Building an RV park. Advice needed.

7 Replies

 cannot seem to find much discussion on Rv parks and how to obtained them. Mobile home parks look like a good idea but I really want to focus in starting a RV park. Basically tentents live in their RVs on my land and pay me a fee each month.  

I was wondering if anyone new what it took to actually start one, what permits I would need and the type of land?  

I need a starting point, anything will help. Thank you! 

I have three RV Parks for sale near Houston!  All cash flowing with retiring owners.  So finding a Park for sale is a fairly easy process and there are several commercial sites like loopnet, rvparkstore and parksandplaces - add the .com or just search RV Parks for sale.  Retail parks are out there and they are priced according to Cap Rate, land, replacement costs and just b/c that's how much the owner "feels" it's worth.  You will need to do a great deal of due diligence to see if the park economics work for your situation.  

What is your situation? are you looking for a turnkey park to go in and run yourself and live there?  a resort style park near a scenic or nice tourist area with lots of seasonal guests?  or a 'residential' park with mostly monthly tenants that is really a Mobile Home Park in disguise. What's your budget and your expected rate of return?  Plenty of retail priced parks that will yield a nice 10+ return.

Building a park is another beast altogether.  Start with your local County and City officials; whoever has jurisdiction over the land you are considering to develop.  Great side called municode that has all the relevant RV ordinances so you can start to get an idea if the area is friendly to RV Park development or not.  From there you would need to talk to an engineering firm that do a topographic survey for drainage and well & septic or if there is city/public water/sewer then you need to speak to the local provider to see how much your tap fees would be for the number of units you want to put in.  We've run into issues with smaller water districts not having the capacity to allow any more taps for a certain area so that could stop you as well.

The engineering firm you hired will assist with the park layout and the City/County rules will tell you how many spaces you can fit in an acre and what the clearances and setback lines are for the land.  i.e. One county we know allows 7 manufactured homes per acre or 16 RVs.  They often have ordinances that require two parking spaces per site, a minimum of 10 feet on each side, sometimes 20 to the rear, etc. The topographic survey will tell how level the land is and what it is the best type of material to use to build the sites and roads.  Concrete or asphalt is pretty and neat but every expensive.  Crushed concrete can often serve just as well and pack down well.  Whatever you use, the sites must as level as you can make them!  Pull-through or back in sites?  nice marine style pedestals or simple breaker boxes on wood poles?  aerial or buried for electric lines?

Surely someone has written a book called, "So you wanna build an RV Park?" or maybe I should?  lol  Yes, there is a ton of things to consider just like any other development.  Can you make money? Yes.  Can you lose a ton of money?  Yes, even faster if you don't educate yourself first.  Talk to other park owners, visit every RV Park in the area and make a list of what you like and don't like and an even bigger list of questions with the thought process of "If I owned this park, how would I manage that type of asset?"  Pools, trees, landscaping, trash, pets, utilities, roads, maintenance, payment systems, manager (good/bad), wifi, insurance, natural disasters, manmade disasters (just had a guy drive his car into the main electrical breaker system and take down the whole park's electricity!) and if the current owner wants to write into the contract that his "never causes trouble son/daughter/nephew/relative" can stay with no lot rent for six months after the sale, say NO!  

Yip, I really gotta get started on that book. . . 

Funding - forgot this very important piece.  If you already money in hand - great, you're al set - go get some more.  Things will break so you need a large operating reserve like any other multifamily property.  

Start a relationship with local lenders who might already be lending on RV Parks in the area.  They will better understand the business and be willing to lend on purchasing a park.  Just b/c someone is offering owner financing doesn't mean it's a good deal!  Some are offering it b/c they know they don't have the books to show the income they need or a proper due diligence will reveal several 'surprise' issues with the park infrastructure or management system and they don't want an inspector or appraiser to find out the shelf life on some major asset is almost up.

Commercial, and even private lenders, will only want to do 65 - 75% of the appraisal value and the larger the park, the more the appraisal will cost you.  Expect to pay $10-25k just in due diligence between a new survey (if needed), an appraisal, inspections, etc all out of your pocket before the bank even tells you they will do the loan.  I have one Seller who told us he does not want to pay for the Title Policy, which on a $3.2 mm park will be about $15k.  Make triple sure to review and then have your attorney review the sales contract; all those boxes and terms are to protect you and your earnest money so know what everything means before signing.

IF the park has a professional management system and CPA keeping up with everything (most don't) then they should have no problem providing you with accurate income and expenses.  Then question everything and then get your own estimates for Park insurance, shop electrical providers, banks (if there are high fees), landscaping, etc.  Poor management is one of the easiest, well not easy but it's something that really turn a profit in your favor.  We've seen Parks with absentee owners where the on-site manager 'raised' rents but did not turn those into the Park account but theirs!  There are some very creative folks out there who manage to make money off your Park if you are not omni-present through either your physical appearance at certain times/events of the month or through efficient management systems that let you keep an eye on everything from afar.

So bottom line, get to understand the bottom line of a Park's financials so you can get funding to buy one, build one or run one.

Yes, I just listed all three on the RVparkstore yesterday!  Great site to compare prices and offerings across the country.  These are full retail priced parks; most are turnkey properties. The strange is that many owners who want to sell their parks do not want a big for sale sign on their property.  It makes their residents/guests nervous so we have to be rather discrete and creative when marketing Parks and when we take prospective buyers through the parks.

@William Dampier

  I think a great deal of it has to do with the fact that no one will issue permits for Manufactured Home Parks but they will allow RV Parks.  Families are being forced or choose to live in RVs b/c they cannot find anything else affordable.

If you're lending on RV Parks, I have several qualified buyers right now seeking funding.  Be happy to send them to you to discuss their options.

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