TANGERINE RV STORAGE - Authentic Diversification is essential in minimizing risk and achieving long-term financial goals. Although nothing can guarantee 100% protection against loss - Authentic Diversification shields through an investment strategy that aims to have each unique investment opportunity react differently to market changes and fluctuations.
Tangerine RV Storage is an example of an investment added to the WealthCo Asset Management portfolio that meets the needs of Authentic Diversification. In every aspect Tangerine is aligned with our investment philosophy, values and meets the requirement of high potential for long term stability and growth. Our investment philosophy has not changed - and it shouldn’t. Authentic Diversification is a model that has proven successful to WealthCo, our partners and the clients we are here to serve.
The sales of new RV’s reached an all time high in 2016 - with 30 million people currently using RV’s annually. Over the past 40 years, RV loans have been the best consumer loan product as far as delinquency and loss, which makes for very attractive customers (Ernie Schumacher, RV national client manager, Bank Of America – source WSJ July 29, 2015)
The attractive characteristics of Tangerine RV Storage:
Stable, recurring cash flow on day one: Established, income producing business with a history of very stable revenues. The average vehicle on the Facility is estimated to be between $100,000 and $150,000. Annual rental fees are a small portion of the value of the vehicle.
Improve current operations: Physical occupancy was 88.9% at the time of purchase and economic occupancy was 77.9%. The difference here is the number of tenants who are paying below market rents. The plan is to bring in a professional management company that is already running four RV Storage businesses in Arizona with the intent to raise both the physical and economic occupancy to 95% over the next three years.
Development potential: Low risk development potential to add an additional 22 covered units. The capital costs are roughly $100,000 USD.
Valuation: We have a margin of safety in that the acquisition price is below the estimated replacement cost as estimated by Cushman & Wakefield. Our acquisition cost of $4,880,000 is a 12% to 20% discount to the estimated replacement values which range between $5,544,000 and $6,166,000.
We believe that investments that offer steady current income with low risk development potential are a good fit for the investment needs of our clients.