Owning and running an RV park in North America is an exciting venture that offers the promise of financial freedom and the great outdoors. But behind the idyllic scenes of campfires and nature trails lies a business that requires meticulous planning and understanding of costs.
Whether you’re a seasoned entrepreneur or a newbie considering entering the RV park business, knowing the average cost of an RV park is crucial for planning your investment and operation. In this article, we will delve into the different ways in which you can acquire an RV park, the factors that influence the costs, and provide average expenses.
Our aim is to arm you with essential information so you can make informed decisions to grow and thrive in this unique business niche.
How Much Does It Cost to Buy an Existing RV Park?
One of the easiest ways to start an RV park business is to buy an existing one that is already established and operating. This way, you can avoid the hassle of finding land, obtaining permits, developing infrastructure, and building amenities. You can also benefit from the existing customer base, reputation, and income stream of the park.
However, buying an existing RV park can also be risky. You will have to pay a premium price for a successful and well-maintained park that has a loyal following and a good location. Also, you may have to deal with any issues or liabilities that the previous owner could have left behind, such as outdated equipment, deferred maintenance, environmental problems, or legal disputes.
The cost to buy an existing RV park varies widely depending on the quality and profitability of the park. Actually, the price of an existing RV park for sale in the United States can range from $100,000 to $10 million.
The prices is determined by a number of factors:
- The number of sites: The more sites the park has, the more revenue it can generate. However, more sites also mean more expenses and maintenance.
- The occupancy rate: The occupancy rate is the percentage of sites that are occupied by guests at any given time. The higher the occupancy rate, the more income the park earns. However, occupancy rates can fluctuate depending on the season, location, and competition. The average occupancy rate for RV parks in the United States is 60-70%.
- The revenue per site: The revenue per site is the amount of money that each site brings in per year. This depends on the nightly or monthly rate that the park charges, as well as any additional fees or services that it offers. The higher the revenue per site, the more profitable the park is. However, revenue per site can also vary depending on the amenities, features, and location of the park.
- The capitalization rate: This is the ratio of net operating income (NOI) to property value. It measures how quickly an investment can pay for itself. The higher the capitalization rate, the lower the price of the property relative to its income potential. However, capitalization rates can also reflect the risk and attractiveness of an investment.
How Much Does It Cost to Build a New RV Park?
Another way to start an RV park business is to build a new one from scratch. This way, you can design and customize the park according to your vision and preferences. You can also choose the location and size of the park that best suits your target market and demand.
However, building a new RV park can also be challenging and costly. You will have to find suitable land, obtain permits and approvals, develop infrastructure and utilities, and build amenities and features. You will also have to deal with the competition and marketing of the park to attract customers and generate income.
The cost to build a new RV park depends on the scale and scope of the project. Considering all the costs that we will examine below, the initial setup of a small or medium-sized RV park in 2023 could range from $180,000 to $450,000. Larger parks could cost more than $1,000,000.
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However, these numbers are rough estimates and it is important that you perform your own research based on your own personal possibilities and expectations.
Let’s take a look at some of the factors that affect the cost of building a new RV park:
- The land and its preparation: The cost of land is usually the most significant initial expense when starting an RV park. The price can differ based on the location, accessibility, and current market rates. Once acquired, the land may require grading, landscaping, and the installation of roads. All these development steps come with their own costs.
- The size of the park: It determines how many sites and amenities it can accommodate. The larger the park, the more revenue it can generate. However, larger parks also require more land, infrastructure, utilities, and maintenance.
- The type of sites: This refers to the level of service and comfort that each site provides. Types of sites could be dry camping (no hookups), partial hookups (water and electric), and full hookups (water, electric, and sewer). The more hookups a site has, the more convenient it is for guests. However, more hookups also mean more expenses and development.
- The amenities and features: The amenities and features refer to the additional facilities and services that the park offers. These may include bathrooms, showers, laundry, Wi-Fi, cable TV, playgrounds, and more. The more amenities and features a park has, the more attractive it is for guests. However, more amenities and features also mean more costs and maintenance.
- The insurance and permits: To operate an RV park, you’ll need various permits and licenses, which often come with application and renewal fees. Insurance is another must-have; it covers potential liabilities and risks associated with running an RV park.
- Marketing and advertising: Getting the word out about your RV park is critical for its success. Whether you opt for digital marketing, traditional advertising, or a mix of both, these costs can be ongoing and should be budgeted for. An effective marketing strategy might require an upfront investment but will pay off in increased bookings and visibility.
Kickstarting the RV Park Ownership Journey
These are exciting times for the RV park industry. Our mission at Roverpass is to provide entrepreneurs in the industry with the tools they need to grow, compete, and thrive in an era full of opportunities and challenges.
One of the most interesting solutions that we have created, both for starting RV parks and for businesses that are looking to improve their online presence, is our Premium Website Builder.
This solution is designed to help RV parks grow faster with unique and high-quality websites. We begin with an SEO audit to optimize your website for Google rankings, and then we proceed to develop a customized website that will highlight your park and enhance your ability to attract new customers.
For more insights on how to thrive in the RV park business, keep reading our blog!
