January 20, 2022
So you are considering buying an existing or developing a new RV park. You have identified the property, have it under contract and now need to figure out your pro forma. You maybe asking yourself, what does it cost to run an RV park?
Part of the pro forma is revenue, the other part is going to be your potential operating expenses. If you are buying an existing park, figuring out these numbers is a little bit easier as you have actual data to start with and adjust based on how you might manage the property. If you are developing a new park, then you have to piece these numbers together which might take a little more time and research if this is your first park. So, lets go through some of these operating expenses you might need to budget for.
- Taxes – Property, Sales and Payroll tax will be large line items on your Profit & Loss report. Property taxes may climb as high as 20% of your gross revenue. This may not happen year one, but it could happen in years 3-5 as your park is completed and stabilized.
- Utilities – Water, Sewer, Electric, Cable, Internet, Trash are all expenses a park owner will need to account for. Parks supplying Wi-Fi to their guests free of charge will need to budget for this. There are companies that specialize in installing these systems. Electricity is going to be your largest line item under Utilities. Be sure to shop your provider if you can and make sure to install individual meters at each space so you are able to charge guests for electricity use and receive reimbursement.
- Maintenance & Repair – Initially you may not have as much repair work to do on a new park, however maintenance starts day one. Landscaping needs to be done, spaces need to be cleaned, trash picked up etc. This line item maybe anywhere from 3% – 10% of your gross revenue depending on the amenities you have at your park.
- Employee Training – If you have employees, you need to provide recurrent training.
- Marketing – This line item could range from 1% to 10% of gross revenue depending on where your park is located and the amount of competition around you. To help reduce this expense, you can take advantage of free advertising by setting up accounts on social media and regularly posting updates on your park.
- Insurance – Property, liability as well as any insurance you carry for your employees such as health.
- Bank Service Charges /Credit Card Fees
- Professional Fees – You may need to hire certain professionals such as an accountant or attorney.
These are a majority of the large items that a new owner might face when putting together their pro forma for a new park. If you have questions, please feel free to reach out to us!
Checkout some of our related content:
- Blog: https://crdrealty.com/self-storage-income-adding-revenue-streams/
- Blog: https://crdrealty.com/vendors/cost-segregation-services-inc-tom-brodie/
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