April 1, 2017

JF942: Why You Should Buy Distressed THEME PARKS


Theme parks! Why aren't you investing in this asset class? From water slides to roller coasters, our guest nets $10,000 a month leasing a theme part to a type of tenant you'd never begin to guess. TIME FOR BIG RETURNS.

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Bruce Dickenson Real Estate Background:
    • Buys distressed theme parks across the nation
    • Owner of over 20 theme parks from California to Mexico
    • Owns more than $15,000,000 in theme parks
    • Based in Tyler, Texas
    • Best ever book: The Bible

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Joe Fairless, and this is the world's longest-running daily real estate investing podcast. We only talk about the best advice ever, we don't get into any fluffy stuff.
Today we're gonna be talking to an investor who invests in an asset class that we haven't come across before. How are you doing, Bruce Dickenson?

Bruce Dickenson: Hey, Joe. How's it going? Glad to be on the podcast today.

Joe Fairless: Nice to have you on the show, and looking forward to digging in. A little bit about Bruce - he buys distressed theme parks across the nation. He is the owner of more than 15 million dollars worth of theme parks that are distressed, over 20 parks across the country -- well, actually nationwide, from California to Mexico, based in Tyler, Texas. With that being said, Bruce, do you wanna give the Best Ever listeners a little bit more about your background and what you're focused on now?

Bruce Dickenson: Yeah, thanks Joe. That's a great introduction. I'm based here in Tyler, Texas... I was pretty much born and raised my whole life here in Texas. I attended a Tyler high school here in Tyler, Texas, got lucky enough to get accepted into Texas A&M; I'm a proud Aggie.

I think my whole life I've kind of been a little bit of that entrepreneur, always trying to do my own thing. I never really was the 9-to-5 office guy, if you know what I'm saying. I always tried to find a little bit of a way to make money, and I kind of fell into the old theme park business, and it's been doing pretty well.

Joe Fairless: Yes, that's what I'm so curious about. You've piqued my curiosity with your background. Now, I wanna talk all about how you buy distressed theme parks, but how did you fall into the theme park business? How did you get into it in the first place?

Bruce Dickenson: It's kind of a funny story. A lot of people know theme parks and water parks have been pretty much a family gathering place all around the United States; there are thousands and thousands of theme parks and water parks around the U.S. Unfortunately, not all of them are run with the best management. A lot of them are left to kind of rot away, a lot of the maintenance isn't upkept, and unfortunately people get hurt, insurance ends up taking that business down.

There was a rundown water park by the name of WaterWorks; it was just a couple miles away from Tyler, Texas, and one day my brother and I hop the gates, and it was just running around that theme park, we were skateboarding up and down the water slides, drinking some beers in the drained pools, and everything... It was a pretty good time, and I think I fell in love it. And I figured, "Man, this would be great if I could own me a couple of these." So I ended up buying that one shortly after college and started making a little revenue on it.

Joe Fairless: So you happened to be living next to the theme park, and it was abandoned. That's funny, you were drinking beers and hanging out, trespassing on a theme park...

Bruce Dickenson: Well, Joe, there was nobody there to stop us. I wouldn't say trespassing, as much as it was just a couple of kids having a good time.

Joe Fairless: [laughs] So you visited the theme park and then you said you bought it. Well, why did you buy it? There's a lot of questions I have, but the first one would be why did you buy it?

Bruce Dickenson: That's the easiest question of them all. Why did I buy it? Because I had so much fun there and I wanted to keep living the dream. Shortly after I bought it -- here's the thing... These types of water parks that are run down, they're just sitting there. A lot of times the banks or the owners are just trying to get them off the books. So that's where I come in - I buy them up pretty cheap, and little do you know, there's still a lot of functioning equipment, and a functioning scrap metal, and other things you can do with the land. Not only the land, but everything else that comes along with buying something like that.

After buying it, I've shortly realized, "Man, I've gotta figure out how to start making some money off of this." So what I first started doing was I just started charging people to come in and kind of do whatever they want there. So it was pretty cool, there was sort of like this natatorium in this particular water park - I started renting that thing out for like $10,000/month, no questions asked. I'm not quite sure what they do in there, but they've been pretty good tenants for about the last ten years.

Joe Fairless: Educate me... I should be able to google this, I know, but what is a natatorium? I'm not familiar with that. I should know, I'm sure.

Bruce Dickenson: It's an indoor pool.

Joe Fairless: Oh, it's an indoor pool, got it. So there's an indoor pool that you rented out... For how much? $10,000/month?

Bruce Dickenson: Yes, sir. I was approached by other local entrepreneurs. They needed a place to run their business. They couldn't quite give me some of the specifics... And heck, I didn't really care about the specifics; I needed to make a little money. They said they offer $10,000/month, so I said "There you go, man. It's all yours. I'll leave you alone."

