Why is the minimum lot quantity for a good deal is 30+? Can somebody explain me please?
That’s not necessarily true, but at 30+spaces, you tend to have a greater impact on your turn around. Also, it’s expensive to go perform diligence on a park if it isn’t in your back yard. Your acquisitions costs are less impactful on your overall numbers the more valuable the park is. Buying a plane ticket, renting a car, staying in a hotel, spending 3-4 days on site, and doing your 3rd party stuff is relatively fixed. Would you rather spread that out over 10 spaces or 30 spaces? Our answer is actually 50+ on that.
Agree with CharlesD, but if it’s a ‘bolt-on’ acquisition that is close to an existing larger park we own and can be managed by that park manager and general contractor, then there is no minimum size for us. We’ve purchased a 20-space park and a 25-space park in markets where we already own 50+ spaces and it is working out just fine for us.
And, frankly, for your first park, especially if it’s close to your home (e.g. no significant travel costs), then the learning experience from getting into this business may far outweigh any ‘too-small-to-make-big-dollars’ concerns. You might hone your skills on a 10-space park in a strong market, and then have the confidence to buy a 100-space park in that same market a year or two later.
Our first park that we directly owned was a 31 space park in North Richland Hills, TX that we purchased last year. The park was full, so we don’t even have it listed in Yellow Pages or have a website for this park. In retrospect, we would have purchased this park even if it was 20 spaces.
This park gave us the confidence of managing larger properties. We will have nearly 800+ spaces this year.
So, it is good to start small but you don’t have to stay that way.
@CharlesD It does make sense. It was my concern as well. If I need to do phase 1 environmental, it will cost the same for 10 spaces and 30 spaces park. Thank you for clarification and explanation.
@Jefferson I am looking now at 2 parks. One is 35 spaces and another one is 22 spaces. Both are in great market and 15-20 minutes apart. It sounds like I should not shy away from 22 spaces park only because it is under 30. Thank you.
@DallasMHP Wow. 31 spaces to 800 spaces in one year sounds inspiring. Thanks you for information.