RV Park Underwriting: How to Build a Pro Forma That Banks and Partners Trust
Most buyers rely on the seller's numbers. That's how you get burned. Here's how to build your own underwriting model — one that holds up under a bank's scrutiny and convinces equity partners to write the check.
In This Guide
- 1. Why You Need Your Own Underwriting
- 2. Step 1 — Build Gross Revenue From Scratch
- 3. Step 2 — Apply Vacancy and Credit Loss
- 4. Step 3 — Reconstruct Operating Expenses
- 5. Step 4 — Calculate NOI and Verify the Price
- 6. Step 5 — Model Debt Service and DSCR
- 7. Step 6 — Calculate Cash-on-Cash Return
- 8. Full Pro Forma Example (80-Site Park)
- 9. Red Flags in Seller-Provided Financials
- 10. FAQ
Why You Need Your Own Underwriting
Sellers present the best possible picture of their park. That's not dishonesty — it's how every business sale works. Your job is to stress-test that picture and build a conservative, defensible model from the ground up.
Here's what seller financials routinely miss or misrepresent:
- ✕Owner labor — The owner manages the park themselves, but shows zero management expense. Add $800–$2,000/month once you hire someone.
- ✕Deferred maintenance — Capital items (road repave, well pump, septic system) that haven't hit the P&L yet but will hit your wallet.
- ✕Peak-year cherry-picking — Showing you 2021 revenue when post-COVID RV demand peaked, not the normalized 3-year average.
- ✕Utility confusion — Mixing gross and net revenue when utilities are billed back to tenants.
- ✕Occupancy fantasy — Reporting peak-summer occupancy as an annual figure.
The banker's rule
A lender will recast your pro forma using their own underwriting criteria. If your numbers don't survive that recast, you don't get the loan. Build your model conservatively first — or get surprised at the lender's desk.
Build Gross Revenue From Scratch
Don't start with the seller's income statement. Start with the physical asset: how many sites, what type, and what can each realistically rent for in this market.
Site Inventory Breakdown
- Full hookup (electric + water + sewer): Premium rate — typically $600–$1,200/mo long-term or $45–$80/night transient
- Electric + water only: 10–20% below full hookup
- Electric only: Budget sites — 20–30% below full hookup
- Dry camping / primitive: Lowest rate, often 50–60% of full hookup price
- Premium pull-throughs or waterfront: Add 15–25% premium to applicable base rate
Revenue Streams to Model
- 🏕 Site rental revenue — Core income. Formula: (# sites) × (rate) × (occupancy %) × (period)
- 🏊 Amenity fees — Pool, laundry, Wi-Fi, storage (if charged separately)
- 🛒 Camp store — Use net margin only (15–25%), not gross sales
- ⚡ Utility income — Include only if you bill above your cost basis
- 🏠 Cabin / glamping rentals — Model separately with realistic ADR and occupancy
- 🚗 Boat / RV storage — Highly profitable if land is available; model at market storage rates
Verify rates against the market
Check Campspot, Hipcamp, Recreation.gov, and state campground directories for comparable sites within 25 miles. Underwrite at mid-range comps, not best-in-class. Leave upside for after you own it.
Apply Vacancy and Credit Loss
No park runs at 100% year-round. Underwrite conservatively — you can always beat your projections, but you can't undo a bad acquisition.
Credit loss is separate from vacancy — non-paying tenants, bounced checks, collection issues. Add 1–3% of gross revenue on top of vacancy.
Effective Gross Income (EGI) Formula
Gross Potential Revenue (GPR)
− Vacancy Loss (15–20% of GPR)
− Credit Loss (1–3% of GPR)
= Effective Gross Income (EGI)
Reconstruct Operating Expenses
This is where most buyers get fooled. Build expenses from first principles — don't accept the seller's schedule.
