How much should an RV park set aside for capital reserves?

A common rule of thumb is $200-$500 per site per year, though older parks with aging utility infrastructure often need $500-$800+. Some lenders and syndicators use a percentage-of-revenue approach instead, reserving 3-6% of gross revenue annually. The right number depends heavily on the age and condition of the park's roads, electrical, and water/sewer systems.

What breaks first in an RV park's infrastructure?

Electrical pedestals and roads tend to be the most common near-term capital items, since pedestals see constant plug-in wear and asphalt in a park with heavy RV traffic degrades faster than typical parking lot pavement. Septic and water systems are less frequent but far more expensive when they fail, since they're often not visible until a lift station, drain field, or well pump actually goes down.

Do lenders require a capital reserve escrow?

Many institutional and SBA lenders require a funded reserve account at closing, particularly if a property condition report flags near-term capital needs. The lender will often require ongoing monthly reserve deposits as a loan condition, separate from whatever internal reserve policy the owner maintains for planning purposes.

Should I underwrite CapEx reserves as an operating expense or below the line?

Most professional underwriting treats capital reserves as a deduction from NOI to reach cash flow available for debt service, not as a line item inside operating expenses used to calculate NOI itself. This matters because it affects your reported cap rate and DSCR calculation, and buyers should confirm which convention a seller used before comparing numbers across deals.

RV Park CapEx Reserves: How Much to Set Aside for Roads, Utilities & Equipment

A park can show a clean 8% cap rate on the T12 and still be a bad deal if nobody accounted for the electrical system that's due for a full rebuild in year three. Operating expenses cover the recurring cost of running a park day to day — payroll, utilities, insurance, marketing. Capital reserves cover the lumpy, infrequent, expensive stuff: repaving roads, replacing pedestals, rebuilding a lift station. Skip this line item in your underwriting and you're not being conservative, you're just deferring the surprise to after closing.

This guide covers what a realistic reserve looks like, what actually breaks first in an RV park's infrastructure, and how to evaluate deferred maintenance before you're the one holding the bill for it.

Why CapEx Reserves Get Skipped

Sellers rarely include a capital reserve line in the T12 they hand you, because it isn't a cash expense they actually paid during the trailing period — it's a forward-looking allocation for costs that haven't happened yet. That makes NOI look better than the park's true economics, and it's exactly why an unadjusted seller T12 needs the same scrutiny covered in our T12 guide: the number on the page isn't automatically the number you should underwrite to.

First-time buyers compound the problem by treating any capital reserve as optional conservatism rather than a real cost of ownership. It isn't optional. Roads degrade whether or not you budgeted for it. The only choice you have is whether you plan for it now, at a discount, or pay for it later, at a premium, out of a cash-flow shortfall.

How Much to Reserve: Two Methods

Method	Typical Range	Best For
Per-site annual reserve	$200-$500/site/year (stabilized park); $500-$800+/site/year (aging infrastructure)	Parks with straightforward site counts and comparable condition benchmarks
Percentage of gross revenue	3-6% of gross revenue annually	Parks with wide swings in nightly vs. long-term mix, where site count alone doesn't capture wear

Neither method is precise — both are planning tools, not appraisals. The real number should come from an actual capital needs assessment: roof and structure age on any buildings, road surface condition, pedestal count and age, water/sewer system type and last inspection date. A park built in 2015 with fiber-optic-grade electrical and a recently repaved road needs a fraction of the reserve that a 1990s park running on original infrastructure does, even at identical site counts.

The Trap of Using Someone Else's Number

A per-site benchmark from a syndicator's investor deck was built around their specific portfolio's infrastructure age and climate exposure. Freeze-thaw states chew through asphalt and exposed plumbing faster than sunbelt parks. Don't import a reserve number without adjusting it for your park's actual condition and geography.

What Actually Breaks First

Electrical Pedestals

Pedestals take constant plug-in wear from guests, and 30/50-amp breakers fail more often than owners expect in a park running near capacity in summer. This is usually the most frequent near-term capital item — not the biggest single expense, but the one that shows up every season if the park is aging.

Roads and Pads

Asphalt in an RV park degrades faster than a typical parking lot because RVs are heavier per axle than passenger vehicles and the same lanes see repeated turning stress at entry and exit points. A full repave is one of the largest line items in most capital plans, and it's also one of the easiest to visually underestimate during a walkthrough — cracking that looks cosmetic in July can be a base failure that surfaces as potholes by the following winter.

