Plenty of RV parks underperform not because travelers stopped coming, but because the park hasn't kept up: tired pedestals, a failing dump station, rough roads, old cabins, Wi-Fi that dies at the third row. Fixing it takes money. Here's how owners and buyers fund it.
Why improvements are worth financing
Because parks are valued on NOI and cap rate, improvements multiply. Add $80,000 of NOI at a 10% cap and you've added $800,000 of value. Borrowing $200,000 to do that is a 4x return on the capital, which is why lenders will often finance it.
Deferred maintenance works the other way. Sewer, electrical and road problems get more expensive every year you wait, and a buyer will subtract them from your price.
What lenders want to see
- Clean financials: P&Ls, tax returns, occupancy trends, and revenue broken out by RV, tent, cabin and monthly.
- Debt coverage: most banks want a 1.20-1.35 DSCR, even after the improvements.
- A real plan: contractor quotes, timeline, and a revenue forecast that ties each dollar spent to NOI.
- Experience: an experienced operator or partner on the deal makes approval much easier.
Where the money comes from
| Source | Best for | Typical terms |
|---|---|---|
| SBA 7(a) | Renovations, working capital, or buying a park and funding upgrades in one loan | Down payment often 10-15% |
| SBA 504 | Big infrastructure: sewer, electrical, roads, new sites, bathhouses | Down payment typically 10-20% |
| Local and regional banks | Owners with strong P&Ls and a clear value-add plan | 20-25 year amortization, 5-10 year balloon |
| Seller financing | Buyers of parks with heavy deferred maintenance | Seller-carried capex, credits at closing, or earn-outs tied to NOI |
| Private or partner capital | Cabins, expansions and amenity builds; owners who don't want more debt | Preferred return or equity share, 3-7 year horizon |
| Equipment loans | Mowers, golf carts, laundry machines | Keeps cash free for the big projects |
SBA program limits and rates change. Confirm current terms with an SBA-preferred lender before you plan around them.
Improvements that pay back, ranked
- Electrical pedestals and utilities. Nothing hurts reviews faster than power that trips.
- Cabins or cottages. Well-placed cabins can earn $120-$250 a night and $20,000-$35,000 of NOI each per year.
- Roads and pads. Smooth roads and level sites drive repeat guests.
- Bathhouse renovation. The first thing guests judge a park on.
- Wi-Fi. The deciding factor for monthly guests and remote workers.
- Amenities that sell: docks, kayaks, dog parks, pickleball.
For buyers: funding improvements at purchase
- Roll the renovation budget into the acquisition loan.
- Negotiate seller credits for documented deferred maintenance.
- Ask the seller to carry part of the improvement budget.
- Use a bridge loan for heavy value-add, then refinance once NOI is proven.
When not to borrow
Don't take on improvement debt if occupancy is under 20% with no proof of demand, zoning or permits are unresolved, the upgrades don't match what local guests want, or the payment would push your DSCR below what lenders require. Good deals can carry financing. Bad deals can't.
Or skip the bank
Our Value-Add Partnership funds improvements with our capital instead of a loan. No personal guarantee, and we handle the work. Ask if your park qualifies.