Understanding RV Park Cap Rates

The mechanics

Cap rate equals net operating income divided by value. Rearranged, value equals NOI divided by cap rate. A park producing $200,000 of NOI valued at an 8 percent cap rate indicates $2.5 million; at a 10 percent cap rate the same income indicates $2 million.

That two-point spread is why the conversation about risk matters as much as the conversation about income.

What pushes a cap rate lower (higher value)

• Verified, professionally prepared financials
• Diversified demand — not one employer, one event, or one season
• Modern electrical, water, and sewer infrastructure
• Strong location with durable demand drivers
• Professional management already in place

What pushes a cap rate higher (lower value)

• Thin or inconsistent records
• Concentrated seasonality or event dependence
• Known capital needs in the next few years
• Regulatory uncertainty around zoning or extended stays
• Remote location with limited buyer pool

Financing affects the rate too

Cap rates do not move in isolation from lending. When borrowing costs rise, buyers require higher going-in returns, which pushes cap rates up and values down for the same income. This is one reason values change even when a park's performance does not.