really what it’s looking like. Campground by itself does 40 plus thousand. The rest is kind of gravy for us, but it’s a pretty solid return.

Ashley :
How many employees do you have working for this specific campground?

Dylan :
Yeah, so currently we have three folks that work more in the office, one’s more of a manager, one’s help, and then we have not a full-time, but a maintenance guy. We’re looking to add on to that because I think we’re currently outsourcing our lawn care for the property. It’s 32 acres, so there’s pretty substantial amount of work to do there, but currently we’re outsourcing that to a third party. I think by just purchasing another piece of equipment, a zero turn lawnmower, we could just bring that in house and have another staff member just that be the groundskeeping job. So we have three at the moment looking to go to four, potentially five. But even with that, it’s not that expensive in our market to employ folks. So not a huge expense.

Tony :
Do they live onsite or are they just employees to kind of come in and come

Dylan :
Out? Yeah, no, so we don’t have anyone on site. They’re all within 20 minutes of the campground. Our maintenance guys roughly five minutes away and then the two that are in the office or 15 to 20 minutes out and then they come on site. One of the employees though, did actually stay in our campground, so when we purchased it, she was living in it while her was being built. Her and her husband were building a house locally and they had a nice camper and all that sort of thing, and they were actually staying there and then they started working and then they’ve since moved into the house, but she still works there. So it’s worked out pretty well. One of the other options, one of the things, the reasons I like campgrounds is because you could actually have people live there and work camp Host is a very popular thing where you can essentially just trade rent for work. And so we’ve looked at that, we just haven’t pulled the trigger on it yet because we like to have the employee model where we can specify exactly what needs to be done. It’s just been working well for us.

Ashley :
So anyone listening right now is probably getting shiny object syndrome, and maybe they’re looking for their first deal or maybe they’ve done a couple deals and they’re thinking, okay, I want to do this. And what are some of the first steps you should do is that we think of single family or duplexes. Sometimes the first step is you go and get pre-approved to figure out what your budget is. Is it networking? What are some of the things rookies should be doing today to be able to get their first campground deal?

Dylan :
Yeah, I would say it’s exactly that. I tell everyone, identify what makes sense to you, what fits your personality, what fits your investment strategy? For me, the whole reason I got into real estate in general was I wanted an asset that would build wealth for me, create cashflow, and would free up my time. That was literally the things that I wanted. So when you’re looking at it, you probably want to choose an asset class that allows for that. I think campgrounds can provide that for anyone that does it properly, just given the amount of different subtypes within the campground community there are. So figure out what that is for you and then narrow down, analyze your own situation and say, how much capital do I have? What kind of property would I need to purchase to free me up or to create the lifestyle that I’m wanting?
And then from that point you can kind of determine, could I do a deal by myself or would I need to partner? Oftentimes, even if you could do a deal by yourself, sometimes it makes sense still to partner with people just because you can leverage other people’s time, you can leverage other people’s experience or you could leverage other people’s money if you didn’t have that. And so figure those sort of things out. And then from that point on, you could begin your journey in terms of searching for a property. And there’s a few different tools, and this is another reason where there’s an opportunity in this space. It’s not so mainstream where you can just hop on to Zillow or realtor.com or even LoopNet and find all of these things. I would partner with a broker in your local market that specializes in campgrounds, or if you’re coming in the southeast, reach out to Dylan.
Again, this is my territory, just so you know folks, but no, so you maybe find a broker that specializes in the asset class or go to a local meetup that’s talking about RVs or campgrounds or potentially attend a conference. I tell other people all the time or just with someone that’s already purchased one, a mentor or a person that has experience can literally turn decades into days in terms of your journey. And so I recommend it all the time. If you can shorten the amount of time that it takes you to get to your goal by just partnering with someone, you should probably do that. And so those are my recommendations. Partner up with someone and then do the research.

Tony :
Dylan, you talked earlier about reducing risk as you’re stepping into some of these deals on the RV parking campground side. And one of the things that comes to mind for me is that you got amazing seller finance debt to take this deal down. But I guess have you thought through what happens after that seller finance note is over? Are you just looking to sell it to someone else? Do you already have a bank that you fill? It’s such a complex piece of real estate, really, it’s a business. It just happens to be real estate, right? You’ve got self storage, the rv, the boat, all these different things going on. So what is the plan for the backend refinance once the seller finance out is done?