Water and Septic Systems

Less frequent than pedestal or road work, but the most expensive when it fails, and often invisible until it does. A lift station failure, a collapsed drain field, or a well pump going out can run tens of thousands of dollars and take the park offline for affected sites in the meantime. This is why a due diligence process that includes an actual inspection of these systems — not just a visual walkthrough — matters more here than almost anywhere else in the deal.

HVAC and Structures

If the park has a clubhouse, laundry building, or manager's residence, roof and HVAC replacement cycles follow standard commercial timelines — but they're easy to forget about in a deal where most of the attention goes to the RV sites themselves.

How Lenders and Buyers Treat Reserves Differently

Most professional underwriting deducts capital reserves from NOI to reach cash flow available for debt service — reserves sit below the NOI line, not inside operating expenses. This distinction matters more than it sounds: two parks with identical NOI can have very different true cash flow if one seller quietly folded reserve costs into "repairs and maintenance" inside opex while the other didn't reserve at all. When comparing deals, confirm which convention each seller's numbers use before you compare cap rates directly — see our underwriting guide for how this fits into a full pro forma.

Institutional and SBA lenders often go a step further and require a funded reserve escrow at closing, particularly when a property condition report flags near-term capital needs. That escrow requirement is separate from whatever internal reserve an owner plans to hold — it's the lender's insurance that deferred maintenance gets addressed rather than deferred again. Expect this conversation with any lender covered in our lenders guide once a property condition report comes back with flagged items.

Evaluating Deferred Maintenance Before You Buy

Deferred maintenance isn't automatically a reason to walk from a deal — it's often the reason the deal is priced attractively in the first place. The question isn't whether a park has deferred capital needs, it's whether the discount you're getting on the purchase price actually covers what those needs will cost to fix, plus a margin for the unknowns that don't show up until you're inside the walls.

Get real bids, not estimates. A contractor walkthrough for road repaving or electrical rebuild work gives you an actual number to negotiate against, not a guess from a spreadsheet template.
Separate cosmetic from structural. Faded paint and old signage are cheap. A failing lift station is not. Don't let visible cosmetic issues distract from invisible structural ones, or vice versa.
Price the timeline, not just the cost. A road that needs repaving in year five is a very different underwriting input than one that needs it in month three. Get a realistic estimate of remaining useful life on each major system, not just a repair cost.
Negotiate the discovery into the price or a holdback. If diligence turns up real deferred maintenance the seller didn't disclose or price in, that's a legitimate basis for a price reduction or a closing holdback — not just something to silently absorb into your own reserve plan.

Building the Reserve Into Your Pro Forma

Once you have a realistic per-site or percentage-of-revenue number, treat it the same way you'd treat debt service: a fixed, non-negotiable line item that comes out before you calculate distributable cash flow. If a deal's investor return projections only pencil out by excluding a real capital reserve, the projections are showing you a return that doesn't actually exist — the reserve doesn't go away because you didn't model it, it just shows up later as a surprise capital call or a special assessment on your operating partners.

This is especially important for anyone raising capital through a syndication or JV structure. Investors who get hit with an unplanned capital call because reserves weren't underwritten correctly the first time don't come back for the next deal.

The Bottom Line

A capital reserve isn't conservative underwriting — it's accurate underwriting. The park's roads, pedestals, and utility systems are going to need money spent on them whether or not that expense shows up in your model. Building a realistic reserve based on the park's actual condition, not a generic per-site benchmark, is what separates a pro forma that survives contact with the real building from one that quietly falls apart in year two.

Where to Go Deeper

RV Park Due Diligence Checklist — the full inspection process that surfaces capital needs before closing
How to Read an RV Park T12 — spotting where a seller has folded (or hidden) capital costs into operating numbers
RV Park Underwriting — building reserves correctly into a pro forma banks and partners trust
RV Park Utilities and Infrastructure — what every investor needs to know about the systems most likely to drive capital costs
RV Park Lenders — how reserve escrow requirements factor into your financing

Whether you're buying your first park or your tenth, the discipline is the same: know the real condition of what you're buying, reserve for it honestly, and let the numbers reflect the building you actually own — not the one you're hoping it is.