What It Actually Costs to Build a Profitable RV Park From Raw Land
What it actually costs to take raw land and build a profitable RV park.
Most people who buy an RV park buy the income. They look at the NOI, the cap rate, the occupancy number, and they make a decision based on what the property is doing today. That's fine as far as it goes. The problem is the properties worth owning are almost never the ones performing at their ceiling. The ones worth owning are the ones with room to grow and the infrastructure to support that growth without starting from zero.
That's what I was looking for when I found this one.
Five and a half acres. Twenty two existing spaces. Operating at about 75% occupancy. Small building on site. NOI sitting around $38,000 a year. Cap rate that looked acceptable on paper but told you almost nothing about what the asset could actually become. Asking price $575,000.
What I saw wasn't the twenty two spaces. It was the other three and a half acres sitting behind them with partial infrastructure already stubbed in from a previous owner who ran out of either money or patience before finishing what they started. Two septic systems already installed. Road base partially cut. Plans on file showing the full buildout had already been permitted once.
That changes the math entirely. Starting infrastructure on a project like this isn't cheap or fast. Inheriting it — even partially, compresses the timeline and the capital requirement in ways that show up directly in your return.
We bought it.
The pro forma conversation with the bank.
Before we closed we built out a full pro forma. Not to impress anyone. Because you cannot walk into a commercial lender and ask for construction financing on a value add project without being able to articulate exactly what you're building, what it costs, and what it produces when it's done.
The pro forma is also how you find out whether the deal actually works before you're committed to it. A lot of deals that look good on the acquisition side fall apart when you run honest construction numbers against the projected income. Better to find that out on a spreadsheet than after closing.
Our target was a final loan amount around $1.3 million. Twenty five percent down on the finished project value including acquisition. That meant understanding our construction budget precisely enough to know what the finished asset was worth to a lender before we asked them to fund it.
Acquisition came in at $575,000. That left us a construction budget of roughly $650,000 plus contingency to work with before we hit our loan ceiling. Every decision from that point forward was made against that number.
What the construction actually cost.
This is where most videos and most blog posts get vague. They'll tell you to budget for utilities and site work and engineering without telling you what any of those things actually cost or why.
Here's what ours looked like broken down.
Utilities were the largest single category and the least negotiable. We needed a new water well, the existing one couldn't support the expanded capacity. That decision alone added time to the project that no amount of money could fully compress. If you have access to municipal water on a project like this take it. The well process, drilling, casing, pump installation, water house, line distribution ran us about $52,000 and added months to the schedule.
Electrical came in at $168,000. That number surprises people until they think about what it means to run individual power pedestals to fifty pad sites plus the infrastructure to support them. Every space needs 30 amp and 50 amp service. The trenching, conduit, panel work, and pedestals add up fast.
Water line distribution including stouts to each pad ran $78,000. Septic, we needed two additional systems beyond what was already installed, came in at $74,000. Permitting the septic was one of the most time consuming parts of the entire project. Budget more time than you think you need and then double it.
Site work and road construction was $138,000 covering roadway expansion, pad construction, base installation, drainage, and materials. We used a premium drainage material on the pads that cost more than standard crushed concrete but solved a drainage problem that would have created ongoing maintenance issues. The decision cost more upfront and was worth it.
Equipment rental ran $31,000 over the course of the project. Engineering, permitting, surveying we surveyed multiple times as the scope evolved, came in at $42,000. We had an owner's contingency of $65,000 built in from the beginning.
Total expansion budget came in just over $648,000 against a contingency adjusted budget of $715,000. We came in under contingency. On a project with a new water well, two new septic systems, and fifty pad sites that is not an accident. It is the result of having real numbers before the project started rather than discovering what things cost after the contract was signed.
What the construction actually looked like.
We kept existing tenants in place throughout the buildout by sequencing the work intelligently. East side first. Existing tenants stayed on the west side while we built out and finished the new spaces. Once the east side was complete we moved everyone over to brand new spaces, which they were happy to do, and finished the west side without displacing anyone or losing a single month of income.
That sequencing matters more than most people realize. Vacancy during construction is an expense that doesn't show up in most construction budgets. Losing eight months of income on twenty two occupied spaces while you build fifty more is real money that changes your return. We never lost it.
The longest single phase was the water well. Everything else was sequenced around it. Electrical went in fast once the trenching was done. Septic permitting was the bureaucratic chokepoint, you cannot control it, you can only start it earlier than you think you need to.
The finished product.
Fully operational fifty space RV park on five and a half acres. Every space with full utility hookups. New roadways. New drainage. Trees preserved throughout, we moved spaces around the existing tree line rather than clearing it. A renovated on site building converted to a laundry facility.
The asset that was producing $38,000 a year at 75% occupancy on twenty two spaces now has fifty spaces, infrastructure that supports full occupancy, and an operation that can be managed remotely once it reaches stabilization.
What this actually requires.
The financial model is straightforward once you have real numbers. The execution is not.
You need a civil engineer who has permitted this type of project in your county. Septic permitting requirements vary significantly by municipality and an engineer who doesn't know your specific jurisdiction will cost you time you can't get back.
You need subcontractors who have done this specific work before. Water well drilling, septic installation, RV electrical pedestals, these are not general construction trades. The people who do them well are not interchangeable with people who do general commercial work.
You need a budget built on actual quotes not estimates. The difference between a quote and an estimate on a project this size is the difference between a contingency you never touch and one that runs out before you're done.
And you need enough patience to let the process work at the pace the process works. The water well takes as long as it takes. The permit office moves at the pace the permit office moves. Building the schedule around those realities rather than against them is the difference between a project that finishes close to plan and one that bleeds holding costs for six months past its deadline.
The spreadsheet to real life gap on a project like this is substantial. The numbers work. Getting from the numbers to the finished asset requires the right people, the right sequencing, and enough experience to know what the surprises will be before they surprise you.
That part doesn't show up on the pro forma.
If you have a raw land opportunity or a distressed RV park in the Houston, Austin, or Dallas market and you want to know what it actually takes to get from where it is to where it could be, that conversation is worth having before you make an offer.