Know the Terms

Investor Glossary

Plain-English definitions for every term you'll encounter when underwriting, financing, or operating an RV park.

A

Amenity Premium: The additional nightly or monthly rate an operator can charge due to on-site amenities — pools, dog parks, laundry, pickleball courts, etc. Investors use amenity premium to justify capital expenditure on improvements: if a $50K pool addition allows a $5/night rate increase across 80 occupied sites, the payback period is roughly 4 months at full occupancy.
Annual Sites: Sites leased on an annual or long-term basis, typically to the same tenant year-round. Annual tenants provide stable, predictable revenue but often at below-market rates compared to transient nightly guests. A heavy annual-site mix can depress NOI and make a park harder to reposition. See also: Transient vs. Annual Sites.
Assumable Debt: An existing loan on a property that a buyer can take over without refinancing. Assumable debt is highly valuable when the existing rate is below current market rates. Common with USDA and some SBA loans. The buyer typically pays the seller the difference between the assumption balance and the purchase price as equity.

B

Back-In Sites: RV sites where guests reverse their rig in to park, with the tow vehicle or motorhome entry facing outward. Back-in sites are the most common configuration. They typically allow more sites per acre than pull-throughs but are less desirable to large rigs. Premium pull-through sites can justify a $5–$15/night surcharge.
Bulk Electric: A utility arrangement where the park pays a single commercial electric bill and allocates costs to guests through site rates rather than individual metering. Bulk electric is common in older parks and creates a hidden expense risk — the park bears all rate increases. Transitioning to individual metering or RUBS is a common value-add play.

C

CAM (Common Area Maintenance): Costs associated with maintaining shared infrastructure — roads, landscaping, restrooms, laundry, pool, and similar common areas. In RV park underwriting, CAM expenses are captured in operating costs. Investors should stress-test CAM projections against deferred maintenance backlogs, particularly for older parks with aging infrastructure.
Cap Rate: Capitalization Rate. NOI divided by purchase price, expressed as a percentage. A park generating $200,000 NOI purchased for $2,500,000 has an 8% cap rate. Cap rates vary significantly by market and park quality — stabilized destination parks in the Sunbelt may trade at 5–6%, while rural Midwest stabilization plays may offer 9–11%. Cap rate is an income-value metric, not a return metric; it does not account for financing.
Cap Rate Compression: The reduction in prevailing cap rates as buyer demand increases relative to supply, causing asset prices to rise. RV parks experienced significant cap rate compression from 2018–2023 as institutional capital discovered the asset class. When cap rates compress from 8% to 6%, a park with the same NOI is worth 33% more. Compression benefits existing holders; it creates entry-price risk for buyers.
Cash-on-Cash Return: Annual pre-tax cash flow divided by total equity invested, expressed as a percentage. Unlike cap rate, cash-on-cash accounts for financing — it measures the actual cash yield on your invested capital. A park generating $40,000 in annual cash flow after debt service on a $400,000 down payment returns 10% cash-on-cash. A primary metric for levered buyers.
CMBS Loan: Commercial Mortgage-Backed Security loan. A commercial real estate loan that is originated by a lender and then pooled with other loans and sold to bond investors. CMBS loans are typically non-recourse, feature 10-year fixed rates, and are assumable — making them attractive for stabilized, income-producing parks. Prepayment penalties (defeasance or yield maintenance) make early exit expensive.

D

Debt Service Coverage Ratio (DSCR): NOI divided by annual debt service (principal + interest). A DSCR of 1.25x means the property generates 25% more income than needed to cover loan payments. Most lenders require a minimum 1.25x DSCR for RV park loans; SBA lenders often require 1.25–1.35x on a global basis (including personal income). DSCR is the primary risk metric lenders use to size loans.
Destination Park: An RV park where guests intentionally travel to — typically near a national park, beach, ski area, or tourist attraction. Destination parks command premium rates, higher transient occupancy, and shorter average stays. They tend to carry lower cap rates (higher valuations) than highway corridor or residential parks due to demand visibility and marketing leverage.
Dry Sites: Sites with no utility hookups — no electric, water, or sewer. Common in boondocking-style parks and overflow areas. Dry sites have the lowest operating cost but also the lowest rate potential. They attract self-sufficient travelers with solar and large tanks. Dry sites adjacent to full hook-up areas are a low-cost expansion option for parks with undeveloped acreage.
Due Diligence Period: The contractually defined window after a purchase agreement is executed during which the buyer has the right to investigate the property and exit without penalty (beyond earnest money). Typical RV park due diligence periods run 30–60 days. Key tasks: review T-12 and rent roll, verify occupancy, inspect infrastructure (electric panels, septic, water), conduct environmental Phase I, and confirm zoning/permitting.

