RV Park Business Investing Webinar

I figured, John, that we go over Wills Creek first and then cover Seven Meadows after that. Sound good?

Sounds good.

All right, I'm going to share my screen and I also linked to these decks in the chat so feel free to pull those up. All right. Can you see my scene screen, John?

Yes, sir.

Okay. Anyway, we'll just do quick intros. Chris Kerner, thank you for joining. We've got a good handful of people in here. I've been buying and investing in mobile home and RV parks for a little over five years now. First couple of years I spent buying smaller long term parks. Between 2019 and 2021 I bought those with two partners across Kansas, Oklahoma, Texas, couple in Louisiana and Georgia. And then I took a break, started writing about it, sold the portfolio in 2021. Met up with John and his partner Jeff last year and we hit it off. We, we, we started with one deal together. We shook hands and said let's just see how this goes. And it went great. And so now I'm a co GP at Blue Metric and happened to be involved and we're doing a bunch of deals together. So John, please intro.

Thanks Chris. Yeah, obviously a Duke fan. Went to Duke, went to Michigan Law school, practiced law as a commercial real estate attorney and along the way started a business, sold a business and eventually hung back out of shingle here. I live in Nashville so this park is about to at two hours from me and one day just started probably like a lot of you just started investing and stumbled into buying an RV park and now there's 20 RV parks. So it's been a, a crazy run and I really believe that this sector will get consolidated and I love it. This park is a textbook park. I love it. It's just near a good location and it's just we're buying businesses that cash flow so, so that's the gist. And yeah, met Chris on a deal in Louisiana and that deal is going well and looking to really build the portfolio. A lot of the portfolio you'll see in this deck will center around a roughly an eight hour radius around Nashville, Tennessee where I am.

John, can you talk about Wills Creek and how we found this and the history and background of this park and why you like it?

Yeah, yeah. So this is, this park is about two hours from me. It's down off an inter the interstate that connects Birmingham to Chattanooga and it's right, it's actually near, it's a park near where my daughters go to sleepaway camp in the summer. So there's a lot of it's just a pretty area. There's, there's several camps there and you get people from Atlanta and Nashville and Chattanooga and Birmingham, different places, bringing their kids to these camps. And it gets a lot of traffic, which is obviously good. There you. Yeah, that's perfect. You can see it in the middle there. Huntsville, Chattanooga, Atlanta, Birmingham and Nashville. It's just up out of the screen and it's really pretty. There's that lake there. There's the country. This is 45 acres. And on there's a creek that runs in the back, which is not Wills. Wills Creek there. Yeah. And, and she. We get a lot of this land. So it's really been assembled over the years by the owner and I've driven by it in the past, not really paying attention, but it has, it's stable. You can see, actually, you can see there, it's largely full just on that screenshot. So it stays largely full. There's tons of room to expand. And the back, some of that property is actually quite pretty along that creek. So there's opportunity to add RV sites and also to add tiny homes. And on a park like this, we've, in the past, what we've done is we can actually site build tiny homes for around 25,000 a pop, which, especially in this area, there's a lot of growth. This is in the middle of a lot of big growing areas like along that path of progress. It's closer to Chattanooga. So you'll actually get people living here, driving to different workplaces and a lot of folks in the construction industry as there are big projects. So I like this park a lot and it's really an easy textbook. Existing RV park has history and room to expand.

Thank you. Yeah, I think we have, I think four seasonal parks right now and this is more of a long term park like that because it's clearly on the way to higher population areas. But I see long term parks as more of a fallback option. Short term parks are more profitable, but long term is easier to maintain a stable occupancy. All right, I'm going to go back to the deck. There it is. So this is a 2.2 million dollar raise and we have, I think 400 grand left. That was all allocated by one LP and he liked it because his kids went to summer camp in the area and then he ended up backing out. John.

That's right. Yeah. And it's, that's. And we're pretty close to closing on this park. We, we might be able to close end of this week, but we have until we have another week and a half on this if we need it. But everything's pretty much ready to go.

