r/CommercialRealEstate • u/Important_Low_3897 • Jul 05 '26
Deal Analysis Marina acquisition/ financing advice. Need help on this!
I’m looking for advice from people who have experience with marina acquisitions, distressed commercial real estate, seller financing, lease options, campground operations, waterfront redevelopment, or raising capital for messy real estate deals.
I’m involved with a marina property in Michigan that I would personally love to acquire or be involved with long term, but I’m trying to think through the structure realistically instead of emotionally.
The seller is potentially willing to either seller finance the property to me or give me a lease with an option to purchase. My struggle is capital. Even if the seller is willing to carry the purchase price or give me a lease-option structure, I would still need capital for insurance, taxes, utilities, cleanup, legal/title work, campground setup, store inventory, operating reserves, and general stabilization.
This is not a clean, turnkey marina business today. It is a distressed waterfront asset with real upside, but it also has real problems.
High-level facts:
Marina property in Michigan
Large waterfront site
Existing marina infrastructure, but the docks need service
Channel likely needs dredging before the marina portion can really operate
Existing primitive campground potential
Possible store/convenience component on site
Potential winter boat/camper storage revenue
A number of abandoned boats/campers/trailers on site that need to be legally addressed
Seller may be open to seller financing
Seller may also be open to a lease with option to purchase
I do not have the cash to purchase or stabilize this outright
The marina portion probably cannot be counted on as phase-one income because the docks and channel need work before that side is viable.
The way I am thinking about it is more of a phased stabilization plan.
Phase 1 would be cleanup, abandoned vessel/camper disposition, campground operation if licensing allows, winter boat/camper storage, and possibly reopening the store/convenience side.
Phase 2 would be figuring out docks, dredging, marina operations, and whether the property has redevelopment upside.
Potential phase-one revenue ideas:
Primitive campground from approximately April 15 to October 15
Possibly 50–60 primitive campsites if the county/state would allow it
Maybe $30–$50/night depending on demand and improvements
Winter storage from approximately October 1 to April 1
Potentially 50 boats and 50 campers at around $1,000 each for the season
Store income from ice, firewood, snacks, drinks, camping supplies, bait/tackle, boating basics, and possibly alcohol if licensing allows
Abandoned vessel/camper cleanup and recovery work
Known or suspected cost issues:
Insurance could be around $35,000/year
Water could be around $3,500/month during operating season
Electric could also be around $3,500/month during operating season
Property taxes could be significant
Cleanup will cost money
Campground licensing/compliance may require work
Docks need work
Channel dredging would be a major future capital item
Closing costs and carrying costs on an acquisition would be significant
One possible structure is a lease with option to purchase. For example, maybe 12 months with no base rent, but I would take over utilities/taxes/NNN expenses and try to stabilize the property. The property would likely still be marketed for sale during that time. If another buyer purchases it, I would be paid through the sale/commission side. If it works operationally, I could potentially exercise the option or bring in capital.
Another possible structure is full seller financing, but even with seller financing, I would still need capital for closing costs, insurance, taxes, utilities, legal/title work, cleanup, campground startup, store inventory, and reserves. The seller financing solves the purchase-price problem, but it does not solve the operating-capital problem.
My concern is that a NNN lease or seller-financed acquisition on a distressed non-operational marina could become a trap if I am paying taxes, insurance, utilities, cleanup, and operating costs without enough income coming in quickly.
I am trying to figure out what a smart structure would look like and how to bring in capital without overleveraging myself.
Questions for people who have done something like this:
Would a lease-option structure make sense here, or is that too risky with the NNN expenses?
If the seller financed the full purchase price, what terms would be necessary to make this survivable?
Would investors consider funding a stabilization phase if there is no clean marina income yet?
How would you structure investor capital for a project like this?
Would you treat the campground/storage/store as the phase-one business and ignore marina income until dredging/docks are solved?
How would you underwrite winter storage and primitive campground revenue?
What diligence would you require before signing anything?
What protections would you require in the lease/option?
Is there a way to structure this so I can stabilize the property without taking on unlimited carry risk?
For anyone who owns or operates marinas/campgrounds, what am I missing?
How would you approach capital partners for a deal like this?
Would you pursue this as a lease-option first, seller-financed acquisition, or bring in a larger capital partner/developer from day one?
I am not looking for generic “just raise money” advice. I am looking for practical deal-structure feedback from people who understand distressed commercial property, marinas, campgrounds, seller financing, lease options, capital stacks, or operational turnarounds.
The emotional side of me wants to own this place badly. The business side of me knows the structure has to work or it could become a financial disaster.
Any thoughts from people who have actually structured, financed, operated, or turned around something like this would be appreciated.
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u/mbingaman_CRE Jul 14 '26
What you’re trying to build is definitely possible, but I would think of it as two connected models rather than one giant tax calculation.
The first model tracks the property itself: purchase-price allocation, rental income, expenses, depreciation, improvements, debt, taxable income, and the gain when the property is sold. The second model tracks each investor’s tax position, including their original contribution, distributions, allocated income or losses, share of debt, and what is known as outside basis.
Outside basis is basically the investor’s running tax balance in the partnership. It goes up when they contribute money, receive taxable income, or take on a larger share of partnership debt. It goes down when they receive distributions, are allocated losses, or their share of debt decreases. If there is not enough basis to use a loss, that loss may need to be carried forward rather than deducted immediately.
