I took a little mini vacation last week. I flew out to visit friends in a small town called Cascade, under the deep blue skies of Colorado, not far from Colorado Springs. My friend, Lucas, is a fellow investor and I came specifically to check out the campground he and his wife, Lauren, recently purchased. Well, they purchased a lot more than a campground I discovered. Lucas has been very active in central Colorado and I was impressed with the deals he was doing and, more importantly, how he was doing them.
Some background. I met Lucas about five years ago in Bakersfield, where he had recently moved and was working for a company selling solar systems. No, he wasn’t selling small suns and planets. These were roof mounted solar panels designed to generate electricity. That’s a big business here in Bakersfield where the sun shines 350 days a year or more. This past summer we had over 60 days of triple digit heat and the hottest July on record. Typical electrical bills in the summer, when the AC runs continuously, are through the roof. When I met Lucas, he was looking to purchase some passive income generating property for his father who lives in Minnesota. He had been introduced to Kevin, my business partner, by Dennis, a mutual friend. As a realtor with Miramar Kevin agreed to show Lucas some properties and suggested I join them. The three of us took a Saturday and looked at several properties but there is a whole other blog about that. The main outcome of that fateful day was the three of us hit it off. Kevin and I even purchased solar for two of our multi-family units from Lucas…another blog for another day. Back then there was an eclectic group that, at its’ core, consisted of myself, Kevin, Dennis, and Hunter, another friend. Other performers would occasionally appear, stay awhile (or not), disappear, and later reappear. But the four of us were pretty constant, customarily convening at Kevin’s house on Saturday evenings to smoke cigars and drink wine. Conversation ranged from music to literature to movies, religion, politics, the military (the other three having served, I was the lone holdout), the Zombie apocalypse, real estate and pretty much any subject that was put on the table. Nothing was off limits. I mean, seriously, grown men talking about the Zombie apocolypse! It was right around this time that Hunter went through some pretty serious life changes and disappeared from our core, eventually moving to Columbus, OH. Lucas fit right in as Hunters’ replacement, aka D’Artgnan, the fourth Musketeer. We represented four decades…Lucas was in his thirties, Dennis in his forties, Kevin in his fifties, and I was in my very, very, very early sixties…almost still in my fifties.
Were I to continue the Musketeer metaphor, Lucas is the perfect D’Artagnan in all respects. He is the youngest and enthusiastically joined the three firmly established elder statesmen eager to learn. Making direct comparisons between Dennis, Kevin, and myself is a bit more complicated. We are somewhat interchangeable depending on how you make the comparisons…by age, by personality, by pecking order. I’ll use swordsmanship, but even here it can be open to debate. I would argue that Kevin represents Aramis, who is described as melodramatic in his sword fighting. He is also hot tempered, romantic and studying to be a priest (or politician in Kevin’s case). Dennis is a good Athos, the leader of the Musketeers in the novel. I’d say the leadership role better suits Kevin, but Athos is also a very precise swordsman
and since Dennis is the only one of us that has experience wielding a sword (don’t ask, it’s probably another blog) Athos falls to him. That leaves me as Porthos, humorous, good hearted, and jaunty in his sword play. It’s by no means the perfect metaphor. I might just as well say Kevin Is Kirk, Dennis is Spock, I am Bones, and Lucas is Scotty. I could also use Luke, Han, and Chewbacca but I don’t know which of us would be Leia.
The four of us got together every Saturday on a pretty regular basis for a couple of years. Eventually, Lucas brought his fiancée, Lauren into the fold. Lauren was a geologist with Aera Energy at that time. Somewhere in there Lucas changed jobs, going to work for another local solar installer. Then, in 2019, Lucas and Lauren got married in a small ceremony in Kevin’s back yard.
Lucas wasn’t exactly a newbie when it came to investing, having been dabbling in the art since 2008. Probably not the best year to start your investment career. But, the year 2008 notwithstanding, he had been doing some sort of real estate investing, off and on, for eight or nine years when he met Kevin and myself. I guess we inspired him because, as he puts it, he went nuts in 2019 and 2020 and he has a lot of deals in the pipeline for the current year. Whether or not they will pan out remains to be seen. He approaches these deals aggressively so I would be surprised if he doesn’t put one or two together in the next six months.