Yeah, this one's a little unique because we've had it under contract for a little while and it looked fully allocated and then he backed out or else we wouldn't even be talking about it today. I'm going to skip over some of these slides. Some of them are a little redundant. If I go too fast. Just leave a comment and I'll try to answer it if I see it in time.

64 submitted a few more folks from the waiting room.

Okay, cool, thanks. 64 sides. This is the expansion concept. We're obviously going to take advantage of the space along the creek. It's right on that main thoroughfare in the city limits of Fort Payne. Is it city sewer, John?

Is it? Not right now, no. But that is not right now, no.

This one's septic and it already has four cabins. So when we add the ever rooms it's not going to be that much of a jump to do short term rentals. Anything you want to talk to about this expansion concept?

Just that we could even get more sites out of this. It's. There's lots of flat open land here. So this, is this considered this phase one of development. But there's a lot we could do and sometimes that's. We don't have to do it all. We could leave some meat on the bone there for someone down the road. But there's also the whole creek front where we could add more sites. So I, I could see this being a park where there's opportunity down the road to, to do further add ons.

This is what we're looking at for this park. The returns and financials look very similar to our other deals. 8% preferred return. So the LPs would receive 100% of the distributions up until 8% and then from 8 to 15% they would receive 70% of the returns. 30% to us, the GPS. And then after. Is it 30%, John? It converts to 50. 50.

Yeah. There's a bump which will likely happen a lot of times that really happens once we get to the refi. So we refinance, distribute out and at that point we really are targeting return of capital for that to happen.

We target a refi year two and three. Only been at this with this official fund for about 17, 18 months now. We've had refi offers we could have taken. It just didn't make sense to. The plan is to refi at a 70% LTV, the hope is that rates drop. But ultimately, even if rates don't drop, the way we're adding value to these parks, it's not, it's not a necessity. This park is located close to our other parks. I'm going to go to this map here. It would be right over here in between the blue and red dots. So we're able to achieve scale. Like generally speaking, when we buy a park, it's managed by the owners and we're able to split up the management of a park, two or three parks between one one blue metric in house. Manager.

I'm sorry, it is city water and city sewer. I think I said septic, but it is city water and city sewer.

Okay, cool. Yeah, I think a lot of folks are scared off by septic, but at the end of the day, if you want a 10:11 cap deal, that's what you get a lot of the times.

A lot of parks, a lot of RV parks, you're out just outside. A lot of times that's that city things are coming but they're not there yet and, or you're on a lake where it could be hard and you wind up with a, like you're a private sewer system. But here, this is city, but city utilities.

We're bullish on the RV sector for several different reasons. There's a few different mega trends that play to it really nicely. Boomers are retiring. Millennials are buying RVs. Boomers are traveling more, Millennials are traveling more. Affordable housing is increasingly becoming more and more out of reach for folks. So as the economy dips, we see a bigger upswing in long term stays. If the economy is strong, we see a bigger upswing in short term stays. And the more realistic risks in this asset class are generally capex related or expense ratio related, not necessarily occupancy related. At the end of the day, if your short term and or seasonal park is having occupancy issues, you could advertise it more towards long term tenants. And if you're still having occupancy issues after pushing it towards long term tenants, you can always backfill the park. Which means buy RVs, seller, finance them out to tenants to remove the friction of them having to own an RV beforehand. So you can see that the industry shrunk a little bit in 2020, but that it's on the upswing. And generally speaking, we're seeing a lot more demand both for their a lot more demand for our stays than supply. Parks are recession resistant, high barrier to entry, they're getting More and more expensive to build from scratch and it's not an asset class that we've seen really rolled up yet. So we're trying to do that. John, you want to speak about our track record a bit I believe a few months ago we, we had purchased $30 million worth of parks worth about 50 million and we're now close to about $50 million purchased. Close to 70 or 75 million book value.

