Historically, acquiring vacant (undeveloped) land is one of the most popular ways to build wealth in America. However, simply owning vacant land can generate property taxes that will continue indefinitely but it will never provide you a monthly or annual cash-flow. More recently, entrepreneurial-minded people who have a passion for the outdoors are finding an alternative: developing a new type of “land development” by transforming their vacant parcel(s) of land into a commercially viable, revenue-producing campground/RV park.
Converting your raw land into a financially successful outdoor hospitality business combines buying rural land with creating a commercially successful business. A well-planned campground/RV Park can create substantial CAP Rates while still retaining the inherent value of the land itself. Creating a successful commercial operation requires a great deal of knowledge about how to properly select a location; obtain all necessary permits from local government agencies; develop the heavy civil infrastructure needed to support such operations; and understand how to use data driven financial models to drive decision-making.
Evaluating Raw Land: Location, Topography and Access
While there are certainly many beautiful meadows and wooded tracts that have the potential to become a profitable commercial retreat, they are by no means all equal in their value as such. The first step toward making this conversion possible is extensive research into both the property itself and its location through an exhaustive physical and geographic study of the property.
Travel Radius
Motorhome travelers and RV campers tend to follow certain patterns in terms of traveling times during weekends. Those properties located within two hours to four hours of large urban areas will experience consistent weekend usage of the site between late Spring and early Fall. Sites located within thirty miles of National Parks, National Forests, or Interstate Highways will attract a large volume of Transient Traffic during each year’s Touring Season.
Topography, Soils and Civil Feasibility
The topographic conditions on the land must be capable of accommodating heavy motorized equipment, trailers and individual campsites without requiring excessive grading costs.
Ideal grades for recreational vehicle use would range between two and five percent to allow for natural drainage while keeping cut and fill cost at a minimum. Grades exceeding these limits greatly increases the excavation costs associated with preparing the site.
It is critical to cross-reference FEMA flood maps and/or local GIS wetland mapping programs to iDiscover how converting raw acreage into a profitable private campground creates steady cash flow, with expert insights on zoning, utilities, and site designdentify whether the proposed locations for habitable pads, septic drain fields, etc., fall within either a 100-year flood plain or a protected wetland. Allowing any type of development within these zones can be met with extreme regulatory scrutiny and potentially result in project rejection.
Real estate professionals also have said that there are similar disciplines that apply when underwriting rural recreational land as do with urban redevelopment. Homer Staves, President of Staves Consulting states that many times investors also underestimate how much vacant land will limit them physically in terms of their investment strategy.
He mentions that when buyers look at raw acreage, it’s very easy for them to become captivated with the scenery and forget about one major fact; raw land has limited real estate feasibility. When you’re looking at a fixer upper house, you need to evaluate all of the factors involved in rehabbing the property. The profit margins in land development are made or broken based upon the information you find out during the due diligence process.
Therefore, you need to consider issues such as roadway easements, grading requirements, visibility of driveways, and zoning restrictions prior to submitting an offer. If having commercial utilities brought to the edge of the property causes you to exhaust your cash flow reserves, even the most beautiful piece of land in the county could end up being a money pit.
Navigating Municipal Entitlements, Zoning and Permits
Zoning and municipal regulatory compliance present significant hurdles when creating a private campground. Rural jurisdictions often lack specific commercial recreational zoning, requiring developers to seek conditional use permits (CUP), special exceptions, or outright rezoning.
Pre-Application Meetings: Meeting with county planning commissions, local fire marshalls, and township supervisors ahead of time allows you to gauge their desire for outdoor hospitality and present your preliminary site design in order to reduce objections from the local communities about traffic, noise and light.
Environmental and Health Permits: The feasibility of a commercial septic system is determined by commercial soil percolation testing. Stormwater pollution prevention plans (SWPPP) as well as environmental impact assessments are also required to ensure that the natural water ways remain intact and that the construction will have a minimal effect on native wildlife habitat.
Emergency Access: Fire protection requirements require a minimum width for roads (typically 20 to 24 ft.), an engineered turn-around loop for municipal pumpers and either a on-site water supply or dry hydrant.
Engineering Critical Infrastructure: Water, Power, and Waste
A key factor for developing a piece of land with no utilities (off-grid) or limited utility services (semi- primitive), to a working hospitality business is large utility expenditures. Unlike building a typical house, a campsite’s utilities have extremely high utilization rates (demand) during long weekend holidays.
