Cash Flow Business Tip of the Week- Odd Ball Financing

marina financing

What if you were asked to buy a note on a marina? Golf course? A church? A cemetery? Where would you turn for more information? How would you underwrite it if you were going to use your warehouse line of credit? These are specialized businesses, and there are places to go to learn about these niche businesses. Let’s take an example.


Let’s say you find, through your research, that there are only 10,000 marinas in the whole U.S. You decide to make it a point to understand the marina financing industry. You determine that if you are going to lend or buy a note on a marina, the property has to throw off enough cash flow to service the debt. You’re going to require 20% equity in ‘real money’; no phony baloney– real bucks.

Value is what you consider stable revenue being created from service: storage (wet or dry or upland), field sales, ship stores, chandlers, restaurants, food and beverage, various services, repair, tenants that do canvas work, electronics, and boat sales and brokerage. They create a magnet to the boater to store his boat there, because he has all those items serviced right there at his fingertips.

Many marinas consider fuel a pain. But they’ve got to look at cash flow that will service the debt at a ratio that is adequate for a downturn.

You decide to only deal with marina operators who have many years of experience in the business, not just some third part investor who is buying an income stream…and you will take equity over everything. Equity is the boss. It’s your favorite word. You should view equity as a preventer; it prevents you from owning the property.

These Tips are intended to stimulate your thinking. The note business knows virtually no boundaries when it comes to niche market specialties. Tune in to for Tim’s regular posts and columns on notes, investing, and personal wealth building. You can email him or call him at 312-922-1695. 

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