Navigating the Renegotiation of RV Park Deals: Strategies for Success By Frank Rolfe

Understanding the Necessity of Renegotiation

In the complex world of RV park acquisitions, the ability to renegotiate terms is crucial. It's a misconception that once a deal is struck, it’s set in stone. The reality is, most transactions undergo adjustments as new information surfaces during the process. Recognizing when and why renegotiation is necessary can make the difference between an average deal and a highly profitable one.

The Why and When of Renegotiation

You might wonder why a second round of negotiations is needed after an initial agreement. The answer lies in the nature of due diligence. Initial negotiations are often based on information provided by the seller, which can later prove inaccurate or incomplete. Additionally, the initial terms are often contingent on assumptions about financing that might not hold up under scrutiny from lenders. When the financial reality shifts, so must the terms of the deal.

Approaching Renegotiation with Precision

Renegotiation isn’t about hardball tactics or aggressive demands. Instead, it’s a process that requires careful documentation and a reasoned approach. Begin by compiling a list of discrepancies between the initial information and what has been uncovered during due diligence. For each issue, gather estimates or bids that quantify the cost to address these problems. When it comes to economic factors, such as occupancy rates or revenue projections, provide clear data showing how the new information impacts the property’s value.

The Importance of Presentation

How you present your case for renegotiation can be as important as the facts themselves. The seller needs to see that you’ve put thought and effort into your reassessment of the deal. Drawing a parallel to a well-regarded TV show like “Pawn Stars,” when an expert appraises an item and outlines the flaws and current market value, the seller is more likely to accept a revised offer. Similarly, in renegotiations, a well-supported case is far more persuasive than a simple demand for a lower price.

Possible Outcomes of Renegotiation

When you approach renegotiation with thorough preparation and a fair assessment, you typically end up with one of two outcomes. The seller may agree to your revised terms or propose a compromise that still works in your favor. Rarely will a well-presented renegotiation lead to outright refusal. Even if you don’t achieve your ideal price, you’re likely to walk away with a more favorable deal than you initially had.

Conclusion

Renegotiation is a standard part of the RV park purchasing process. By being prepared and handling the process correctly, you increase your chances of securing a deal that aligns with the true value of the property. This skill can turn a good investment into a great one, setting the stage for long-term success.

By Frank Rolfe

Frank Rolfe has been an active investor in RV parks for nearly two decades. As a result of his large collection of RV and mobile home parks, he has amassed a virtual reference book of knowledge on what makes for a successful RV park investment, as well as the potential pitfalls that destroy many investors.