Jonathan Carcone, principal of 4 Brothers Buy Houses, emphasizes that both the type of equipment used and how it is designed can have a direct relationship to profit.
Each mechanical and structural decision you make on one campsite affects all the sites in your park, he says. If you size your electrical transformers smaller than necessary and install residential grade plumbing fixtures when designing your campsites, you will experience catastrophic failure of your utilities at some point during the most heavily attended holiday weekends, Carcone adds.
Conversely, if you build too much unnecessary infrastructure when first developing a raw property, it may take longer than expected to recover those costs through rent.
Designing Layouts: Density, Flow, and Guest Demographics
To create a good balance of space (and therefore closeness) in campground design along with sufficient commercial site density, there is a point at which too much camping area can become a congested environment with noise that drives away visitors. Conversely, if you spread out the areas enough where people are not close to each other, it will add more cost to digging trenches for utility lines and building roads.
Commercial developers that build full hook-up rv resorts normally allow 8-10 sites per acre as their optimal density metric. The above mentioned density level is usually large enough to preserve tree canopy cover and provide a satisfactory amount of vegetative screening to neighbor sites. However, when designing primitive tent zones or secluded glamping unit locations, you can generally afford to place those more densely; less expensive to install subsurface utilities and more likely able to develop on sloping land or on uneven or rocky land.
Eric Miles, CEO of Baker Tilly, points out that operational flow and customer expectations must drive land layout decisions. Campground guests are paying for the outdoors, but they demand frictionless modern utility, notes Eric.
Your design must deliberately separate operational circulation from guest tranquility. Wide, one-way internal roadways protect heavy rigs from sharp turns, while designated green buffers preserve personal privacy at every campsite. When raw acreage is laid out efficiently, guests enjoy the feeling of secluded wilderness while ownership benefits from streamlined maintenance and centralized utility corridors, Eric adds.
Financial Projections and Capital Allocation
Building a private campground is about making smart decisions on how you spend your money in the beginning based on projected revenue from your campground. The cost of developing a modern campsite can be anywhere from $20,000 to $45,000 per site. However, it’s best to build a profitable campsite by not just relying on nightly rent from individual sites.
A successful campsite will have additional profit-generating opportunities such as:
High margin Camp Store Retail
High margin retail sales can include items like; bundle firewood, potable ice, propane tank fills, specialty camping gear and local products for sale at the camp store.
Equipment rental opportunities
Golf carts, kayaks, paddle boards and other outdoor equipment Rentals are both fun for guests and an ongoing source of steady daily revenue.
Off-season storage services
Off season boat and RV storage using flat, level, graded acreage within your property can provide reliable off-season (winter) revenue through monthly/seasonal storage rental contracts.
Varied accommodation
Mixing tent pitches with luxury glamping options. By offering luxury glamping options (dome tents/glamping units), you increase your ability to command higher nightly rates and attract a wider range of potential customers.
Launching Operations: Booking Systems and Long-Term Value
When you are finished building your project, it is time to make sure that your commercial venture will be able to produce revenue over the long term. This means moving from being a land developer to operating in the hospitality industry. To do this you need reliable systems for accepting on-line reservations, for managing your web-site and other aspects of your property and for maintaining your property proactively.
Cloud Property Management Systems (PMS)
The system allow users to automate their on-line reservation process using a variety of reservation engine products such as Campspot, RoverPass and Newbook. These PMS tools enable guests to select specific campsites directly through the website, offer dynamic seasonal pricing and provide instant digital check-in capabilities.
Proactive Landscape Stewardship
High traffic campsites can suffer significant wear and tear on the surfaces due to the high number of visitors. Strictly enforcing campfire safety regulations, separating trash from recyclables and strictly controlling vehicle parking help preserve native tree populations, prevent compaction of soils and maintain native ground covers.
Long-Term Real Estate Appreciation
Beyond creating annualized cash flows from your commercial infrastructure investments, developing a commercial private campground can significantly increase the value of the underlying raw acres. Converting non-productive agricultural or timberlands into an operational commercial business creates tangible long term real estate appreciation and transforms a once vacant piece of wilderness into a family owned and operated generational real estate asset.
Verdict
Converting raw land into a commercially successful private campground is a patient and costly endeavor requiring consistent application of engineering principles and expert professional guidance through all phases of the planning and execution processes. By carefully designing and executing your feasibility study with thoroughness and utilizing quality civil engineers to execute your design, transforming vacant wilderness into an enjoyable retreat for travelers can create a long term source of passive income.