There is a trifecta in place right now guiding the boom in marina sales. First, according to Marina Dock Age magazine’s annual survey, the average length of time that marina owners and operators have been in place is rather high with about 64% having been at the helm for more than 20 years. In other words, there are baby boomers looking to retire. Next, the pandemic inspired a shift in how people spend their money and free time with multitudes choosing to head to the water for some fresh air, freedom, and family time. Finally, the cap rates on marinas, while slowly changing, have been at near record-breaking levels. Put it all together, and the marina market is seeing arguably its best days, and for many, now is the time to sell. Before you sell your marina, do your homework. There are many things to consider. v
Number one is to put a time frame on when you would like to sell. Be realistic. If you want to retire by the end of the year, don’t start the preliminary sales process in October. Real estate may be sitting on the market for shorter periods, but putting up the for sale sign and closing the deal still generally takes
several months. On top of that, there’s legwork that needs to be done before the marina property is ready to be shown to potential buyers.
To figure it all out, of course, we would encourage you to contact us to help guide you from thought process to successful sale. We encourage you to start by asking the very personal question of why you want to sell. For some, it comes down to being ready to retire, but others may find it necessary to sell a marina due to illness, a partnership dispute, or even a wanted career change. Why you want to sell your marina will help form what to look for in the terms of a sale. A career changer may not be looking for as large a payout as someone who is ready to retire.
Another consideration is what you would do if a new owner wanted to keep you involved in the business. Would you be willing to be an employee or an advisor? If such an opportunity arises, you don’t want to feel forced to make a quick decision, so think it through well ahead of time.
If you have decided you are ready to walk away, it’s time to learn about the sales process. There are many intricacies but in short, the steps are identifying potential buyers, reviewing offers, negotiations, due diligence, and then, finally closing. By working with a broker, you have a ready consultant to guide you through every step or even take on the steps on your behalf.
For a reality check, spend some time with your tax professional or financial advisor. By working with a financial expert, you can ensure that your finances are in order and potential buyers can see the true value of your business. The goal is to put together a package that reflects how your marina is operated. The basics for the package will include all financial statements and tax returns, a list of equipment, payroll reports, operating manuals, and any current lease agreements.
Finances are just part of the overall operations and management package that a buyer will be interested in seeing. Make sure property surveys, permits, environmental reports, and insurance information is all updated and readily available for a buyer to review. There are many regulations that marinas must adhere to and showing that you are in compliance and well covered will reassure a potential buyer that there will be no unpleasant surprises if he takes over the marina.
While your financial advisor crunches numbers, you should walk your property and make note of any maintenance items you may have been putting off. Nothing can sour a sale faster than dilapidated docks, dangling wires, overflowing dumpsters, or derelict boats. A marina is a place to store boats and maybe work on boats, but it is also a hospitality business and should showcase as one. Address deferred maintenance items, spruce up the landscaping, and add some fresh paint. Just like a home, curb appeal and first impressions are often key to what makes a property sell.
When you are taking in your property with an eye toward repairs and improvements, also consider what other income potential might be hiding among the reeds. Buyers like steady income streams. That’s one reason marinas are of interest–occupied slips bring in regular cash. Does your upland have space for storage racks or a storage shed? Even if it’s just room for racks for paddle sports, storage is steady revenue. If there is enough land and if extending electric and water to a portion of the upland isn’t too unwieldy, maybe an RV park could be added. Consider the possibilities, make note of them, and then be sure these thoughts can be passed along to potential buyers. Do the visioning for them.
Sales are complicated, but giving yourself enough time, putting together a plan, and finding the right people to help will ease the burden and help ensure a successful sale. Contact Simply Marinas to help you start the process.