For a young guy of thirty-eight Lucas has led a full life. He grew up in Minnesota but has traveled extensively in Europe where he taught dance. Teaching dance is how he originally met Lauren who grew up in Maine. He has also been to Japan and who knows where else. It is safe to say that his passport is fairly well ink stained. He also lived in Denver, Colorado for a short time. I mention this because in 2019, shortly after the wedding, he was offered a job with a company that makes woodworking tools. Woodworking is another passion of his so one would think this was the perfect job. It took him to Maine that summer where he settled in while Lauren remained behind to shut down their house and ease out of her job with Aera. Unfortunately, there were some internal politics going on within the company and Lucas ended up on the wrong side of things. From Maine he bounced to aforementioned Denver in July of 2019 while Lauren made arrangements to lease the house to their roommate. The job search wasn’t producing results so, in September, Lauren left Aera and followed Lucas to Denver.
Lucas had admired what Kevin and I were doing with our real estate business, and he is a natural salesman. He saw an opportunity and wanted to make a dedicated run at real estate investing. Ever supportive, Lauren encouraged him to follow his dream and get the training offered by Elite Legacy. Using funds they had saved for a rainy day, Lucas purchased the $30,000 training program. Talk about a leap of faith. Remember, at that point in time neither of them had a job. They used the last of their savings to keep their head above water and in December of 2019 they moved in with Lauren’s parents. Her parents live in Maine but maintain a house in Denver, usually deadheading back to Maine in the spring. But in 2020 Covid came along, wrecking everyone’s plans, and the in-laws stayed in Denver with “the kids”. Lucas and Lauren lived with her parents for the next fifteen months. Fortunately, that same month of December, witnessed Lucas put his first flip under contract. It wasn’t a big windfall of cash, but it gave Lucas a boost of confidence, showing him that he could make this work.
The year 2020 was an eventful one in spite of the pandemic. In March of 2020 they got their second flip under contract just as things started to get real. This was a condo that the bank, unfortunately, over appraised at about $386K. With Covid rearing her ugly head the bottom dropped out of the condo market and Lucas couldn’t sell it for $275K. Another valuable lesson. Not every deal is going to work out so always have a backup plan. Fortunately, in this case, they were able to turn the condo into a rental. The backup plan. They didn’t allow the setback to discourage them. In June they closed on their third flip. Well, technically their second flip, since they still owned the condo. July saw the biggest deal yet as Lucas put a 23-unit apartment complex in Branson Missouri under contract. He bought it for $500K with a $50,000 down payment. Four months later it appraised at $710K. He still owns the apartment building and is currently working on a refinance. That experience pushed him towards the hospitality sector of the real estate industry andthe timing couldn’t have been more appropriate as people were tired of being cooped up due to the pandemic. The last year has seen a spike in the sales of RV’s and campground bookings. In the spring and summer of 2021, with many of the Covid restrictions lifted, most campgrounds were completely booked. Not unexpected for places like Yellowstone and Yosemite, but even small, out-of-the-way, mom and pop campgrounds are filling up. I expect the trend will continue as we all become accustomed to the new normal. Next year, if you are planning a trip to any campground in or around a national or state park or forest, make sure you call ahead for reservations.
With all this going on, naturally Lucas bought a campground. But first he bought a motel. In February 2021 he put the Apache motel under contract. Built in the 1940s, the Apache was one of only three motels serving the area at that time and was then very elegant. These days she is pushing 80 years and looks every day of it. She is less a motel and more of an apartment complex, with mostly long-term residents. With an investor in tow, Lucas was able to pick up the 18-unit property fairly inexpensively. Currently, they are in the process of gently moving the residents so now, only a handful remain. They
are refurbishing the units as they become vacant, mostly updating, painting, putting in new floors and adding kitchenettes. Lucas has, what I believe is, a brilliant plan going forward. Really outside-the-box thinking. Old Colorado, where the Apache is located, is a very touristy area, home to a number of trendy restaurants and shops. Very much a destination spot. it was the territorial capital before Colorado became a state and the capital was relocated to Denver. When the units are finished being refurbished, Lucas and his partner will rent the individual units out for $800 to $1200
per unit per month. The people that are renting the units are then going to sublet them as Airbnbs. Lucas is projecting income of $80 to $120 a day per unit, depending on the size and amenities. This means the tenants will be able to pay rent with about 11 days Airbnb rentals. Anything over that is profit, less any maintenance costs. The projected occupancy rate is 80% or more so the tenants should be able to sublet the units for a minimum of 25 days each month. Lucas knows he could make more money if he were to manage the Airbnbs himself but, as he says, he likes to defer as much risk as possible. He sleeps better at night with that guaranteed rental income while dealing with the tourists staying there is somebody else’s headache.
