Cost per site to build and cost per site to buy keep landing in the same place

Question

I've been pricing two paths to roughly the same 40 site outcome and I don't trust that they're converging.

Path one, buy. Small operating parks in the corridor I'm watching trade somewhere around 28k to 42k a site depending on utilities and season length. Call it 35k for something with working 50 amp and a bathhouse that isn't a liability.

Path two, build. I own 14 acres already, bought as a hold, gently sloped, road frontage, power at the line. Contractor ranges I've collected for full sites with water, sewer and 50 amp run 18k to 34k each, and the spread is entirely about whether I'm on septic and a well or tying into anything municipal. Add roads, a bathhouse, a shop, permitting, engineering, and the survey work, and my all in per site lands right around 34k. Which is suspiciously close to just buying one.

The difference is that the built park has zero revenue for two seasons and every dollar of the estimate is a range rather than a fact. The bought park has a rate card, a repeat guest list, and a well that has already either failed or not. I also know that septic design for a campground is not a residential septic design, and my ranges may be optimistic in ways I can't see yet.

On the other side, the bought park comes with 40 years of deferred everything, and I'd be paying somebody else's cap rate on income I could create at cost.

Where do people land when the two numbers meet?

kevin_lombard · Answer

I've read this thread three times and the part I keep coming back to is that your build number is a range and the purchase number is a price. When I've compared anything with a range against anything with a price, the range has always been the higher one by the time it was over. Does the 34k include anything for the two seasons of carrying the land and paying yourself nothing? Because if not, the numbers aren't actually meeting yet.

sonia_alvarez · Answer

Financing is where these two stop being comparable. An operating park with two years of statements has an income stream a lender can size against. Fourteen acres and a set of contractor estimates is a construction request, which is a different product with different draw mechanics and usually different recourse. I'd get both conversations started before you finish the spreadsheet, and get the terms in writing, because what you can borrow and on what timeline may decide this for you regardless of which per site number is lower.

One more thing on the build side. Your septic point is the right worry. Campground flows get calculated per site and the design load can push you into a much larger system than anyone quoted casually. Get a designer on the parcel before you treat 34k as real.

Cost per site to build and cost per site to buy keep landing in the same place

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