Building an RV Park from scratch under 50k?

Having driven around that area quite a bit over the past couple years - I don't see any real problem attracting and keeping full-time long term residents who only want power water and sewer.

But they are not going to get $40 per night. Their spots will rent for $300 or $350 per month if they put in a laundry facility. They might make a penny or two per KWH by billing residents for electrical usage.

I've seen a couple dozen dirt lot parks like that around San Antonio. I can think of at least 30 around the Dallas area. Have seen five put up and fully occupied within a month in the past year. However, they tend to run around 40-50 spots.

It not a tourist customer they are trying to draw, I think.

I suspect if the "RV Park" is in the Recharge Zone of the Edwards Aquifer that a conventional septic system cannot be put in and a treatment plant must be installed. These treatment plants cost about $6,000 to $8,000 per home in normal soil, so for a large installation I would guess that you're talking about costs in the $15,000 to $20,000 range for this project besides using probably several acres for spray fields. I doubt that any licensed installer would touch such a project without proper permits from the appropriate regulatory agency since such unlicensed installations could be very expensive in fines or even prison time.

This seems like a really horrible investment. Out in the middle of nowhere with a dirt road, and not really in the heart of tourist country (although I do enjoy San Antonio).

Even if you could do it for 50K, which I highly doubt, what will attract visitors in the boonies even if it is near San Antonio?

I see zero chance of this working. It would be interesting to hear the rationale that was used to sell the investor on the idea.

Mike

myredracer wrote:
There'd be numerous codes, regulations, and standards that would have to be complied with if doing it fully permitted and inspected. Some of them are:

The NEC has specific requirements for RV parks. How much is the power utility co. going to charge for a connection? Electrical alone would eat up a big chunk of the $50K.

There's NFPA 1194 "Standard for Recreational Vehicle Parks and Campgrounds" that covers fire protection and a number of other things.

In Texas there's TCEQ (Texas Commission on Environmental Quality) which covers water supply, wastewater and storm water disposal, garbage disposal and outdoor burning. 15 or more sites can be considered as a public water supply. Texas TCEQ

There's no contingency fund to put towards any unforeseen costs? There could very well be a whole lot of them you never knew of or thought about.

Has there been any analysis of projected income versus operating costs? According to one source of info. I read, it takes 125 sites to break even.

Any savvy investor wouldn't go near it.

Doesn't take anywhere near 125 sites to be profitable. Say you had a 40 site park and built it for $800,000. Operates for 8 months out of the year with a 60 percent occupany rate (not bad, but not exceptional either) At $40 a night, that would be revenues of $230,000. Figure operating costs of about 30 percent, you will have net income of about $160,000. That's a 20% return on your investment, not too bad. Even if you paid a manager couple $5,000 a month for those eight months, instead of running it yourself, you would have a return north of 15 percent. Can't get that on your savings account.
The trouble with the OPs situation is $50,000 is a far cry from $800,000 and building a park in the middle of nowhere won't ever generate $40 a night rates or 60 percent occupancies.

If I were in your position, I would research the zoning regulations for the county/township where the land is located. Also research what is required for sewer, water. What permits are required and the approximate cost. Print everything out - highlight the important parts and let them read it with their own eyes. If they still choose to go down the tubes trying the venture, there would be nothing more you could do. I'd leave it and them alone and let them do it their way with no further comments or questions regarding the project.

There'd be numerous codes, regulations, and standards that would have to be complied with if doing it fully permitted and inspected. Some of them are:

The NEC has specific requirements for RV parks. How much is the power utility co. going to charge for a connection? Electrical alone would eat up a big chunk of the $50K.

There's NFPA 1194 "Standard for Recreational Vehicle Parks and Campgrounds" that covers fire protection and a number of other things.

In Texas there's TCEQ (Texas Commission on Environmental Quality) which covers water supply, wastewater and storm water disposal, garbage disposal and outdoor burning. 15 or more sites can be considered as a public water supply. Texas TCEQ

There's no contingency fund to put towards any unforeseen costs? There could very well be a whole lot of them you never knew of or thought about.

Has there been any analysis of projected income versus operating costs? According to one source of info. I read, it takes 125 sites to break even.

Any savvy investor wouldn't go near it.

Personally, I think you're more involved with this than you're letting on and just trying to get a feel for 'what ifs'. Good luck.

With the collapse of the oil drilling business you would think there are plenty of empty rv spots. They were being built as fast as possible for awhile. My CPA bought one, but it is near several huge petrochemical projects east of Houston. Hopefully he can get a payback before the projects complete.
Don't sound like they have a clue what they're doing. I would tell them one time, then back off and watch.
No, don't loan them money.
Tell them to change locations to Pecos. Apache Oil just discovered a huge field there.
http://money.cnn.com/2016/09/08/investing/apache-huge-oil-discovery/

monkey44 wrote:
First piece of advice - IF they insist after all this advice, DO NOT put sewer to each site. Make one septic and a dump.

I know, folks want permanent - use portable tanks. If these folks want back to the land, then a portable dump tank will at least limit the septic cost - which for commercial size will be very expensive.

I was a building contractor for a lot of years - I think the only thing your friends will get with this fifty grand is a good education in lost investment.

A central dump would save the cost of piping, but to be legal, it would still have to be engineered for the flows that are attributable to 15 RV sites. It would have the benefit that if it was located correctly, it would increase the value of the land when someone buys it for what it is currently intended and properly zoned for, an actual home. They might get 30 cents on the dollar returned, if the property is sold traditionally, and not in a foreclosure sale, which sounds like a very real possibility. It sure appears this train is going to wreck, I sure hope the OP will stick around so I can watch it, ambulance chaser that I am.

First go to the city, town, county, who ever is in control.
See what the zoning is on the land.
If not zoned right, see how long and how much for (trying) to get what you need.
Go to flood control see what they say.
Get a survey.
Environmentel report.
You will need a Engineer for grading and drainage report.
Check with ele. co. for up front cost., Water company for supply. Sewer company for volume needed.Phone for up front cost.
So far you haven't started anything yet. Just cost.
At this point you have spend $25,000 to $100,000 and no building or roads, well, curbs, swiming pools, pool tables. Hello

If other are in it you will need a operating agreement. Lawyer, LAWYER, RUN FAST.