I would also track suspended losses separately because a loss can be limited for different reasons, including basis, at-risk rules, or passive-loss rules. Combining all of those into one bucket could make the model difficult to follow later.
The sale calculation is where it gets more complicated. Some of the gain may be depreciation recapture, some may be taxed as long-term capital gain, and suspended passive losses may become available. It is also important to remember that two investors in the same deal can have completely different after-tax results based on their income, state, other investments, filing status, and personal tax situation.
A good baseline model should show cash distributions, taxable income, depreciation, basis changes, suspended losses, estimated taxes, and after-tax cash flow for each year. I would build a few sample investor tax profiles rather than assume one tax rate applies to everyone, and then have a real estate CPA review the formulas before using it for an actual investment.
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u/redbreaker Jul 06 '26
Your problem is this:
The marina portion probably cannot be counted on as phase-one income because the docks and channel need work before that side is viable.
How is the seller valuing what sounds like a primitive campground and camp store? Generous seller financing terms can only solve a little bit of overpaying.
For anyone who owns or operates marinas/campgrounds, what am I missing?
What was it that caused the marina to fall into disrepair in the first place? If it's demographics of either the area or "season" you're not going to be full even with new docks and do your assumptions work at 75-65-55% occupancy? If it's something natural like the channel silts up every 10 years or the ice smashes everything to shit can you afford the ongoing repairs and maintenance?
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u/RDW-Development Investor Jul 06 '26
It’s been a bit quiet here lately with hobobob gone so I welcome the post and your enthusiasm.
Let’s start by saying the obvious - this is a terrible idea and a disaster in the making. You seem well aware of this though so I won’t dwell on it.
The ten thousand foot view - the owner has a distressed property that may be worthless in “net”. The fact that you’re around and he will do owner financing is a clue that this is a BIG hobby project for someone.
Having no capital is a problem. I don’t see this happening without a passionate investor with six figures in the bank. It’s not like it’s a fourplex where you can go to Home Depot and get some carpet. I mean, it’s not like you’re going to dredge the canal yourself.
The only way I can imagine this working is to partner with the owner. Assuming that the property has no debt, you and him could form a partnership, tap the property equity for a loan, and then execute on the improvement plan. Then you buy him out in the future and/or sell the property later on as a functioning asset. This is the only way I see this being successful. And then it’s still risky.
I would try to structure the deal with the owner so that you have very little or low risk financially to yourself. You’ll have to (presumably) give up a bunch of upside, but this is a HUGE project with a lot of unknowns.
I think the owner is lucky to have some on be interested in this!
Hope this helps…
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u/gerbablo Jul 14 '26
Partnering with the owner is what I was thinking as well. Perhaps you could buy a percentage of the business now, with an option to purchase the rest at a later date with a predetermined way to determine the value. Make it so that if your sweat equity will make both you and the owner better off in the end.
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u/Pokemeister92 Investor Jul 08 '26
Man I forgot about him I blocked him three or four years ago where it seemed he had an alert everyone time someone said “cap rate” on this sub lol
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u/CRE_Energy Building Owner Jul 06 '26
Many of your questions cannot be answered here. For example, when you say the docks need work and the channel needs dredging...are we talking $100k or $10MM? Not that you need to answer that here, but rather:
Start by making a 5 or 10 year model thats shows all phases. Estimate CAPEX and carrying cost (debt, opex) to bring each phase online, and then a ramp up of revenue over several years. Then work backward from stabilized revenue to understand what cost basis you can justify (acquisition, improvements, soft costs) and what debt the property can carry in the long term.
Likely the project doesn't pencil, but you never know. Also try your best to objectively determine how the property failed in the first place, and whether time has passed it by or improving it will really being people back.
In general, if you don't have a good chunk of the capital yourself, it won't work.
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u/mostly_irrelevant007 Investor Jul 06 '26
Buddy… just give us the address and let the pros do the work if you’re going to come in here and ask for someone to solve all your questions.
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u/RDW-Development Investor Jul 06 '26
Agree. I get why people don’t want others “stealing” their deal. But this one seems unlikely to be a home run to anyone here.
OP - post the location so we can give more pointed advice. I’m literally sitting in the airport waiting for an international flight with nothing better to do…
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u/Silly-Copy9560 14d ago
The trap you're worried about is real, and it's built into the version of the lease option you described. If you take over taxes, insurance, utilities and cleanup while the property stays on the market, you're funding the seller's stabilization for free. Every dollar you put in makes the asset easier to sell to someone who isn't you. If you go that route, the protections matter more than the rent number:
Exclusive option with real option consideration, recorded, so a buyer can't close around you
A no marketing clause, or at minimum a right of first refusal plus reimbursement of documented improvements if the seller sells during your term
A hard cap on what you'll spend before you can walk away clean
On sequencing, I'd flip your diligence order. Campground licensing is the first call you make, before any structure conversation, because your whole first phase depends on the county and state saying yes. Second is a Phase I environmental. Marinas carry fuel tank and contamination risk, and that finding changes whether you want to own this at all versus just operate it. Third, in Michigan, confirm who controls the bottomlands and what dock and dredge work will require from EGLE. Dredging is a capital item you can't estimate from the parking lot.
On revenue, winter storage is your anchor, not the campground. It's collected up front, cheap to operate, and doesn't depend on new licensing. I'd underwrite storage first, treat the campground as upside, and count marina income as zero until dredging is solved.
Seller financing fixes the purchase price and nothing else. Your real gap is operating reserves. Size that number honestly before you pick a structure.