Joe Fairless: And how long have they been renting that for 10k/month?

Bruce Dickenson: Roughly ten years.

Joe Fairless: And how much did you pay for the WaterWorks?

Bruce Dickenson: $65,000.

Joe Fairless: Holy cow! That's a return right there.

Bruce Dickenson: Yup... That thing has paid for itself many times over. It's great. A lot of times what I'll do now is I'll make rounds to the functioning theme parks and water parks... A lot of times these guys' equipment breaks all the time. If I were you, don't ever visit a theme park, don't ever get on a rollercoaster; these things are some of the most unsafe things I've ever seen. I know from experience. I know probably because I've sold, you guys... They're all second-hand safety straps, they're all second-hand motors and engines on there. Heck, because I've pretty much sold all of that stuff to them.

Joe Fairless: Wow... So theme parks buy the equipment from you, and you're getting the equipment from these rundown theme parks?

Bruce Dickenson: Yeah, you wouldn't imagine to see how much of this stuff has just been left to sit there, and most of it is still working and functioning, it just needs a little bit of a power wash, a pressure wash, and it looks clean as new. Heck, I sell them sometimes almost looking brand new.

But yeah, like I said, these theme parks operate under very tight margins, so they're not looking to go out there and buy a whole new rollercoaster if a break just suddenly stopped working. They'll go out there and find any breaks -- as long as it will get the thing to stop and people don't die, heck, they're still up and running.

Joe Fairless: Yeah, that will give me pause the next time I go to a theme park. You mentioned scrap metal... I know with apartments we talk about the number of doors or units that a community has; with mobile home parks it's the number of lots, and I've heard that with theme parks it's number of slides. It's like, "Okay, I'm buying a theme park... We've got 57 slides." That's how you basically say how large a theme park is. Is that how you measure it as well?

Bruce Dickenson: When it comes to scrap metal, most of the water slides are made out of carbon fiber, so the scrap metal is gonna come from your rollercoasters, and also the support beams actually holding up your water slides.

The more intricate any sort of rollercoaster or waterslide is, the more scrap metal is gonna be in there, the more that thing is worth to me.

Joe Fairless: Okay. And how do you know which slides you should scrap, versus which slides you should keep for different tours and other things that you might use the property for?

Bruce Dickenson: For the most parts, the slides are fallen down. There's probably ones that gotta go. If it's holding up pretty good, I'll leaving it there because we also rent it out to the local skateboarding community. The skateboarders love these rundown water parks, the slides... I don't know how they do it, it's pretty dangerous, if you ask me... But they take their skateboards right down the waterslide, and it's pretty funny to watch. I went up there one day and watched them. One of the kids got banged up a little bit, but I think he was alright.

Joe Fairless: So far we've identified three revenue streams. One is selling scrap metal, two is renting the indoor pool, and three is renting it to a skateboard community. Do you have any other revenue streams for the theme park?

Bruce Dickenson: All kinds of party promoters coming through town... I don't know if you're familiar with a lot of the paloozas and those types of festivals. A lot of those paloozas and festivals, when they first started, they were looking for venues. Obviously, those are much more established types of festivals now, but there's like the EDM festivals and all these other smaller, weird Goth festivals, and then festivals for people who just run around in their underpants and paint their bodies... I don't know what they're doing, but they need places to do their little festival man, so I'll rent out the park to them and let them do it [unintelligible 00:10:14.01] The other day we had about 19,000 people over there.

Joe Fairless: Wow. Let's talk about the other water parks or theme parks that you have, because you've mentioned four different revenue streams, which I didn't think that you'd be able to be cash flow positive on, but you clearly are doing really well, especially with the one with the indoor pool, $10,000/month when you paid $60,000 to acquire it.

How do you identify if a theme park -- because you're in Tyler, Texas... I know you have property in Mexico and all across the country - how do you identify what revenue streams that particular theme park is going to generate? Because it sounds like it's very local; it's depended on the local economy.

Bruce Dickenson: That's true, it depends on the local economy a little bit, but also, like I said, there are these traveling festivals - if you're getting good with those guys, those guys know everybody in all these different local markets. So being able to find those different revenue streams with those guys - this is pretty easy.

One of the famous rundown theme parks - I don't know if you've ever heard of the Six Flags AstroWorld, the one in Houston...?

Joe Fairless: Yeah.

Bruce Dickenson: That's a big one! That one cost me about $350,000, but I've sold a lot of scrap metal from that thing. I just kept the -- man, I'm blanking on one of the coasters over there... I think it was called the Viper. That thing is still operational. Sometimes I go there with my family and we just strap it up and keep going.