Yeah, that's right. Yeah we've over well over 50 million purchase now and I think there's. And you'll see how we're infilling a little bit too strategically with scale. I don't. We. We don't have anything against Arkansas in case you're. In case you're wondering. So maybe we'll find some parks in Arkansas eventually to complete that circle around Nashville. But the. We've hit the preferred return on all parks and we are continuing to look really at that circle inward and really excited even. We're at the point too where we're having. I had a meeting on Friday with a family office and we're this. I think the thesis is holding up. There's a lot of interest in the sector. There's potentially some other cool things we could do do down the road but there is starting to be. I even had ubs, the bank, their. Their investment banking department reach and I did a call. So that's just where some of the interest is in the sector and that's our thesis here is that there will be a reward for all of us as investors in the sector for these parks for a portfolio that's managed, has scale in an area and delivers a return and hopefully we're rewarded with a higher exit valuation.

We got a couple questions in the chat. Nick asked what our going in LTV is for these parks. Isn't it similar to about 70% what our refi LTV would look like?

It's yeah we assume similar. Yeah there are. You potentially could go higher. Some depends. A lot depends on that. That valuation. On the other side there's other. It's not just banks. It's also there's insurance. A lot of insurance companies are considering the sector too. That was another meeting we've had recently where as we show again they want the same thing though is banks really looking to three years historicals. They might take the sellers historicals too but that could be a nice portfolio refinance and they might go higher on the LTV and they might go even more generous on the appraisal side as well.

And Aaron asked who our exit buyer is asking. You guys are buying a lot of these parks. Are you hoping to exit a portfolio deal to private equity or similar? Yes, I would say that's the most likely outcome especially once we get above 100 million under management.

Yeah and this I can tell you that just generally like the sector like why would a PE enter the sector and pay a premium. It's not just the RV parks this fits into. You're talking that multi billion dollar transaction. And this is what I've seen Some of the folks talking to us already are also looking at a marina operator like us or comparing some of the technology like the booking system used with our V park. So there's Yes a PE buyer is a likely buyer.

Another question. Seller financing terms refi assumptions the so the loan is.

Let me pull it up. I say I believe we're right refi. Just give me one second I'll pull up our model. So I don't speak on a turn here. And I I admitted a couple. Couple more people jumped in the room. Yeah. So we are 7.95% and a five year. Five year loan. It's actually 35% on the purchase and it's a new bank we got. We had the option 30% or a little lower interest rate. So a little lower interest rate on the purchase and then usually we assume we're around. We assume the same rate on the refi. But let me just check our model. Sometimes we go a tad bit lower looking three years out. Where will rates be? That's a good. That's a good question. But we. We are at yeah 7 7% is our assumption on the refinance rate.

And then Logan asked about handling on site management.

Yeah. So this park. So we've. That's all the man we do all the management ourselves. We. This park will be overseen by a husband wife couple. They manage another park we already own in Alabama south of Birmingham. So they just swing up and they have.

There's.

They do they have a little triangle of park. So this will be their third park for us that they manage and then over them is we have a HQ some indirect labor we call it Director of Ops who oversees everyone and sets their KPIs and bonuses and all that. But this. This. This husband wife couple has been with. They were actually at the for very first park bot so I I trust them a lot.

And then Nathan asked what the breakdown of duties is between yourself and I I can answer that. You're welcome to add to it. I help with deal Flow just by nature of my audience, people will DM me deals. Sometimes we don't take most of them. Obviously we're pretty picky. But in addition I help with fundraising and just advising and strategy. John has a ton of experience here. I have different experience. I have more long term park experience but primarily deal flow and fundraising. And then John, John, you're the guy, you're the go to.

Yeah, that's a lot. It's a lot.

It's.

It's a lot. We. But it's actually, I'd say a year ago it was incredibly stressful. Six months ago it's, it's gotten as we've gotten scale, it's gotten less stressful and we're starting to rinse and repeat on a lot of these, a lot of these parks. But it was very hard, very hard for a while to get to this place. So yep, there's some of the team and there's more. Now we have another fellow that a lot of retired military. We have another fellow that came was a master chief in the navy for a long time. Does is great at doing check ins and making sure every park is doing.