| Expense Category | % of EGI (Typical) | Notes |
|---|---|---|
| Property Taxes | 4–8% | Pull actual tax bill; verify if reassessment triggers at sale |
| Insurance | 2–4% | Get your own quote from an RV park specialist carrier |
| Utilities (Owner-Paid) | 5–15% | Request 24 months of actual utility bills from seller |
| Repairs & Maintenance | 5–10% | More for older infrastructure: roads, electric pedestals, water lines |
| Management Fee | 8–12% | Model this even if you self-manage — you won't forever |
| Payroll / Labor | 5–15% | Varies widely by park size and amenity level |
| Advertising & Marketing | 1–3% | OTA commissions, Google ads, campground directory fees |
| Administrative / Legal / Accounting | 1–3% | Bookkeeping, software, attorney review costs |
| Capital Reserves | 5–10% | Sellers almost always omit this — $150–$400/site/year depending on age |
| Total Expenses | 36–55% | Lean owner-operated: ~35%. Full-service managed: 50–55% |
Never skip capital reserves
RV park infrastructure wears out. Budget $150–$400 per site per year depending on age and condition. A 100-site park needs $15K–$40K/year in reserves even when nothing breaks today. Sellers almost always show $0 here.
Expenses Sellers Routinely Understate
- 🔴 Management — Owner-operated parks often show $0. Budget it in from day one.
- 🔴 Capital reserves — Almost always missing from a seller's P&L.
- 🔴 Utilities — Summer averages hide winter maintenance costs and rate spikes.
- 🔴 Tax reassessment — Many states reassess at sale. A $2M purchase can see property taxes jump 40–80% in year one.
Calculate NOI and Verify the Asking Price
NOI (Net Operating Income) is the single most important number in commercial real estate. Valuation, loan sizing, and cap rate all flow from it.
NOI Formula
Effective Gross Income (EGI)
− Total Operating Expenses
= Net Operating Income (NOI)
NOI does NOT include mortgage payments, depreciation, or income taxes.
Back-Solve the Implied Cap Rate
Implied Cap Rate
Cap Rate = NOI ÷ Purchase Price
Example: $150,000 NOI ÷ $1,800,000 = 8.3% cap rate
Compare your implied cap rate to the market. RV parks in 2026 typically trade at:
- 🏆 Primary / coastal markets: 6–7% cap rates
- 📍 Secondary markets: 7–9% cap rates
- 🌿 Rural / tertiary markets: 9–12% cap rates
If your underwritten NOI produces a cap rate lower than the market benchmark, the seller is overpriced. Use the market cap rate to back into your maximum offer price:
Maximum Offer Price
Max Price = Your NOI ÷ Market Cap Rate
Example: $150,000 NOI ÷ 8.5% = $1,764,706 max price
See our full guide to RV park valuation methods for a deeper dive into cap rate comparables by state.
Model Debt Service and DSCR
Once you have NOI, you can determine whether a bank loan works and how much you can borrow. The key metric is DSCR: Debt Service Coverage Ratio.
DSCR Formula
DSCR = NOI ÷ Annual Debt Service
Annual Debt Service = monthly mortgage payment × 12
Example: $150,000 NOI ÷ $108,000 debt service = 1.39x DSCR
Common Loan Parameters to Model
- SBA 7(a): Up to 90% LTV, 25-year amortization, current rate ~7.5–8.5%. Slow (60–90 days) but low down payment.
- SBA 504: Splits between bank and SBA debenture. 10% down on eligible projects. Good for land + building.
- Conventional commercial: 75–80% LTV, 20–25 year amortization, balloon at 5–10 years. Faster than SBA.
- USDA B&I: Rural parks may qualify. Up to 80% LTV, 30-year amortization, competitive rates.
- Seller financing: Negotiated terms — no DSCR minimum, but seller prices for their risk. See our seller financing guide.
Read our full RV park financing options guide to compare lenders, rates, and which loan fits which deal type.
Calculate Cash-on-Cash Return
Cash-on-cash (CoC) tells you how much cash the deal returns relative to your actual dollars invested. It's what investors care about more than cap rate.