Joe Fairless: What type of liability insurance/waivers do you make sure that you have in place? If any...

Bruce Dickenson: Legally, you're supposed to have a lot, but here's the thing, man... You grease up the right politicians around here, throw a little bit of money their way, they'll kind of turn a blind eye. I wouldn't say I spend a whole lot on it, I'm saying that's where people get caught up in the whole legality of it all. I've been operating just fine with very minimal insurance at this moment.

Joe Fairless: That sounds risky, and it just doesn't sound right...

Bruce Dickenson: You know what's not right, Joe? Paying insurance every single month, every single year for how many years in a row, have nothing happen, and then all of a sudden one time one thing happens, and all of a sudden your insurance premiums go through the roof... You're telling me that's right? That's highway robbery, if you ask me.

Joe Fairless: One thing you might wanna look at... I've interviewed a guest who talks about how he creates his own insurance company, and you have a monthly payment but you pay it to yourself. Then, if there is an event that happens where you have to pay out, then you're covered by another insurance company. Your insurance company si being insured by another company and all your payments go in there. But only a few are I think paying more than $350,000 in insurance on an annual basis.

Bruce Dickenson: Well, I'll have to look into that. I don't know, but that sounds like a lot of money. I've been operating pretty good just the way I have been. I'll look into that, maybe off the air you can set me up with this gentleman.

Joe Fairless: So you've got over 20 theme parks, from Texas, California, Mexico... How do you manage them?

Bruce Dickenson: I get a couple local people to manage them. It's really depending... There's not a big demand for people wanting to work in these types of places, but heck, I sure do pay good, I'm pretty flexible, the hours are great... So I'll kind of go in there and I'll find some local teenagers that I can really trust, and just kind of hand them the keys and say, "Hey man, the more money you can make for me, the more money you make for yourself."

And then I'm constantly on the road, swinging by, checking in... Sometimes I don't even let them know, I'll just come check in, see what they've got going on. They've been pretty good so far... I let them hire and fire their own employees... I like to delegate when it comes to my management skills.

Joe Fairless: What are some lessons learned along the way, as a distressed theme park owner?

Bruce Dickenson: One big lesson - if you don't know how to skateboard, don't try to skateboard down a waterslide, I'll tell you that. [laughter] Oh my god, I've got so many splinters in my backside...

Other things - be careful of who you're getting into business with, because sometimes people try to take you for the proverbial ride, if you know what I'm saying.

Just kind of make sure you go in there, do your due diligence of what has been there, because a lot of times these theme parks have been sitting there too long, people go in there and they do a lot of picking. They'll get all the good stuff out of there; they'll get all the motors and the engines and the box cars and everything like that... You wanna make sure that all the cables from the bungee cord swing and everything - you wanna make sure those are all there, because heck... If you get some bungee cord cables, you sell those to somebody else, maybe you get about $50,000 just for some good functioning bungee cords. Those are about 200 feet, some pretty good stuff. So you've gotta be careful, go in there and do your due diligence, make sure that all the stuff is there.

You wanna make sure you hire some people -- you want somebody always there, patrolling the lot, making sure nobody's there coming by, piquing into your stuff. It's hard work, but somebody out there's gotta be able to move this scrap metal.

There's other functioning theme parks that need to barely make it by, you know what I mean? [laughs] Until they shut down, then I'll buy it up.

Joe Fairless: Bruce, based on your experience as a distressed theme park investor, what is your best advice ever for real estate investors?

Bruce Dickenson: Don't listen all too much advice... If you find something that you love, just go for it. It doesn't matter if it's gonna make a ton of money right away; you'll eventually figure it out. That's what I did. I eventually figured it out. I started small time, local, then started working my way up big time, and heck, maybe one day you can also own AstroWorld. Once I do my run there, I might put that up for sale.

I say just follow your gut, don't listen to too many other people. A lot of times they're gonna try to hold you back and try to get at what you're getting at.

Joe Fairless: Are you ready for the Best Ever Lightning Round?

Bruce Dickenson: Let's do it!

Joe Fairless: Alright, first a quick word from our Best Ever partners.

Break: [00:15:50.06] to [00:16:32.23]

Joe Fairless: Bruce, what's the best ever book you've read?

Bruce Dickenson: The Bible.

Joe Fairless: Best ever personal growth experience, and what did you learn from it?

Bruce Dickenson: Best ever personal growth experience is if you're gonna be breaking and entering into a place, make sure you can run faster than your friend, because they're gonna catch one of you!

Joe Fairless: [laughs] I think for legal reasons I probably shouldn't ask, that way it doesn't incriminate you, right?

Bruce Dickenson: No, sir... I think the statute of limitation is long expired.

Joe Fairless: Alright, what happened?