What they should and medicine investor, your question. Initial loan was 30% on this one. He said the sound was a little muffled. And then Emiliano asks is your financial model on Argus? Argus, Excel or other software and any chance it could be shared on the drive for review?

So the loan to value was. Is 30.

Was 30%.

Yeah. We're putting 30% down. And then the interest rate is 7.95%.

Yeah. And then our financial model, we could.

We can share it if you shoot us an email.

Do we just do it in Excel or do you have something else for that right now?

Just Excel.

I can show that. And then how are you verifying historical current numbers? Mom and pop. Businesses such as these can have questionable bookkeeping practices. And have you ever had any surprises once you took over? Probably.

Any surprises?

I.

There's no major surprises. I'd say the surprises have been a little more on the inspection side that we've had some concealed electrical in parts portions of the park. Usually not the main thing or I'll tell you, I'll tell you one area that gets us is the pool crack in the pool that the inspector didn't catch. That's been one on two parks. I'd say in terms of verifying financials we pull, we have a whole checklist of stuff. We ask for them and the diligence doesn't start like our inspection period will get Pushed back if they don't get us everything we asked for. And it's a pretty comprehensive list. So we'll take bank statements. Really it's just cross checking against bank statements and then. But you're right. Yeah. Sometimes the bookkeepings. This one was pretty good. She. It wasn't too bad. There was some cash. So I think cash is an area. It's. How do we know it's coming from here? Sometimes and sometimes folks will have like multiple businesses and they'll muddle. But this one was reasonably clean. And we have someone who her job is really just to. Just to gather all that information in our diligence room and compare and. But we tax returns, bank statements panels and then do you get any. Do you have any cash deposits? And then trying to validate that with bank statements.

Then Emiliano asks how our expenses are saying staying fairly low even though the park is doubling in size. She says the expenses remain the same more or less when you exclude payroll management, for example, utilities are barely increasing even though you have double the users. What is the thinking behind this low growth in opex?

So she had, if you're looking at trailing finances, she had, she definitely had some cash that she started reporting. Another way to verify that is you look at like the site. You look at, you do the count, you go there and say who's here, how many sites? And you get the rent roll from that month. So a lot of times and that's something where the seller can be a little sensitive about how they share that. As for utilities, the. So what one thing we do is we come in and meter all the sites. So if you don't see utilities pop up, that's in part because we're assuming we're going to pass through some of that. So if we're adding sites instead of doing a massive rate increase, a lot of times we just like the really one of the top levers we pull is just meter the electric and pass through the electric. Maybe not all utilities, but at least the electric pass that through and then, and, and sometimes you may lose a few folks, but those may be. Usually those are the folks that are burning a ton of electricity and we're not very profitable in the first place.

And he asked how we source our deals.

That's, that's, it's honestly that's work. That's. We've got a retired police officer who spends all day every day looking. He's got a couple folks calling and we're starting to get to where deals are starting to come to Us and it's through. Even Chris. Like people. Chris will see deals. You just accumulate them. I will look at brokers. Usually brokers are overpriced, but I don't want to. I don't want to poo poo the brokers. Like sometimes there's a good deal too. So it's just. I think it's a lot like one week we called 100 people and there was probably like 97 no's and a couple maybes. So it's work. And we probably know just about every park above 50 sites or so, at least in the southeast. And then looking in other areas. But it's Mont. Oh, Montana. Someone else asked, is that Montana? The Rockies. It's. We'd love to get the challenge there is. We're in national and all. You saw the map of all the parks. It's just we want there to be scale. So it's. It'd be nice to get. We have the one park in Montana now and if we could maybe build from that. So it's just. It could be a good deal. But if it's in a place we can't manage it, it's makes it challenging. So.

And if I don't remember if I said this correctly in the beginning, but it's apref. It splits to 50. 50 after the 15% IRR wanted to correct. Yeah, yeah. This is the NOI. You can see there's a couple different thresholds here. So next year the expansion would go into effect. So you see the revenue bump there. And then it goes into this. This is the projected returns from $100,000 investment for the first four quarters. Returns are fairly small because we haven't pulled those levers yet. And then as we add the expansion sites, it grows considerably. And then the refinance is, of course, when you'd get the capital back and then it would stabilize from there.

