Knowledge Base
Deal Analysis Guides
In-depth guides on underwriting, due diligence, financing, and value-add strategy — written for active RV park buyers, not passive readers.
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In-Depth Guides
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Underwriting an RV Park from Scratch
A step-by-step framework for building your first underwriting model. How to go from a broker OM to a defensible purchase price offer in under an hour.
Most first-time buyers overcomplicate underwriting or skip it entirely and rely on the broker's proforma. This guide builds a clean underwriting model from first principles: gross potential revenue, vacancy assumptions, expense reconstruction, NOI, and cap rate to purchase price. Includes the three adjustments every T-12 needs before you trust the numbers.
Reading a Rent Roll and T-12
What to look for — and what to be skeptical of — when a seller hands you financials. Red flags, normalization adjustments, and how to verify numbers with bank statements.
A seller's T-12 is a marketing document until you verify it. This guide covers the six most common ways RV park financials are presented favorably: owner compensation excluded from expenses, management fees absent or understated, non-recurring income included in revenue, deferred maintenance not reflected in OpEx, seasonal revenue smoothed, and occupancy calculated on peak months. How to normalize each and what to request from the seller.
Cap Rate vs. Cash-on-Cash: Which Matters More
Two investors can look at the same park and reach completely different conclusions. Understanding when each metric is the right lens — and when sellers use one to obscure the other.
Cap rate is a property metric — it tells you the unlevered yield on the asset at a given price. Cash-on-cash is an investor metric — it tells you what your equity actually earns after financing. Sellers use cap rates to make prices look reasonable when financing is expensive; they use cash-on-cash projections to look attractive when rates are low. Knowing which is being pushed on you tells you what the seller is trying to hide.
Financing Options: SBA, CMBS, and Seller Notes
A practical breakdown of the three most common RV park financing structures — how each is sized, what it costs, and which deals each structure fits best.
SBA 7(a) and 504 loans are the most common financing for RV parks under $5M — they require 10–15% down and offer 25-year terms, but require the buyer to operate as the primary business. CMBS (commercial mortgage-backed securities) loans work for larger, stabilized parks and are non-recourse but have strict prepayment penalties. Seller notes are the most flexible structure — they fill gaps in conventional financing and signal seller confidence in the asset. This guide covers when to use each and how to stack them.
Due Diligence Checklist: What to Inspect Before Closing
The full list: utilities, zoning, environmental, permits, leases, and infrastructure. What to hire professionals for and what you can verify yourself before spending money on reports.
A 30-day due diligence period feels like a lot until you're in it. Prioritize in this order: (1) title search and zoning confirmation — if these fail, nothing else matters; (2) utility infrastructure assessment — well, septic, or municipal connections and their capacity; (3) environmental Phase I — lenders require it and it protects you; (4) physical inspection of hookup condition, roads, and amenities; (5) lease review for long-term tenants and any unusual terms. Items 1–3 require professionals. Items 4–5 you can do yourself with a checklist.
Value-Add Strategies That Move the Needle
Not all improvements are equal. The six plays that consistently improve NOI — and the ones that sound good but rarely pencil. How to sequence them for maximum value at exit.
The highest-ROI value-add in most RV parks is rent-to-market — parks acquired below market rate can be raised without capital. After that: adding full hookup sites to existing partial-hookup inventory, switching from annual to nightly/weekly pricing on transient sites, adding amenities that justify premium pricing (pool, laundry, WiFi), and monetizing underutilized acreage. The plays that rarely pencil without significant scale: full amenity builds, cabin/glamping additions in rural markets, and major infrastructure upgrades without clear revenue tie-in.
Deep Dive
The RV Park Underwriting Model: Line by Line
A clean underwriting model has three sections: revenue reconstruction, expense normalization, and return calculation. Most buyers skip the first two and wonder why their actual returns differ from projections. Here's how to build each section correctly.
Revenue Reconstruction
Start from site count and category — transient, monthly, annual, and any ancillary (cabins, storage, laundry). For each category: sites × occupancy × rate × periods. Don't use the seller's blended occupancy figure — build occupancy assumptions by category. Transient sites at 55% annual occupancy yield very different revenue than monthly sites at 90%. Calculate Gross Potential Revenue (GPR), then subtract vacancy and credit loss to reach Effective Gross Income (EGI).
Expense Normalization
The seller's T-12 expenses are almost always understated. Add back: market-rate management fee (8–10% of EGI) even if owner-managed; market-rate salary for any labor the owner does personally; deferred maintenance reserve (3–5% of revenue for older parks); property taxes at post-purchase assessed value (not current owner's basis); and insurance at market rates. These four adjustments typically add 15–25% to reported expenses.
NOI and Cap Rate to Price
Subtract normalized expenses from EGI to get Net Operating Income (NOI). Divide by your target cap rate to get maximum purchase price: Price = NOI ÷ Cap Rate. If the market cap rate for this asset class and location is 8%, a $200,000 NOI property is worth $2,500,000 at that cap rate. This is your anchor. If the seller wants more, you need a story for why NOI will grow — and you need to underwrite that growth conservatively.
Cash-on-Cash and Debt Coverage
Run the deal with your actual financing terms: loan amount, rate, amortization period, and resulting annual debt service. Subtract debt service from NOI to get pre-tax cash flow. Divide by equity invested to get cash-on-cash return. Also calculate DSCR (NOI ÷ Annual Debt Service) — lenders typically require 1.25× minimum. A deal that pencils at 8% cap rate can destroy cash flow at 7.5% interest with 25-year amortization.
Reference
Due Diligence Priority Sequence
Do these in order. If anything in steps 1–3 fails, terminate the contract. Don't spend money on steps 4–6 until you've cleared the deal-killers.
Week 1 — Deal-Killers
- → Title search and lien verification
- → Zoning confirmation (RV park use, site count)
- → Flood zone determination
- → Permit verification (operating license current)
- → Utility infrastructure type and capacity
Week 2 — Physical
- → Hookup condition inspection (30-amp/50-amp, water, sewer)
- → Road and site condition
- → Common area and amenity condition
- → Well and/or septic capacity test (if applicable)
- → Environmental Phase I ESA
Week 3 — Financial
- → Bank statement verification vs. T-12
- → Security deposit reconciliation
- → Long-term tenant lease review
- → Vendor and service contract review
- → Insurance claims history
Week 4 — Closing Prep
- → Survey (if not recent)
- → Final walkthrough with punch list
- → Estoppel letters from long-term tenants
- → Utility transfer setup
- → Management transition plan
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