Cash-on-Cash Formula
Annual Pre-Tax Cash Flow = NOI − Annual Debt Service
Cash-on-Cash Return = Annual Cash Flow ÷ Total Equity Invested
Total Equity = down payment + closing costs + upfront CapEx
Run a sensitivity table
Model three scenarios: base case (your underwritten assumptions), upside (+5% occupancy, +3% rates), and downside (-10% occupancy, expenses run 5% hot). If the downside scenario still covers debt service with positive cash flow, you have a sound deal.
Full Pro Forma Example: 80-Site RV Park
A stabilized 80-site park in a secondary market, asking $1.6M. Numbers built from scratch.
Assumptions: 60 full hookup @ $700/mo, 20 electric-only @ $500/mo (long-term monthly). Down payment: 25% ($400K) + $30K closing = $430K equity. Loan: $1.2M at 7.75%, 25-yr amortization.
| Line Item | Annual | Notes |
|---|---|---|
| REVENUE | ||
| 60 Full Hookup @ $700/mo | $504,000 | 60 × $700 × 12 |
| 20 Electric-Only @ $500/mo | $120,000 | 20 × $500 × 12 |
| Laundry & Misc | $6,000 | Ancillary estimate |
| Gross Potential Revenue | $630,000 | |
| Vacancy (15%) | ($94,500) | Conservative annual floor |
| Credit Loss (2%) | ($12,600) | |
| Effective Gross Income (EGI) | $522,900 | |
| EXPENSES | ||
| Property Taxes | ($28,000) | + 20% reassessment buffer |
| Insurance | ($14,000) | Specialist carrier quote |
| Utilities | ($38,000) | From 24 months of actual bills |
| Repairs & Maintenance | ($26,000) | 5% of EGI |
| Management (10%) | ($52,290) | Included even if self-managing |
| Payroll / Labor | ($24,000) | Part-time maintenance + gate |
| Marketing / Advertising | ($7,000) | OTA + Google + directories |
| Administrative | ($8,000) | Bookkeeping + legal + software |
| Capital Reserves ($250/site) | ($20,000) | Critical — almost always omitted |
| Total Operating Expenses | ($217,290) | 41.6% expense ratio |
| NET OPERATING INCOME (NOI) | $305,610 | |
| DEBT SERVICE | ||
| Annual Mortgage Payment | ($106,524) | $1.2M, 7.75%, 25yr |
| Annual Pre-Tax Cash Flow | $199,086 | |
Use this as your template
Build this table in a spreadsheet for every deal you analyze. The discipline of filling in each line forces verification — and catches the gaps before the bank does. Use our RV park investment calculator to run scenarios quickly.
Red Flags in Seller-Provided Financials
Watch for these signals that a seller's numbers aren't reliable:
Zero management expense
Owner-operated parks often show $0. You'll need to pay someone. Add $800–$2,000/month — and so will every lender who reviews your file.
Zero capital reserves
The single most common omission. If you don't budget for infrastructure replacement, the bill comes out of your cash flow or your personal pocket.
Revenue above the 3-year average
Always request 3 full years of tax returns and bank statements. Cherry-picking a strong year is the oldest trick in commercial real estate.
Occupancy quoted as peak-season rate
A May–September park at 90% does not have 90% annual occupancy. Get monthly occupancy data for at least 24 months.
Utility expenses well below peers
More than 30% below regional benchmarks suggests deferred maintenance on utility systems or cherry-picked low-bill months provided to you.
No documentation available
Any seller unwilling to provide 3 years of tax returns, 24 months of utility bills, and a current rent roll is a deal you shouldn't make. Full stop.
For a complete pre-closing checklist, see our RV park due diligence checklist.
Frequently Asked Questions
Related Guides
How to Analyze an RV Park Deal in 30 Minutes
Quick-scan framework for go/no-go decisions before building a full model
How to Value an RV Park: Cap Rate, NOI, and Comps
Valuation methods and cap rate benchmarks by market type
RV Park Financing Options: SBA, Conventional, and Seller Finance
Compare lenders, loan types, and which financing fits which deal
RV Park Due Diligence Checklist
Everything to verify before you sign a purchase agreement
RV Park Investment Returns: What ROI to Actually Expect
Real cap rate data and cash-on-cash comparisons across asset classes
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