If you are considering starting an RV park or campground, now is a great time, with six out of 10 American households identifying as campers. However, like any business venture, it is essential to understand the full scope of costs before you begin.
Generally, starting a campground or RV park can cost between $100,000 and $2 million, depending on its size and whether you buy an existing campground or purchase land to build on. Additional costs include renovation expenses, insurance and amenities.
Although the initial cost to build an RV park may seem high, this industry has a booming market. Understanding the cost of starting a campground before you begin can help you create a destination that families will love to visit. Contact us today to learn more about buying or building a campground.
Cost to Build vs. Buying
The startup cost to build an RV park or campground depends on many factors. The main cost differences come from whether you are building a new campground or buying and revamping an existing campground.
Both buying and building an RV park or campground have benefits, and the best choice for you will depend on your business goals. Building a new campground allows for greater control over the park’s design, but it likely will be longer before you can be open for business.
If you buy a campground that is in good standing, you can likely start turning a profit faster. However, if the campground requires repairs or updates, you may not be able to welcome campers right away. The key is to know what you are getting into when buying a campground.
Starting a New Campground
A new campground often costs about $15,000 to $50,000 per site, and here are some of the many elements factoring into this cost.
Land
Land is one of the most important purchases you will make for your campground, and you want to make sure you have the proper acreage for your current campground needs and any future expansions. Where you decide to purchase land can also impact its price. For example, land in rural settings may be cheaper than in more urban areas.
Licensing and Permits
Every state has its own licensing and permit requirements, so it is essential that you obtain the correct documents before you begin building your campground. These can include zoning permits, health and safety inspections and environmental impact assessments.
Construction Cost Per Site
If you have a variety of site types, they will all have different construction requirements. The final price for each site will depend on the amenities you wish to install, such as hookups, gravel roads and pads. If you choose to include gravel, asphalt or concrete for your campsites, consider the cost of ground leveling, paving roads and landscaping.
Electric
Most campgrounds have outlets with varying amperage for campers to connect to. Generally, adding electricity costs about $1,500 to $2,500 per site.
Water
Your water costs will vary depending on if you plan on drilling a well or connecting to city water. A well can cost $5,000 to $12,000, or city water hookups might cost $1,200 per site.
Septic System
You can install a site-by-site septic system or a dump station for your campground. A dump station can help reduce your overall costs, but you can charge more if you offer full septic hookups for campers.
Additional Buildings
Most campgrounds have more than just campsites, and if you are starting from scratch, you will need to include costs for structures like:
- Restrooms: A restroom with good water pressure provides extra comfort and convenience for your guests. Quality restrooms can add about $20,000 to expenses.
- Office: You will need a designated space for check-ins at your campground, making an office another essential building. Depending on the size of your building, an office might cost $15,000 to $80,000.
- Internet: A reliable Internet connection is vital for your office building. Extending it throughout the campground can increase the price, as you will need additional ethernet cables or routers.
How Much Land Do You Need for a Campground?
For the best chance at revenue, a campground should have 75 to 90 sites. Depending on the size of your sites, an acre of land can support roughly 10 sites. That means you need eight to ten acres, roughly equating to a mid-sized campground.
For larger campgrounds and RV parks, consider purchasing 15 acres or more. Although more sites mean more revenue, they also require an investment to set up. Land costs add about $3,000 per acre to the startup cost.
Buying an Existing Campground
Buying an existing campground can eliminate costs like planning and zoning that those starting new campgrounds must consider. However, buying a campground comes with its own set of expenses, such as updating facilities, which can add $10,000 to $50,000 to the total costs. Here are some other campground costs to consider.
Initial Costs
A new campground might cost $100,000 to $2 million. Generally, you will perform a decent amount of renovation as well. Depending on the land’s desirability, it may range from $1,000 to $10,000 per acre. The location, acres available and infrastructure can impact the overall cost. The cost may also fluctuate based on whether sections of the land are unusable or have outstanding views.
Cap Rates
The cap rate is how long it takes to recoup and break even on your investment. You find this rate by dividing the net operating income (NOI) by the property value.
For example, if you have a property worth $3 million and a NOI of $150K, divide $150,000 by $3,000,000 for a 5% cap rate. This means you will earn five cents for every dollar you invest in your campground.
Insurance
Keeping your property safe is essential. Insurance adds about $450 to $1,500 each year for general liability.
Renovations
While the exact scale of your renovations will depend on your campground, you will want to include funds in your budget for updating infrastructure and park branding. Hiring a contractor or inspector to examine your existing infrastructure can help you get an accurate idea of costs.
You will also want to consider upgrades like an Internet connection. The initial setup for the system costs about $3,000, with monthly costs ranging from $250 to $500.
Tips for Reducing Hidden Costs of Starting a Campground
Regardless if you are buying a new campground or building one, the following tips can reduce unnecessary expenses.
1. Choose a Strategic Location
As you consider states and locations to purchase or build your campground, you will want to look at sites that are scenic, affordable and easily accessible. Another great option is to research locations experiencing a boom in campers and tourists.
2. Start With a Limited Number of Campsites
You do not need to start with hundreds of campsites immediately. Start with a manageable number and expand as you see more stable occupancy rates.
3. Provide Limited Activities
When you first begin operating your campground, the focus should be on quality. Instead of starting with a full range of events and activities such as cookouts or movie nights, start with one or two. Starting small will allow you to focus on quality and can help you save on costs. As your campground grows and you get more feedback from campers, you can expand your activity offerings.
4. Create Shared Facilities
Shared spaces are great enhancements for any campground without increasing the cost. For example, you can add a pavilion where campers can gather or a community fire pit.
Get Help From Kampgrounds of America
Learning how much it costs to start a campground can give you a better idea of whether this business decision suits you. If you want support in this venture, consider building or buying a Kampgrounds of America, Inc. Campground. As part of the KOA franchise, you can own and manage your own business with the power of the KOA brand behind you. Contact us to learn more about joining the KOA Family of Campgrounds.