Yeah, this is. I really love the location and it is a good something on depreciation there. And we'll see how that turns out later in the year.

Two more questions. Capex amount expected for expansion and is the customer base long or short term? Mostly long term on this part. Maybe 60. 60% long term.

Yeah. And there's more demand for that. It's almost more in the Chattanooga metro and there's a ton of. But you could reach Huntsville, you could reach Chattanooga and you could reach Birmingham and that. The gr. It's right in the middle. Even Atlanta is reachable or the outskirts. So there's a heavy. There's a lot of contractors here and there is transient. There is some transient traffic especially during the summer so if we yeah I maintaining like 60, 70% 80% even long term I suppose we could fill it but it is one where you could if you. If we can maintain it and that's where the expansion really helps you we could have a nice stable base of long termers and a little because it's 45 acres have some phasing there where we could still have sites where we could have premium sites during the summer. It's beautiful here during the summer and.

Then capex amount for expansion.

Yeah it's a. It's a good. It's a solid one point can you see it there it's the. So well doesn't show this yet right around 1.266 is the CAPEX and it's a lot of that's we can really. It's probably more. I know it's more sites than we even have on the plans so we can expand this park significantly and just.

To be clear we. This raise includes all of that capex so there's not expected a future. Yeah all to pay for that. Let's see there's another question. What if appetite for refinance isn't there what would a plan b be for.

LPs yeah you end up. We'd end up just holding and distributing and going to to whenever the exit is in the portfolio exit.

Any other questions on this before we go to the next one? How do you decide on what the LPGP split after the 15 IRR is deciding?

6040 or 50577030 up to the 15 IRR then 5050 it really seems correct.

Me if I'm wrong John but more of a function of investor appetite or investor demand.

Yeah yeah I'd say what's the market and can we deliver a return that the market like that investors in the market and that's really in practice like to really be sure we've exceeded the IRR it really gets to that some event most likely we have had some that are distributed well way above 15% so we could distribute our way there but we don't want until you clearly are above the break point you don't want to start you have to clearly exceed the breakpoint and that usually kicks in once there's an event like the refinance.

Just to tie a bow on this One it's a $2.2 million raise. We have 400 left. We're hoping to finish that by the end of the week and then the next park is a ground up development deal closer to John south of Nashville called Seven Meadows, which is less of a tight timeline. Do you want to talk about our thesis on this one, John?

Yeah. So this is about 30 minutes south of where I live. It's. You're into the Nashville metro. It's out of. It's out of this. You're not in Davidson county, which is the main Nashville county. It's one of the few places I think you could build one. There's a ton of demand coming north and south and east and west through Nashville. You could reach downtown Nashville. A lot of the. A lot of the growth just because of where the river is. Nashville's going every which way. But this is just direct. A lot is growing south down 65 and it's pretty country. And there's also. So there's the Nashville draw and then there's also Franklin. But there's also a wedding venue here that's literally across the street. So that is booked.

What's the name of that venue, John?

I hear. Let me. Because there's a couple that had the. The same name. One second.

Allenbrook Farms.

Yeah, I believe that. Yeah, there you go.

This one.

It's it. One second. I'm pulling up. I can't see your screen for one second here. Yeah, we have it in the deck there. Second. Just want. I thought we'd put it in there somewhere. It's the venue. Birchwood. I'm not sure what you have on your screen. You go east.

It's called Birchwood.

Yeah. So it was the one to the east.

There it is. The venue. Okay.

Yeah, there you go. Yeah. 92. There you. Oh yeah, sorry.

There we go. And so we're just north and there's.

There's no housing around that. There's nowhere. There's no place for people to stay. So that's the. The owner of that is excited about our project.

And we're just north of it on.

Ollie Chun on Ali Chan. Yeah. Road. Right where that bend is. Yep.

So can you speak to our development experience at least this one?