E

Earnest Money: A deposit paid by the buyer to the seller upon contract execution, demonstrating the buyer's commitment to close. Earnest money for RV parks typically ranges from 1–3% of purchase price. It is applied to the purchase price at closing. Depending on contract terms, it may be fully refundable during due diligence, then hard (non-refundable) after the due diligence period expires.
Economic Occupancy: The percentage of gross potential revenue actually collected after vacancies, discounts, and uncollected rent. Distinct from physical occupancy: a park at 90% physical occupancy may have 80% economic occupancy if long-term tenants are paying below-market rates or if there is bad debt. Investors should underwrite economic occupancy, not physical occupancy, when projecting NOI.
Environmental Phase I: A professional assessment of a property's environmental condition, typically conducted by a licensed environmental consultant. A Phase I reviews historical land use records, regulatory databases, and the site itself for recognized environmental conditions (RECs) such as underground storage tanks, fuel spills, or industrial contamination. Most lenders require a Phase I. If RECs are found, a Phase II (soil sampling) may be required.

G

Glamping: Glamorous camping — a category of experiential outdoor lodging that emphasizes comfort and design over primitive camping. Includes safari tents, geodesic domes, yurts, Airstream suites, treehouses, and similar structures. Glamping amenities command $150–$400+/night in high-demand markets. Adding glamping inventory to an underutilized RV park is one of the fastest-growing value-add plays in the asset class.
Gross Potential Revenue (GPR): The maximum revenue a park could generate if every site were occupied at full rack rate for the entire operating period. GPR is the ceiling before vacancies, discounts, and below-market leases. Underwriters use GPR to calculate loss-to-lease and economic occupancy. A realistic stabilized NOI is typically 55–70% of GPR after operating expenses.

H

Hook-Up Sites: Sites with utility connections — typically electric (30A or 50A), water, and sewer (full hook-up). Hook-up sites are the core product of a traditional RV park and command the highest rates. The ratio of full hook-up to partial and dry sites is a key due diligence item; parks with a high percentage of full hook-ups are more valuable per site.

L

Letter of Intent (LOI): A non-binding document outlining the proposed terms of a purchase before a formal purchase and sale agreement is drafted. LOIs typically specify purchase price, earnest money, due diligence period, financing contingencies, and closing timeline. Submitting a strong, clean LOI quickly is often the deciding factor in competitive off-market deals.

M

Management Agreement: A contract between a park owner and a third-party management company that delegates day-to-day operations in exchange for a management fee — typically 5–10% of gross revenue. Management agreements matter to buyers of owner-operated parks who intend to hire out operations, and to lenders evaluating operational risk. The quality of the management agreement terms (termination rights, fee structure, performance benchmarks) can significantly affect park value and lendability.
Master Meter: A single utility meter serving an entire park, with no individual site metering. The park pays one bill and either bundles utility costs into site rates or allocates them via RUBS (Ratio Utility Billing System). Master meter parks have higher operating expense exposure to utility rate increases. Converting to sub-metering is a capital-intensive but high-return value-add project in electric-heavy markets.
MH/RV Distinction: The regulatory and operational distinction between a Mobile Home (MH) park and an RV park. RV parks are licensed for temporary recreational use; MH parks are licensed for long-term residential occupancy. Some parks serve both uses — creating regulatory complexity, tenant rights issues, and lender scrutiny. Buyers should confirm licensing, confirm tenant lease structure, and understand the eviction implications before acquiring a mixed-use park.

N

NOI (Net Operating Income): Gross revenue minus operating expenses, before debt service and depreciation. NOI is the fundamental income metric for RV park valuation. Operating expenses typically include utilities, payroll, insurance, property tax, repairs, maintenance, and management fees — but not mortgage payments. At an 8% cap rate, every $10,000 of additional stabilized NOI adds $125,000 to asset value.

O

Operating Expense Ratio: Total operating expenses divided by gross revenue. RV parks typically operate at 35–55% expense ratios, depending on amenity level, management structure, and utility arrangement. A well-run, self-managed park with individual metering may achieve 35–40%. A highly amenitized resort with third-party management may run 50–55%. Expense ratios significantly above market often indicate deferred maintenance, above-market management fees, or inefficient utility recovery.

P

Perk Test: A soil percolation test that measures the rate at which soil absorbs water — used to determine whether a site can support a septic system. Critical for undeveloped parcels or parks considering expansion into areas not connected to public sewer. A failed perk test can eliminate the viability of new site development and must be conducted as part of expansion due diligence.
Physical Occupancy: The percentage of sites occupied at a given time, regardless of rate paid. A park with 100 sites and 80 occupied has 80% physical occupancy. Physical occupancy is an operational metric; economic occupancy is the investment metric. Physical occupancy data should be verified against registration records, utility usage, and on-site observation — seller-reported numbers are not always reliable.
Pro Forma: A projected financial statement showing expected future revenues, expenses, and NOI under a buyer's operating assumptions. A stabilized pro forma models the park at the buyer's target occupancy and rates after any planned improvements. Lenders underwrite against the pro forma; investors use it to model IRR and equity multiples. A credible pro forma is anchored to T-12 actuals and market comps, not aspirational assumptions.
Pull-Through Sites: RV sites designed so guests can enter from one end and exit from the other without backing up. Preferred by large rigs (40+ ft motorhomes, fifth wheels with tow vehicles). Pull-through sites typically command a $5–$15/night premium and improve guest satisfaction scores. Increasing the ratio of pull-through sites is a targeted site-improvement investment for destination parks serving larger rigs.