Dylan :
So for us personally, depending on how the assets performing at year five and what the rest of our portfolio looks like, we’ll either take that and refinance it or we’ll look at potentially selling it. My nature is buy and hold, so I doubt that I would sell it at year five. But yes, we’re developing, we’ve already developed relationships with regional banks and lenders that specialize in the asset class. And that’s one of the things that I tell folks too, unlike, and that is a downside of the asset class, right? It’s a downside and an opportunity in one where it’s not financeable like a multifamily apartment building would be, or really like a single family home. You could go to anyone down the street in your local town and you could get a loan for a house. You could go to anyone that’s in a little bit larger town buying a loan for a multifamily building.
That doesn’t happen in the campground space, which can be tough. However, there are people that will finance it, and the biggest player in that space is regional banks. So if you can find someone that’s local to the property that you’re purchasing and develop a relationship with them and show them the business model that you’re working and the functionality of the property, oftentimes they will get comfortable and they’ll provide a loan for that. So that’s our strategy. Alternatively, you could request an extension on your seller financing. I’m not going to do that. Or you could work with the SBA, which is small business Association. That’s a great option for a lot of people, which I’ve seen a lot of clients do just right now with interest rates where they are. That’s probably not the best option. And so that’s why I’m not looking at that. But there are multiple options there.
But one of the things, so that’s the risk associated with it. The opportunity there though is the fact that there is not readily available financing for this asset class prevents a lot of people from venturing into it. And once there is readily available financing, you’re going to see a flood of competition and the folks that are already in it, their values are going to increase. So you’re going to be sitting pretty. And so I plan to be on the latter half of that, but you definitely have to be aware, it’s not as easy to finance a campground as it’s a house or a multifamily building

Tony :
Ash. And I definitely love working with the local regional banks, and I think they’ve played a big part in both of our portfolios up until this point as well. Now, one last question, Dylan, that I want to ask, and you kind of glossed over this, but it was pretty intriguing to me. So I wanted to circle back here before we let you go, but you said you initially talked to this person and then they weren’t super interested, and then you followed up eight months later and then you were able to get ’em across the finish line. So a couple of questions here. First, how are you sourcing or finding the potential leads to call them? What is your script when they actually pick up the phone? Because you’re cold calling these people who don’t have their properties listed, right? So how are you sourcing and what are you saying when you call?

Dylan :
So for me, this could be a little bit different just given my active income. I’m a broker and I lead a real estate team, but for me, essentially, I’ll give you something that anyone could do, which is simply go to Google, type in campgrounds in X area. So for me right here, I would say campgrounds or RV parks in Greenville, South Carolina, there will immediately pop up a list of campgrounds and RV parks in South Carolina along with a couple of websites that you could source those from, like RV, park Store, RV Life, you named it, correct, might pop up, LoopNet, you name it. And then you can go through there and see campgrounds that are not listed for sale, but that just exist. And then you can research those folks and how you research if it’s in an LLC, you can look up your state’s business lookup tool and then you can find an LLC, find a registered agent, and then try to search for their phone number.
I’m not going to tell exactly how you would do that. There’s different ways or sites and things that you can leverage to pull that information. But once you get them on the phone, my approach is just simply introducing myself and telling ’em who I’m so Dylan Kid with a line capital. I saw you own such and such RV part. Just curious. I was really calling to check and see if you’re in the market to pick up any others or if you entertain an offer on that one, and then they tell you yes or no. The guy that I spoke to on my campground, it was that simple like, Hey, I saw that you owned this campground, wanted to get a little bit more information on it, saw that you recently purchased it, what’s the plan? And so it’s more just like an entry question to get an answer to. And then you can dive deeper based on that. And don’t be discouraged when folks aren’t as friendly when you first call because you are a stranger. But my goal is always to turn a cold call to a warm conversation. So if you can just connect on one thing, you can kind of take it from there. And that’s what we do. And then again, like I said, the cold call is part of it, right? The phone call is great, but the FaceTime is where you

Ashley :
Win. So Dylan, thank you so much for joining us today. We love talking about campgrounds with you and cold calling and financing campgrounds, so many things. If you would like to learn more about Dylan, you can go to biggerpockets.com and you can find Dylan’s profile under Dylan Kid, KIDD. You can reach out to him and maybe he will be your mentor, give you some advice and help you get started with your first campground deal. So Dylan, thank you so much for joining us. Thanks

Tony :
For having

Ashley :
Me. I’m Ashley. And he’s Tony. And we’ll see you guys next time on the next Real Estate Rookie podcast.

Tony :
This BiggerPockets podcast is produced by Daniel ti, edited by Exodus Media Copywriting by Calico content.

Ashley :
I’m Ashley. He’s Tony, and you have been listening to Real Estate Rookie.

Tony :
And if you want to be a guest on a BiggerPockets show, apply at biggerpockets.com/guest.

 

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