We're bringing in a partner. So we're. We've been mainly as you saw from Wills Creek. We've been mainly existing park do the expansion. So this is ground up but it's also. This is also naturally right here. So it's my kind of my backyard so to speak. And we're bringing in. There's a local developer that's helping on this one and also the Eric from Ever Room. So we're going to be putting 100 RV sites but also ever rooms which some folks may have heard of before but so there'll be tiny homes and then there'll be RV sites as well. And the ever rooms I think both will benefit from the wedding venue but the ever rooms will. Will obviously chill it with a wedding venue and that's. I think we'll be able to pre book here as well. But in terms of development experience Eric's been he and his team and the developer he uses has done a lot of developments in the greater Nashville area. So we brought in an experienced developer to really help run this project. So our land development director has a lot of experience but he's obviously got a lot of projects going on. So he's going to be more consulting But a lot of this that needs to take place at a local level will be a local developer.

So we're planning on 85 pad sites to start everooms coming in after.

Yeah yeah it's. There's been a couple different tweaks to how this can lay out but the. Yeah I'm just looking at your drawing so the we could start cash flowing. This RV is nice for that reason. You can get the RV there and that can start paying for some of the project before you even complete it. So it'll complete in phases and then but although the evergreens can go in there pretty quickly. They've been building those. They come and they'll be site built but they come fairly, fairly ready to go and then they. They build them up pretty quickly and then so really it's possible it's hopeful that this year we'll actually start seeing some revenue. We don't assume any material revenue till next year just as how. How things can go. But this, this wedding menu does have obviously it does better in the spring, fall and summer than the winter but it does have bookings. It's not. It's not like our Montana park where it's like heavy seasonal.

Yeah. Is this 195 projected this year for basically pre bookings?

Yeah, pre bookings and I think we'll be able to get some. We could have some RV revenue there but for sure, for sure pre bookings too. So it's. I'm hopeful we could maybe even coming over to that number between pre bookings and getting some RV sites active.

And this one's a little more aggressive on the return because it is a ground up deal. There's a little more risk involved. 10% pref 35% target IRR and then was this a 7030 as well. Where is that one? It wasn't on that first slide.

Usually we have a slide with that. Let me see if we have it. I want to make sure we have that posted. We maybe in the port sometimes we put that on the portal as well so people can see it. Yeah it's so it's 1010 pref 6040 up to 15% IRR then 50 50.

Yep. There it is. I have this other explainer here in the doc that I shared and I went ahead and looked at our assumptions here. We're assuming 2025 only a 30% occupancy on RV which I feel is pretty conservative. And then I think it's about 40% on the ever room because you we have it at 277 which is right in between here.

Yeah and I think. Yeah. And so this is. I think this is beatable.

109 also seems pretty conservative for the ever rooms. Yeah. The playbook is similar to a park that we're buying outright. 2 to 5 year hold period refinance year 2 to 3 3.05x equity multiple similar to the Alabama park. Just a little more risk so a little more projected returns. I skipped anything here. I think that's pretty much covers it. There's one question. What would you say are the strengths of the in house management team around value add opportunities?

I think it's the same thing. I think it's. They say the. We have a niche that we've really focused on and we're seeing the same. There's five things on every park and we just do them over and over again and it's efficiency and then scale. Like we've built these tiny homes before. We've laid sub meters before. We've managed use the same booking system before and you just get. Get good at it just through repetition.

And our all in cost for this park. 735 for the land, 200 for improvement or 2 million for improvements.