R

Rate per Site: The average nightly, weekly, or monthly revenue generated per occupied site. A fundamental operating metric for benchmarking performance and underwriting. Rate per site varies significantly by park type: destination transient parks may average $65–$120/night; long-term residential parks may average $400–$700/month. Rate per site improvement — through rate increases, mix shift toward transient, or premium site development — is the most powerful NOI driver.
Rent Roll: A schedule of all current tenants, their site numbers, lease terms, rent amounts, and payment status. For RV parks, a rent roll is most relevant for parks with monthly or annual tenants. Reviewing the rent roll reveals below-market leases, lease expiration risk, and tenant concentration. Buyers should reconcile the rent roll against bank statements to verify actual collections during due diligence.
RevPAR (Revenue Per Available Site): Revenue Per Available Site — total revenue divided by total available site-nights in a period. The RV park equivalent of hotel RevPAR. RevPAR captures both occupancy and rate performance in a single metric. A park with 100 sites at 70% occupancy and $80 average nightly rate has a RevPAR of $56. Improving RevPAR is the core goal of revenue management and rate strategy.

S

SBA 7(a) Loan: A Small Business Administration loan program that is the most common financing vehicle for RV park acquisitions under $5M. SBA 7(a) loans offer up to 90% LTV (10% down), 25-year amortization on real estate, and are fully amortizing with no balloon. The SBA guaranty reduces lender risk, enabling financing of parks that conventional lenders won't touch. Borrowers must personally guarantee and the loan is recourse. Owner-occupied parks (where the buyer operates the business) are eligible.
Seasonal Park: An RV park that operates for only part of the year — typically summer-only (Mountain West) or winter-only (desert Southwest). Seasonal parks have concentrated revenue periods and require careful cash flow management in the off-season. Underwriters must normalize operating expenses across the full year when analyzing seasonal parks; NOI and cap rates can look inflated if seasonality is ignored.
Seller Financing: A transaction structure in which the seller carries back a note — acting as the lender — rather than receiving the full purchase price in cash at closing. Seller financing is common in RV park deals because the asset class has fewer institutional lenders and many sellers are motivated to spread capital gains. A seller-financed first lien at favorable terms can significantly improve cash-on-cash returns. Terms, interest rate, balloon date, and prepayment provisions should be negotiated carefully.
Stabilized Occupancy: The occupancy level a park can reasonably sustain under normal operating conditions after lease-up or repositioning is complete. Lenders use a stabilized occupancy assumption (typically 75–85% for transient parks) to underwrite NOI. A park operating below stabilized occupancy represents a value-add opportunity if the shortfall is due to management, marketing, or deferred improvements rather than market demand.

T

T-12 (Trailing 12 Months): The last 12 months of actual financial performance — revenue, expenses, and NOI. The T-12 is the primary financial document in any RV park acquisition. Buyers should request bank statements to verify T-12 figures. Sellers sometimes present owner-adjusted or proforma T-12s; buyers should re-underwrite with realistic management costs, market-rate insurance, and normalized maintenance. The T-12 is your ground truth.
Tiny Home Sites: Sites designed and permitted for tiny homes, park models, or accessory dwelling units rather than traditional RVs. Tiny home sites typically command higher long-term lease rates than standard RV sites and attract a different renter profile. Zoning approval for tiny home use is not universal and must be confirmed. Some operators develop tiny home pads as a hybrid between RV park and manufactured housing — creating both higher income and higher regulatory complexity.
Transient vs. Annual Sites: The mix between short-term (nightly/weekly) transient guests and long-term annual tenants. Transient sites generate significantly higher revenue per site but require active marketing and management. Annual tenants provide occupancy stability but are often locked into below-market rates with tenant rights protections in some states. A common value-add thesis is converting annual-heavy parks toward a higher transient mix — improving NOI substantially if the market supports transient demand.

U

Utility Metering: The method by which electric (and sometimes water) usage is measured and billed to individual sites. Parks with individual sub-metering recover utility costs from guests directly, reducing operating expense exposure. Parks without metering must absorb all utility costs in the expense line. Sub-metering conversion is one of the most financially impactful capital projects available to RV park operators, with payback periods as short as 2–4 years in high-consumption markets.

V

Value-Add: An acquisition strategy in which the buyer intends to increase NOI — and therefore asset value — through operational, physical, or revenue improvements. Common RV park value-add plays include: rate increases on below-market annual tenants, converting dry sites to hook-up sites, adding glamping inventory, sub-metering utilities, improving revenue management, and professionalizing marketing. At an 8% cap rate, adding $50,000 in stabilized NOI creates $625,000 in value.

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