Underwriting a Marina?

[Jonathan Bombaci]

I’m an experienced multifamily investor (100+ units under management), but I’m stepping into new territory with my brother and could use some guidance. We’re looking at a marina in CT that’s a little defunct, about 40% occupancy on ~80 slips. It also comes with a restaurant that hasn’t been in service for 40 years, but the structure is in surprisingly good shape.

Here’s what I’m thinking through so far:

• Standard due diligence: +Phase 1 and 2 environmental, city plans/zoning, health department approvals for bringing the restaurant back online.

• Talking to the Army Corps of Engineers and the local harbormaster about dredging (not something I’d do immediately but want to know long-term outlook) and figure out generic cost for budgeting purposes. 

• Understanding systems and inspecting the general infrastructure (electrical for slips, septic, fuel, etc.).

My underwriting concern is obvious—40% occupancy is tough. I’m trying to figure out what I don’t know about this asset class.

For those who have experience with marinas:
What else should I be looking at?
What questions do you ask before jumping into one of these?
What are the gotchas that don’t show up on a spreadsheet?

On a related note, I do plan to push for redevelopment of the parcel (over 1.5 acre waterfront) and hope to do a mixed-use development which is allowed by special permit. That said, I know that is going to over a year to get necessary approvals and want to stress test a Minimum Viable Product exercise in case the redevelopment doesn't pay off. 

Any insight would be appreciated.