It's I. I think we'll land around if I had to qualify that some I think we'll. It'll be more like 3.5 with the potentially with more ever rooms there and then land 4.2. You could give a buffer there and even go all the way up to five and then. But this should be. This should be a 10 million dollar park when all said and done and the thing you just look at some of the comps in Nashville. I think it's hard to. It's hard to. Hard to know I'm here so I've we've looked goes back to an earlier question. We've looked for parks in Nashville and in. In middle Tennessee. And it's just been so hard. And if you think about the portfolio, we've started to come inward. We've come inward until we were like, we need to build something to get ax, to really get access to this market. Because the other thing we're working on is a loyalty program that will benefit all the parks. So to get closer to Nashville is we've been looking for where can we build to have a park that gives us a presence and hit this msa and this is the spot. So you look at some of the other parks that it's just Google, like Opryland KOA or something like just some of the valuations. It's. You're into a top growing msa and it. There's just. There's limited places to put. Just the prices and the buildability of it. There's limited places to put an RV park, a new RV park now in the greater Nashville area. So I think that's. To me, that's a bigger picture. Let's say construction costs come way above. Let's say we're at 5 million. We could. This should be a $10 million development or more. When all said and done.

I think you just answered that question. But Matt was asking about developing competing parks around the Nashville area.

It's getting harder. The zoning and the local requirements are getting harder and harder. Just as there's so much growth that when we've seen this even outside of the national eastern Tennessee, just more restrictions. So if you're there, if you get something built, lucky you because it's getting harder to develop and build. And a lot of that makes sense. We saw in eastern Tennessee, just near some of the parks, there were some regulations passed just. And a lot of it was for sanitary reasons. Just making sure people did. If there was septic, did it appropriately or if it was they were on city sewer water that they actually did what they were supposed to. A lot of people were doing small RV parks or smaller developments and skirting some of the rules. And it wasn't really sanitary. That was more of an eastern problem out in some of the eastern parts of the state. But so we sent our manager to attend the meetings and we were grandfathered in. But we also. We're not at risk because we were a bigger park. We were like that particular part was city water, sewer. But we're seeing the regulatory environment change some, especially in the greater natural area. So I think That's. I think this is one of the spots where you could do something like this. But it's definitely. It's definitely getting harder with the growth.

Bud is asking what our biggest risks are with this development as well as what are the natural features in this development or is the thesis being close to Nashville metro population close to Nashville.

And close to this wedding venue Spring Hill. Spring Hills growing in and of itself the the wedding venue really it does so well because of its. I think in part because of its proximity. Nashville is like the bachelorette capital of the country. I think it beat Las Vegas. And there's also a heavy amount of growth especially down south. You're running south like the in the College Grove was in the Wall Street Journal. It's like one of the top the most expensive zip codes and most of the people in New York, California moving there. I had lunch today with someone from who lives in College Grove and it's. There's just incredible growth from that shows no signs of stopping and all these rich people need a place for their kids to get married and there's also i65 running up and down. So I think it's a combination of factors that that that make us a good a good choice.

And what about our biggest risks in the development?

Just going over cost overruns, delays, timing.

What is the timing on development? Any risk to the bonus depreciation based on construction delays? Do you have any and all regulatory approvals to build this? Well septic and city utilities the.

Yeah I think yeah you're right on depreciation. Some could roll to next year. This year's 60 bonus next year's 40. So there's definitely some risk there timing of when the assets are placed in service for the tax code. So we'll try to get as much into this year as we can but. And we'll see about whether that bonus depreciation changes in Congress. I don't. It seems like that prior bill stalled but then there's an election. Who knows the other part of that question do you have any in all? Yeah. So it'll be so city utilities any and all regulatory approvals. I'm sure there's I hate saying any knowledge I'll say to my knowledge at this point I think there's there may be things we need to pass along the way. I'm sure there's and there's the one and one thing I will highlight there is that we are going to have to pave the do pave sites which it was a bigger is a bigger Cost, then you don't always have to do pay sites. But it's also, it also makes the park more valuable, too. Some of our parks that are gravel just seem to eat gravel. So it's a lot cheaper early on. But the, the thing about paving it though, we can phase the paving so we could. You don't have to pay. Come out of the gate and pay. Spend all the money paving it. You can, we can do that. We come back through after and. And do a lot of that.

And what is the deadline for this park specifically, John, for the fundraise?

