Trailer parks are often regarded as areas to house your caravans and mobile homes. With mobile homes gaining popularity in recent days, it’s becoming more common to see trailer parks developing nationwide.
Whether for recreational purposes or for permanent living, the interest in mobile home living is unlikely to phase out soon. Of course, this would lead to a need for more trailer parks in various communities across the nation.
But have you wondered how much would it cost to build a trailer park?
In general, you will be looking at an investment from $4.5 million and up to build a 100 lot trailer park from scratch. In some cases, this investment does not include the cost of basic utilities that may set you back between $500,000 to $750,000 for private sewer treatments.
Read on for a more detailed description of the financial and practical aspects of building a trailer park.
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Building a Trailer Park from Scratch: Is It Worth It?
Building a trailer park from scratch allows you to include your own style and niche into your investment as a property investor. This also means you can control how big you want your trailer park to be.
Building a trailer park from scratch can often mean costly investments like paying for land, legal fees, mobile home purchases, and utility investments.
So, how much would it cost to build, say, a 100-lot mobile home park? Let’s break it down to the individual financial components.
Finding the Right Land
Depending on the size and location of the land, this can be the largest or the smallest investment required for your trailer park.
Typically, you will need a plot of land measuring between 3 acres to 5 acres if you wish to house 100 mobile homes within your trailer park.
You will also have to check with local authorities for zoning restrictions and ask about the various approval fees from your city, county, or other governing authorities to add to your total investments.
Water and Sewerage Treatments
As some areas will not provide water and sewerage services from the municipality, you may be looking at bigger investments to make your trailer park work.
With proportionally sized private sewer treatments costing between $500,000 to $750,000 to build initially, this could make your trailer park investment a significant initial cost.
Do bear in mind that you will also have to include annual maintenance and other unexpected repair fees in your budget, making water and sewerage treatment for your trailer park an expensive investment.
Design and Blueprint Costs
To fully utilize your plot of land, it’s recommended that you engage a civil engineer’s help to draw up a blueprint of your trailer park.
Ranging between $1,000 to $1,500 per lot, civil engineers would be able to design your trailer park according to your niche and style.
While this isn’t always necessary, having a clear design and blueprint will help you set a clearer direction of how you want your trailer park to look.
Purchasing Mobile Homes
If you’re looking to create a specific niche for your trailer park, you will likely have to purchase the mobile homes and lease them to your tenants after.
With mobile home costing around $40,000 each, this would amount to $4 million for a 100-lot park. Most mobile home purchases also exclude the cost of moving, so you should expect to add between $1,000 to $3,000 per unit.
Finally, you’ll have to factor in management costs to run your trailer park. While most trailer parks can be self-managed, you will still require assistance if you’re looking to rent out 100 mobile homes to separate tenants.
Most of these management costs can add up to $30,000 a year, so you need to include that in your budget when building a trailer park from scratch.
How Much Does It Cost to Build a 100-lot Mobile Home Park at a Glance?
In total, you should expect to initially invest between $4.5 to $6 million to build a trailer park with 100 lots. This includes land purchase, legal fees, blueprints, water and sewerage treatment facilities, and mobile homes.
Do bear in mind that these are merely ballpark figures and may go higher, depending on the location of your trailer park, the sizes of your mobile homes, and other legal fees, moving costs, and labor that should be added to the running cost.
Renting or Selling the Mobile Homes?
While it may seem expensive to build a trailer park, the good news is that you could earn it back if you have the patience.
Renting the Mobile Homes
Typically, mobile homes in trailer parks can hold a rent from $1,200 and up, including utility bills and lot rentals. When placed in comparison with your startup cost, these small figures can add up to a lot.
For example, if you have 100 mobile homes in your trailer park that are available for rent at $1,200 a month, your revenue will amount to around $120,000 depending on the occupancy rate. As some tenants may seek stability with long term rental ideas, you’ll be earning back your investments in 42 years or so.
Of course, this isn’t a quick return on investment, considering the money you’ve put into building the trailer park of your dreams. However, it can still be a potentially lucrative investment if you leverage the investment by financing it.
Selling the Mobile Homes
A more common strategy is to sell your mobile homes at a small profit rather than renting them out. Assuming you have paid $40,000 per unit (including related costs) and sell at $45,000, that’s a $500,000 sales profit for a 100-lot park.
This way, you will recover most of the initial investment, after which you can generate a mostly passive monthly income stream from renting out the land below the trailer at around $200 – $300 per lot.
Should I invest in a pre-built trailer park?
Due to the initial costs to build a trailer park, many trailer park owners of today have turned to purchase existing trailer parks instead. While this isn’t a small investment, purchasing an existing trailer park will save you more on the initial startup costs.
In general, you should be able to find existing trailer parks for sale from $800,000 for 80 lots, depending on location. However, all pre-built trailer parks would already have resolved any issues related to water and sewerage, although you should look into regular maintenance schedules to save yourself further worries later on.
However, it’s important to remember that buying a pre-built trailer park means you can’t control much of the design and uniqueness of the trailer park you will be running. Unless this is a significant issue, a pre-built trailer park may well be a better overall investment.
Buying an existing trailer park can be financially very rewarding. To help stand out from your competitors, you may also consider refurbishing the pre-built investment into a more unique trailer park, catering to certain niches.
In conclusion, you shuld expect to spend approximately $4.5 million to $6 million to set up your very own trailer park. While you’re likely to leverage this investment through loans, building a trailer park will take a lot of time, effort, and money on your end.
In many cases, engaging with a professional real estate team to find the right land can help steer your investment in a trailer park the right way. They can provide you the necessary advice on land suitability, various legal and county fees and let you in on tips to building a successful trailer park.
Although this may add to your initial investment expenditure, getting these bits of advice may be key to ensure you start the trailer park project on the right foot.