Bruce Dickenson: Again, this was probably at the beginning of...

Joe Fairless: This was WaterWorks?

Bruce Dickenson: This was WaterWorks, man. We were breaking and entering, I was there with my little brother... And sure enough, we were riding bicycles around the bumper car area, and one of the security officers came balling up on us, and I made it out. I didn't hear from my brother for about three days, but he eventually made it out.

Joe Fairless: I'm just curious... On that $10,000/month that you're making for renting the indoor pool, what are your expenses? I'm just wondering what the cash flow is. What are your expenses on that $10,000.

Bruce Dickenson: To be honest, as long as the electricity works, that's all they care about. I'm not allowed to go in there. To be honest, I wouldn't wanna mess with those boys. They don't seem like they're really up to much good, but if they're doing their thing... They've got the entrepreneurial spirit as well, so they're doing their thing and I kind of stay out of it. I make sure the electricity is working.

Joe Fairless: Best ever way you like to give back.

Bruce Dickenson: I tell you what, Joe... I'm not really that much of a giver backer. I give back by getting people jobs and that's pretty much it. I feel like I'm a pretty fair business owner. And I give back by maintaining these pretty much dumpy theme parks that they've got going on in their towns.

I'm not really much of that... I'll go [unintelligible 00:18:07.18] I think that's pretty good.

Joe Fairless: Thinking back on a deal that you've made with the theme parks, what's a mistake along the way that you made that you wanna share?

Bruce Dickenson: I don't know, there's a lot of mistakes... I think a lot of times people wanna get you into some bad agreements, some bad negotiations. A lot of times they'll not want you to take a tour of the park where you make that final agreement and final payment.

One time I trusted this guy a little too much, so I bought the water park. It ended up turning out there wasn't much left for me when I got in there. I was able to turn that land over and kind of sell it for just a little bit more than I bought it for, so it ended up being okay.

Joe Fairless: And where can the Best Ever listeners get in touch with you?

Bruce Dickenson: If you wanna get in touch with me, I do a comedy show every Thursday night in New York City, at a bar in Hell's Kitchen called The Gaf. You can find all that information at www.bombsheltercomedy.club. We've got the Bomb Shelter Comedy Festival coming up in 12-15th April. It's gonna be a good time. We have some pretty big time comedians: Mark Normand, Anthony DeVito, Marina Franklin, Sean Lynch... These guys have all been on national TV...

Joe Fairless: Wait, I gotta stop... Best Ever listeners, April Fool's, baby... This is not Bruce Dickenson, this is Matt Azark, and he is not a distressed theme park investor, nor is he an investor in real estate, but he is a stand-up comedian in New York City.

Bruce Dickenson: Yeah, man... I think your listeners probably are quick enough to catch on that everything that I was saying is pretty much just kind of pulling out of my butt, so... Yeah man, I've been doing stand-up comedy for a long time, so if you're in New York City, come on out, man! We're gonna make it happen. This Bomb Shelter Comedy Festival is gonna be great. You can check out all the details at bombsheltercomedy.club.

Joe Fairless: Awesome, and that will be in the show notes link - bombsheltercomedy.club. Matt, thanks for doing another April Fool's Day episode. I think it was two years ago that you did an episode... You were Ted Winters, and...

Bruce Dickenson: Ted Winters, and we described a Ponzi scheme, I believe...

Joe Fairless: Yes, yes... And I got very angry messages from people on BiggerPockets, via e-mail, on Twitter... They were like, "He's describing a Ponzi scheme. Why don't you realize that?" I was like, "Listen to the whole episode, please." and they're like "Oh, my bad..." So if you want another good April Fool's Day episode, just search "Ted Winters Joe Fairless" and you'll be able to hear all about a Ponzi scheme.

Bruce Dickenson: Yeah, and I run a comedy podcast. It's a weekly podcast called "Cart Talk with Matt & Chris". It's like golf cart, not car. I know that there's a Car Talk... I didn't know that when I created this podcast. Anyway, it's "Cart Talk with Matt & Chris." You can find that on iTunes, we're on Soundcloud, Stitcher... Tune in. It's a once-a-week episode, so check us out there as well.

Joe Fairless: Awesome. Matt/Bruce Dickenson... Matt Azark, glad you came on the show, and I hope you have a best ever day. You sound like you are a legitimate theme park investor. Maybe you've missed your calling.

Bruce Dickenson: I actually have broken into a couple rundown water parks and did some skateboarding, and actually did wipe out pretty hard. It's pretty dangerous stuff. Don't go playing around in a rundown theme park, because you will definitely get hurt.

Joe Fairless: And we'll end it on that. Thanks a lot, Matt. Talk to you soon.

Bruce Dickenson: Yeah, thanks, Joe.

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