Planning on Selling your Marina or Resort? It pays to plan accordingly.

One of the most important steps in selling a marina or resort is planning the disposition a few years out before it goes to market. A marina or resort, most of the time, is a multiple income streams with many nuances to consider and there will key decisions to be made. It benefits a seller to start to think about all aspects of the sale two to five years prior to when a final sale is anticipated.

Viewing a potential sale through the eyes of a buyer, instead of solely through the sellers goals and aspirations, will make some decisions and processes easier and more profitable.

CURB APPEAL

Customers expect impeccable grounds, free from eyesores like equipment, supplies and non operational watercraft.. If there are areas that have been neglected, it is time to implement a plan.

It goes without saying, but I see it more times than I care to count.... equipment and supplies need to be in a storage facility and not out in the open.

Deferred maintenance is second on the list. The most productive idea you can incorporate into your thinking and planning is to VIEW YOUR ASSET FROM THE EYES OF A POTENTIAL BUYER.

Peeling paint, neglected dock maintenance, loose tiles in the shower or evident leaks in the ceiling put up red flags in a buyers mindset. Valuation can be greatly affected with issues like a dockage that needs to be rebuilt. Preparing for a sale 2-4 years out is optimal, so you can slowly perform necessary upgrades over time, which will help with a premium valuation upon the sale. It will also help with your bottom line when customers see the improvements, there is repeat business and they tell their friends, which results in higher returns.

INVESTING IN YOUR MARINA OR RESORT

What are the most profitable improvements to incorporate when selling a marina or resort? Expanding the acreage of the property or adding larger slips for larger vessels are two profitable areas. In the Midwest, Midsouth and East Coast drydock storage is in demand ands a profitable addition for marinas. Resorts would benefit from updating their furniture or adding a family friendly amenity. Performing renovations ahead of a sale can ensure a higher valuation. Ken Capps, CEO of Marinas and Resorts stated "we had suggested to one of our clients to add 30 larger slips after they had come to us to market the property. They did so, plus also added 4 cabins which, collectively, netted them an additional $1.9 million at the sale."

As part of his advisory services, Ken provides an assessment of "pain points" and areas of improvement that can add value to the business. Profit centers come in all shapes and sizes and it is important to pay attention to what the needs of your community are, and what a potential buy looks for in an asset.

Boat rentals, jet ski rentals, cabin and condo rentals and golf cart rental are lucrative investments that provide additional revenue streams and compliment a marina or resort Adding something as little as four or five rental boats adds decent revenue for a minimal investment. The goal is to make the business as attractive as you can to potential buyers. There are some improvements that may not be appealing to some buyer groups. We have some repeat buyer clients that had told us they do not want marinas that are restaurant heavy, because they do not like to deal with restaurateurs. ther are other buyer groups that part of their buying criteria want properties with dry boat storage, or the ability to place dry boat storage. Many times it comes down to demographics and what brings in the most revenue with the least investment. Ancillary revenue streams benefit If it drives customers to your business.

There are also buyers who prefer value add properties instead of a fully stabilized property, so they can build equity as their building their new business. In the end, your business valuation it comes down to how much effort you put into your property. A buyer will pay a cap rate based on cash flow whether that be a $3 million asking price or $30 million.

DO THE WORK TO VALUE YOUR MARINA FOR THE HIGHEST POSSIBLE VALUATION

We see much to often in our business that marina and resort owners allow the buyers to set the value of their property with unfair comparisons and without doing enough due diligence into its true potential earnings.  They typically take the easy route of comparing the sales prices of other area marinas and figuring a value on the inventory, even though the subject marina or resort business model may be set up entirely different than area properties that have sold.

A potential buyer will always weigh valuations in their favor and that is why it is imperative for a seller to be well equipped with there own data and numbers to support their valuation, especially forecasting estimates.

Your property's value should be based on:

1. Property assets (e.g., restaurant, service docks, rental boats, dry and wet storage, pool, spa, etc)

2. Your businesses average annual revenue over the last 2-3 years

3. The location, and unique amenities or offerings of your of your property

4. Recent marina or resort comps

5. POTENTIAL FUTURE REVENUE Many property owners do not even consider the last step above to arrive at a valuation for their property ( and the experienced buyers would not dare bring it up). The typical realtor has know idea that these complex multiple formulas exist to help build value in your marina. To quantify your potential future revenue , we implement benchmarks in a formula to quantify future earnings potential. This one discipline will make a marketable difference in what your sales price could be for your property and is a critical step in realizing maximum valuation. it could potentially mean the difference of leaving millions of dollars on the table.

Most of the time, there are three different types of buyers. you have your single local buyer, your local or regional investment group, and lastly your institutional buyer.

The optimal process of selling your asset differs from buyer to buyer. It is important to know that an institutional buyer varies from a local or regional buyer because the have been through that specific buying experience multiple times and they have a much more sophisticated range of data from which to pull from to accurately evaluate a recreational asset. Your advisor has a proven strategy to approach each situation to arrive at the highest possible price point.

Ken Capps is the blogger and CEO of MarinasandResorts.com Please email us at admin@MarinasandResorts.com to schedule a consultation with our team.