Hi BP World,
I came across an interesting deal that I wanted some advice on. Mainly for those involved in RV parks in Texas. The RV park is located in Permian Basin where there is currently a ton of activity. The RV park is listed at a decent price which would come with it a decent sized loan amount. The finances look great with a 100% occupancy since 2017.
At first I thought this was a slam dunk gem. But, as I do more due diligence I have concerns about how long/sustainable the RV park will be. My questions are the following:
- Do oil worker jobs go through cycles or are they stable for 10+ years once a good site like the Permian Basin is found.
- Could it be possible that 5 years down the road all jobs could be dried up because the market for oil just isn't doing well.
- Is anyone familiar with the Permian Basin area and has a rough idea of when/if jobs are sustainable for years to come.
Obviously the main concern here is getting involved into a large loan, jobs drying out, and my park becoming a deserted island.
Hi David,
I play in the Permian basin so I will try to give you some good advice.
Last few significant events to hit the Permian basin.
2008 - This was a bust that resulted in the Permian basin becoming a ghost town.
2010 - recovery moving a a turtle's pace
2012 - The second bust in 4 years all oil and gas production that had recovered got spanked again... ghost towns became vacant
2016 - recovery in full swing
2019 - oil and gas production is in full swing. Stupid money is everywhere! Ghost towns are now thriving cities without enough housing. There's over 100 thousand workers living in travel trailers.
Rooms not houses are renting for $2500 a room in nice houses. Car dealers can't keep $110k trucks in inventory. It's steak and baked potatoes every night. There's excessive alcohol, drugs and prostitutes everywhere. It's a boom, there's gold in them hills.
Now this is just my opinion but I would never sugar coat anything to do with losing money... mine or yours.
1. You are about 4 years late to the party!
2. The party might last another month or 20 years... nobody knows!
3. I personally would not finance anything in the Permian basin. If you don't have a truck load of cash and it's f**k you money I wouldn't invest out here.
4. When the next bust comes and it will, there will be zero workers living in travel trailers. These parks or patches of dirt will be worthless.
5. Investors who bought rental property before 2016 and haven't sold out will just dump the houses and walk with all that cash they made.
6. I lived through these cycles my entire life. The steak and potatoes every night to rice and beans for years. I posted this in another thread but I've seen investors, grown men cry, go crazy after becoming homeless and even kill themselves. It's not a joke out here.. this place will make you a rock star overnight and a homeless person the next day.
It's not a place for rookie investors or for investors not swimming in cash already.
Now does that mean a newbie can't do it or investors getting financing can't play out here in the wild west. Sure they can but my word of warning is... it's gambling not investing and you set the limit you are willing to lose before you roll the dice. Because when it bust... most of the investors out here just walk with what they made.
Foreclosure of rental properties and owner occupied homes and even dirt patch RV parks go through the roof. It's all good though because cash heavy guys that ride the oil rollercoaster will start buying for the next boom.
Good luck with your investing!
Clifford
