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FIVE STAR CASHFLOW
People often ask
me how many stars my park has. I always tell them that
I’ve got a five-star cash flow. That totally confuses
them, and allows me to change the subject.
I’m not shy
about talking about the “mysterious” star system, only
I’m confused as much as everyone else as to how to truly
rank you park in such a subjective system, and why the
heck anyone would care anyway.
I’ve found that
most of the people who ask me this question are total
beginners. They think that the system really means
something, and that a five star park is worth more (like
a five star hotel room). Now I defiantly rank a Ritz
Carlton over a Ramada Inn, but it’s not that easy in the
park business.
The star system
revolves around basic structural differences and
amenities between parks. However, it leaves off the
three most important comparison points: LOCATION,
LOCATION AND LOCATION. I would rather have a one star
park in a great location than a five star in a desert.
I have seen five star parks in location only accessible
by a burro, and I don’t see much pride of ownership in
such a property. Some of these parks have more
amenities than customers.
I propose that
we re-think the star system to something tangible and
objective – CAP RATE. In that event, most of the old,
10 unit per acre parks will be fives all day long, and
the empty five stars will plummet down to ones. Until
that time, I suggest you answer the “how many stars is
you r park?” question with “mines got five star cash
flow!”
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