Why do I have to pay fees if I own the cabin in the caravan park?
This is a question we get asked frequently at Cabin Connect. Interested buyers see the price of the cabin advertised for example, $60,000 and can not understand why they then need to pay ongoing annual site fees to the park.
To answer this question, we will break it down. In the majority of cases, the land that the cabin is located on is not included in the sale. The advertised price, for example the $60k, is for the relocatable structure (the cabin only). This cabin has been installed on a private businesses land, and therefore, you are required to enter into a rental agreement with the land owner (the caravan park).
Due to regulations, it is not often called a rental agreement, it is referred to as an occupation agreement. This agreement is between the cabin owner and park owner for 12 months at an agreed rate. This rate can go up at the end of the agreement and the cabin owner who is renting the site can agree to enter into a new agreement or remove their cabin from the site and leave the site for vacant possession.
When buying the cabin, you are not buying the cabin from the caravan park, you are buying it from the existing owner. There are two (2) transactions going on with every sale. One, is the sale of the relocatable asset and second is the new agreement between the new owner and the park.
So, what do your fees cover?
Your fees cover the expenses involved in running the caravan park. Without these fees, the park would have no revenue and would be unable to stay open, pay rates, electricity, water, wages of staff to mow the grass, rubbish removal and the list goes on.
Why are the fees so expensive?
The fees are only expensive if you do not get maximum use of your onsite cabin. The more you use the cabin, the better the value it becomes. With most fees ranging from $3-$10k per year and your allowance to holiday there up to 180 days, if you use your onsite cabin a lot, this is a cost effective holiday, if you don’t, it’s a lot to pay in cabin storage.
In summary, when considering whether or not you should buy an onsite cabin or van, you should consider:
- Can you afford the ongoing fees and maintenance?
- How much can you actually use it? Otherwise hiring a hire cabin may be a better use of your money…
- Are you prepared to part with the cabin if your life circumstances change and will you get your money back?
By asking yourself these questions, you should be able to come up with the right decision for you. Owning an onsite cabin or van is a lifestyle choice, not a luxury and is an ongoing expense that needs to be paid for and maintained.
