A feasibility study is not a cover sheet. It is the evidence base for every lendable land project. Land Kings supports operators who want to bring disciplined market feasibility discussions into investor meetings.
Feasibility Studies Decide Whether a Project Survives Review
Before a lender will fund development, before an investor will commit equity, and before a developer should commit land, someone needs to prove the project makes economic sense. That proof is the market feasibility study. It should answer one core question: can the project generate enough revenue and exit value to cover hard costs, soft costs, carrying costs, and an acceptable return on equity, without relying on better-than-expected metrics?
Most developers write feasibility studies backward. They start with a desired return and work back to the required revenue. The good operators start with the market itself: vacancy rates, rent levels, absorption capacity, competitive inventory, and the demographics of the trade area. That information sets realistic assumptions, not optimistic ones.
The Trade Area and Competitive Map
The first section of every feasibility study defines the trade area. For residential subdivisions, the trade area is households who want to live near employment, schools, and amenities. For manufactured home parks, it is renters priced out of traditional apartments but within commuting distance of workplaces. For RV parks, it is seasonal or long-stay rig owners near recreation or employment corridors. For storage, it is households and businesses willing to pay for security and climate control.
How to Draw the Competitive Map
List every competitive property within a five-to-fifteen-mile radius of the subject site. Capture the following for each competitor:
- Product type and year built.
- Price per site, per square foot, or per unit depending on the asset class.
- Occupancy or vacancy history over the last two years.
- Special features such as covered storage, RV wash stations, security gates, or playgrounds.
- Distance and driving time from the subject site.
The gaps in that map are your opportunity. If no MHP within ten miles accepts pets, charges less than five hundred dollars per month, or offers Wi-Fi, those are market signals.
Population and Employment Data That Drive Demand
Land development feasibility lives or dies on local economics. Manufactured home park demand is driven by the gap between median rent and median income. RV park demand is driven by disposable income, recreational access, and seasonal employment. Storage demand is driven by residential density, small business formation, and household mobility.
Key Data Points to Collect
- Population growth five-year and ten-year trends.
- Median household income versus median rent.
- Employment growth by sector: logistics, healthcare, construction, hospitality.
- Rate of new household formation and apartment construction.
- Number of new commercial permits issued in the last twelve months.
For storage and industrial development, count warehouse permits, truck registrations, and boat or RV registrations in the trade area. A county with high marine registration numbers and no boat/RV storage within twenty miles may represent a real opportunity.
Site-Specific Demand Tests
Trade area data tells you whether the region is healthy. Site-specific tests tell you whether this dirt is the right place to capture that demand.
The Visibility Test for Land Development
Visibility matters for MHPs, RV parks, and storage because each depends on drive-by discovery. A site that cannot be seen from the traffic lane will require more marketing, more signage, and more online budget. Visibility includes not just frontage but unobstructed sight lines, signing area, and room for a monument sign.
The Access Test
Access tests measure whether customers can get in and out safely. For MHPs and RV parks, test ingress and egress from the main road during peak hours. For storage, send a fifty-three-foot trailer down the access route to confirm clearance. If the access route is signalized, has a raised median, or requires crossing multiple lanes, the site is less attractive than it looks.
Absorption Testing for Residential Land and MHPs
Absorption testing asks: how fast can the project sell or lease its units or sites at the planned price?
For residential subdivisions, absorption is often two to four lots per month in active markets and may be slower during downturns. For manufactured home parks, absorptions depend on the number of vacant homes available, effective marketing, and the distance to workforce housing. For RV parks, absorption is more seasonal and depends on proximity to lakes, coastlines, hunting leases, or industry parks.
Reasonable Absorption Assumptions
Good operators underwrite absorption based on the lower of three numbers: historical absorption of the closest comparable, the rate achieved by the best comparable in the last two years, or the rate implied by current vacancy in comparable properties. Do not use the highest absorption you can find as your starting assumption.
Revenue Modeling for Each Product Type
Manufactured Home Parks
Model revenue by site, not by square foot. Common rent bands for workforce MHPs in Texas and Louisiana run from three hundred to six hundred dollars per month per pad depending on the market. Add utility markup if tenants pay their own electric, gas, or water, because that margin usually exceeds thirty percent. Include lot rent escalator assumptions of three to five percent per year over a five-to-ten-year hold.
RV Parks
Model seasonal and nightly rates separately if the park includes short-stay RV sites. Long-stay monthly sites usually run from three hundred fifty to eight hundred dollars per month depending on hookups and location. Nightly sites can run from thirty to one hundred dollars per night in high-demand locations. Include turnover cleaning costs for transient sites and exclude those from long-stay monthly assumptions.
Self-Storage
Storage revenue is sensitive to unit mix and pricing strategy. Climate-controlled units command two to three times the rent of standard units. Boat and RV storage units run higher per square foot but occupy more land and require higher paving cost. Occupancy assumptions range from seventy-five percent stabilized to ninety percent in tight markets. Factor in insurance, security, gate maintenance, and on-site management.
Cost Modeling and Pro Forma Discipline
After revenue, estimate hard costs, soft costs, and carrying costs. Hard costs include dirt work, paving, utilities, buildings, fencing, and gate systems. Soft costs include engineering, survey, legal, permitting, and marketing. Carrying costs include interest, taxes, insurance, property management, and vacancy reserves.
Common Soft Cost Underwrites
- Civil engineering and design: six to twelve percent of hard cost.
- Survey and geotechnical: one to three percent of hard cost.
- Legal and permitting: one to two percent of hard cost.
- Marketing and leasing: one percent of first-year revenue for MHPs and RV parks.
Do not squeeze soft costs to make your return look better. A feasibility study that assumes free engineering is not useful for decision-making.
Land Basis and Residual Value
The residual land value test asks: given projected revenue and cost, what is the most a developer should pay for dirt? If you paid one million dollars for raw land but your residual calculation says the land is worth six hundred fifty thousand in this use, the deal destroys equity before you break ground.
Residual Calculation Formula
Gross revenue minus operating expenses minus carrying costs minus construction costs minus profit equals residual land value. Work backward from a desired return on cost to find the maximum land basis. That protects your equity and gives you a floor for negotiations.
Sensitivity Analysis: What If Scenarios
Every credible feasibility study includes sensitivity tables that show how returns change when assumptions shift. Key sensitivities:
- What if construction cost rises twenty percent?
- What if absorption is fifty percent slower?
- What if interest rates move up one point?
- What if the jurisdiction requires a more expensive stormwater solution?
If your project fails under any realistic downside, you should not buy the land until you can fix the structure of the deal.
Working With Capital for Feasibility-Driven Investments
The difference between a good land deal and a great land deal is how well the feasibility study ties the project to real capital terms. When you present a disciplined feasibility study, capital sources take you more seriously and offer better terms.
Summary
A market feasibility study is your strongest defense against bad land and your best sales tool for good land. Start with the market, build competitive analysis into the heart of the document, verify absorption assumptions against real comps, stress-test the pro forma with sensitivity analysis, and never let a residual value calculation produce a land basis higher than your actual purchase price. If you treat feasibility as an instrument of discipline instead of a marketing document, you will buy the right land faster and attract investors instead of chasing them.