Lucas continued to roll in 2021. The month before he bought the Apache Motel, he qualified for his Colorado real estate license. The month after, he picked up a couple of vacant lots in Cripple Creek, which is a small gambling resort about 20 miles off the main highway. Then in April he put the aforementioned campground under contract, at $3.1M his biggest deal yet. He was actually looking to purchase a commercial building that was for sale. The current tenant rented ATV’s and Lucas was asking him if he intended to stay, should Lucas purchase the building. Lucas didn’t want to use the building for anything, he just wanted the rental income and if he could keep the tenant, so much the better. I can imagine the conversation as, having seen him in action, Lucas has a way of connecting with people and putting them at ease. They just open up to him. The ATV guy told Lucas that, if he was interested in investing in the area, he should speak with the owners about the campground located directly behind the building, as they owned it as well and were looking to sell.
Lone Duck Campground had been in the owners’ family for over 50 years. At the time, they were ready to step aside, but were still emotionally connected to the campground. While discussing the purchase Lucas, discovered that they had also received an offer from KOA that was substantially more than Lucas could afford or was willing to pay. KOA would have come into the campground and bulldozed it, adding more camping slots and turning the campground into an RV parking lot, which was not what the owners wanted. Lucas assured them that he wanted to keep the same aesthetic for the campground moving forward. This is why the owners ultimately were willing to go with Lucas even though he was offering less money. So, on April 15th, Lucas put Lone Duck Campground under contract. He needed about $1,000,000 for the down payment, money he obviously didn’t have. Fortunately, his wife’s sister and her husband did have $1,000,000 they were looking to invest and became silent partners.
Living room Lone Duck main lodge 
Kitchen in the lodge where Lucas and Lauren now live
During escrow Lucas did something I have never heard of anyone doing before. He secured the funding, from a local bank with which he had never done business, before his investing partners had signed the escrow papers or delivered the funds for the down payment. He structured the deal such that, if they were able to close before July 4th, the sellers would include all profits from 2021 in the deal. That was another $250,000, or about two years’ worth of loan payments. The issue was, there had been delays due to problems with the title company. He convinced the loan officer that, should he close this deal, he would be a big hero to the bank. “C’mon, don’t you want to be a hero?” was his mantra. Besides, it’s not like this was a car loan. They were easy to find. The campground was a short drive from the bank, and Lucas and Lauren had already moved into and taken over the operations, in anticipation of a successful close. They wanted to make the management transition as smooth as possible. As Lucas put it, he wanted the staff and customers to see a man (the owner) behind the counter with a pretty blonde wife transition to a different man behind the counter (new owner) with a pretty blonde wife. He also assured the bank that, if necessary, he would fly to Minnesota, get the documents signed, pick up the check, and return the very same day. In the end, the bank funded the loan and then all documents and checks were delivered at the last possible instant anyway.
The campground has a five-month season, from the beginning of May until the end of September. There is a month of maintenance prior to opening and another month of maintenance and winterizing after closing. They established Lauren as the campground manager and put her on salary. Lucas likes to point out that she is retired five months out of the year. The purchase included a beautiful log cabin lodge above the campground store, which is where they live. The lodge has three downstairs bedrooms plus a fourth bedroom in an upstairs loft. It also has a wraparound deck
with a beautiful view of the grounds and the mountains a short distance away. The campground itself comes with a heated swimming pool, a general store, a small arcade, a stocked trout pond, three natural springs, seven cabins, 44 sites for RV’s, a number of tent sites, and a couple of areas for large group camping. Lucas also made sure that he got both the water and mineral rights, which is apparently much easier to do in Colorado than it is in California. If you want to see more pictures of the campground you can go to loneduckcamp.com.
Lucas picked me up at the Colorado Springs airport on a Monday afternoon. I stayed at the lodge with him and Lauren and their friend Ruby, who had moved in short term to help run the store. I was there until Thursday evening. We spent one day taking in the campground and then driving around the local area were Lucas had a chance to show me what he was doing with the Apache Motel. He hasn’t slowed down and is in active discussions about several potential properties in the area. Just outside the campground there is a commercial trading post that he is looking at.
