* I like the idea of saving and re-purposing an old, and neglected trailer frame, to be made into a teardrop (or squareback) camping trailer. I had a derelict motorcycle trailer?
frame that I had bought almost 20 years before I got the urge to transform it into a camping trailer, but it had never been used or moved in all those years, so it needed some work. It had a bent/broken tongue, and 8" wheels on a spindly axle (w/rusted-out hubs & bearings), so those were necessary upgrade items, along with needing to extend the length from 60" to 96" (to build a 4x8). The 50" width was fine, since the plywood sheet flooring could sit atop it.
* I was doing a cheap, no/low budget, stealth build, and didn't replace the suspect (unknown weight capacity, too much positive camber) axle, so I put on larger hubs/bearings/14" wheels as a short-term fix, and proceeded to enlarge the frame dimensions using new steel tubing, and upgraded/extended the tongue using 3" square 3/16" thick tubing, 6 ft long, welded to three cross-members. After that, it was overbuilding all the way, using 3/4" plywood w/1/2" oak pieces as inner framework. steel bracing, and 10-12 tubes of PL adhesive. Only the failure to totally replace the axle on start-up ever surfaced as a problem, later on. And, somewhat a problem, was adding 12" to the front and 24" to the rear, which should've been the opposite, which caused an initially too light tongue weight (because I added too much weight in the galley).
* As to the OP's old boat trailer, if it was to be built into a 4x8 (the width is right), or even a 5x9 (building over the wheels), my concern would be with the suspension (I'd replace the springs/hangers/axle/tires & wheels first!) and the small size of the tongue material. A long tongue is good, but I'd want to have a beefier cross-section for strength. Otherwise, after stopping the rust, it's in no worse shape than my old frame was, and after improvements, my trailer frame has been a solid basis for what's got to be the heaviest 4x8 around (now almost 6 years after first use). I'd be even less concerned if the build was to be a lightweight, foamie-type camper, as those can often end up less than 1000 lbs. Go for it!
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