We've got. This one goes into June, so we're gonna, we need to. We're gonna close on the land in June. So I'd like, I'd like a certain amount. We need a certain amount by the end of this month. So people have a couple weeks. I'd say get in a couple. I think this deal will be popular though. So that's the other caveat. It's we have time, luckily, which is nice for a change with us compared to Wills Creek. Wills will come. It's going to come and go very fast. But this one, we have a little more time and then. But I will say, if it gets. There's been a lot of interest in this one, I think too some folks locally on my end are interested in this one just because of where it is and they know the area. So I would say. I'd say go and probably go off the end of this month for this one in your head.

And then Greg asked, is the fund still open? If so, when do you expect to close it? Will both deals be in the fund? So as I understand it, the fund is still open. It's closed. When we get to 10 million, we still have a ways left to go. All past and future deals will be in fund one as long as it's open. And there is a $25,000 threshold there instead of 50. Majority of our returns are based in the prospect of refinancing in three years. Who is willing to underwrite junior debt on a remote RV expansion? You have a primary lending partner. What is the break even cut off on refinancing? 12% rates.

Break even cut off? That's a good question. I'd have to play with the model of rates if we haven't been assuming rates are going to be materially higher. So I don't know that we've looked much north of 8% in terms of underwriting. We have two banks. We've done a lot of loans with a Lot of times they like two to three years but I've seen them take a year and because there's a relationship after a year showing of operation sufficient here always the risk of landing environment changes a lot but hopefully changed slight slightly my assumption our assumptions slightly for the better in in two years and we have not had a problem refinancing and in terms of some of our parks even a year in banks are willing to we're getting the term sheets just like on some of the refinances. As Chris said earlier some of the rates are you know we. We're just waiting a little if it's an existing park that's stabilizing cash flowing we're waiting to to pull the trigger on the refi until rates are hopefully seven under maybe even under seven in a year two or three. But I I'm. I think within just what we're seeing a year of good financials a solid tax year good financials we should be in a position to refinance.

And how much of each park do we have in the fund?

It really vary. It varies based on the liquidity of the fund at the time. So we're. We have to manage investors what we're putting aside for distributions and we have you know the next distribution will be July 1st. So we don't want to we have to keep that reserve and then make a decision from from there. Usually it may be a couple percent it may be there are a couple parks that the fund bought the whole thing and then there's a lot it's 5, 5, 10% of the park.

And then Nick just asked about the minimum on the the fund. It's 50 grand minimum on basically all the parks except 25 grand on the fund which we didn't really talk about the fund much. So a lot of people don't know about it. I'll include the deck for that in the Google Drive folder. The fund is the only thing that is a $25,000 minimum.

Yeah. And we have folks putting in regularly there too. So that's part of that rationale.

I'm going to go ahead and add the financial model to the drive and I'll add the fund to the drive as well. Do we have any other questions that we could cover? So just to recap, closing at the end of this week for Wells Creek. Hope to close by the end of this month for Seven Meadows. And then we have the fund option as well that I'll link in there if anyone is interested. You can go show your interest at the link that I just put in there. Mhpguy.investnext.com you can just create a free account and then look at all the decks. You can show a soft commitment. There's no obligation to invest if you soft commit anything. There's only an obligation after you sign all the loan docs. So it goes soft commitment, doc signature and then fund and that's it. Anything I missed, John?

That was great. Then I'll say it may slow slightly in June. So just in terms of the earlier question of deal flow and all that, I'd say the summer is a little less active time for people to sell. So I think we'll still have some deals but it'll slow a touch.

And I just linked the folder for anyone that missed it. There's one last question. What is your thinking around a scenario of higher interest rates slash harder lending environment for refinance? Would you like to wait it out?

Yeah, we might be wait if that's why we want to make sure property's cash flow. So that is, I think that's a risk factor for all real estate, any and all real estate, higher interest rates and once, once we get it, make sure we build it right and operate it right and distribute and then at least we'd be stuck in something that's distributing a cash on cash return that's hopefully acceptable to all of us.

Yeah, I think that's it. Thank you to everyone for joining. You can email me chrisofounders.com with any questions. I'll go ahead and respond to that right away and we'll see you next time. Thank you John.

Thanks Chris.

See you guys.