Next door to that is a quilting shop that he is interested in buying. The owners also operate the quilt shop so he would have to find another use for it, probably something touristy selling knick-knacks, I’m sure. I think he’s really more interested in the building because it is an old historic log cabin that has been kept in excellent condition. He pointed out that a lot of the shops around town are owner-operated and the owners are getting up in years, looking to retire and making for some excellent opportunities in commercial real estate.
He also has his sights on some larger deals. He took me out to an old dude ranch he is looking at. Currently it has a main building that doesn’t appear to be in use although it appears to be in good condition, a couple of apparently empty barns also in good condition, and several cabins that were being used. This is all located on a parcel that is probably 5 to 10 acres in size. The overall size of the ranch is 140 acres so Lucas discussed opening the main lodge for business and putting horses in the stables so people could go riding. There is an active wedding venue off the main building and, on another part of the property, some undeveloped hot springs. Those could be developed into a destination. Another idea he mentioned was to turn the ranch into a nonprofit, putting in a school to teach various trades like woodworking, metalworking, plumbing, electrical, home economics, etc. All the things the schools are no longer teaching. Students would enroll in the school and pay to learn how to do basic construction. They would build a cabin, the labor being free and the only cost to Lucas being materials. Then he turns around and rents the cabin out. Brilliant idea! The parcel is owned by the only realtor in the area and Lucas has a hard time getting this guy to return his calls, so he doesn’t really even have a firm price at this point.
Lucas showed me another property he is actively looking at and I was able to see him in action. This is an operating hot springs and spa that Lucas had visited on a prior occasion. The owner, Kathy, is a nice elderly lady that absolutely adores Lucas. I would describe her as an old battle axe, but I say that in the nicest way possible as the highest compliment. Really a very interesting personality. When we first arrived, Kathy was in a meeting so one of the staff offered to show us around. I was impressed by the line of questions Lucas took. He casually asked her what she thought was the biggest problem the spa had. She felt turnover was high because the personalities of the different employees don’t always mesh very well. He asked her if she would change anything if it was up to her and if she thought there would be a large turnover if the ownership changed hands. All important things to know. When we met with Kathy, Lucas indulged in a lot of small talk but also asked pertinent questions about the property, which consists of 160 acres in four or five different parcels. He discussed different ways to structure the deal so he could qualify for multiple SBA loans. Kathy was asking $14 million for the property, the entire multi parcel 160 acres. Whether or not that is a fair price remains to be seen. The way Lucas forms an offer is to look at the books and see what the annual net profit is. He then bases his offer on an 8% to 10% cap rate. Currently he hasn’t seen the books, but it was one of the things he and Kathy discussed. He also asked her about the adjacent restaurant, which had burned down recently, and what it would take to rebuild it. He asked her what she would like to see happen with the spa if he took over operations from her. At one point the girl from the front desk politely interrupted to ask Kathy if it was okay to rent a cabin out for a full month as someone was making an inquiry. Lucas mentioned that she didn’t want to rent for more than 28 days as they can then claim residency. Kathy said she knew that, but would not have thought of it, thanking Lucas for the input. In short, Lucas has a great way of connecting with potential sellers. He disarms them with small talk but peppers that talk with very pertinent questions, thus endearing himself to them and letting them know that they will be entrusting their legacy into caring hands. Lucas is a very intelligent guy, probably the most intelligent one in the room more often than not. As Lucas explains it, he tries to downplay that. He lets the other person, whether that is a potential seller, a loan officer, or just a buddy from California, know that he is smart and knows what he is doing but he also lets them think they are just a little bit smarter. It’s a fine line but Lucas walks at very well.
It amazes me to see how far Lucas has come in such a short time. Hopefully some of you will take inspiration from this. The message here is pretty simple. Know what you want and go for it. Personally, I found this to be a very interesting case study. I hope to be able to do some more articles like this. For one thing, I got to spend three days in some really beautiful country with some very good friends and, because I am blogging about it, it’s all tax deductible. That, and the fact that while I was there Lucas and I discussed my coming in as an investor on some of his deals next spring. If you are a regular reader you know what I always say at the end of these. Swing for the fences! Lucas did!
