RV Park Investing: Cap Rates, Site Criteria and Real Risks

RV park investing currently offers something most commercial asset classes don’t: an entry cap rate in the 8-13 range plus a realistic path to both current distributions and a total return in the high teens. Danny Mulcahy of USA Camping Company bought two parks in May — one at just over a 13 cap, one at 7.9 — while his read on multifamily was 5-7 caps and industrial 6-8.

The catch is that the return comes from operations and supply discipline, not from cap-rate compression. Mulcahy runs 12 parks across seven states, roughly 1,000 RV spaces, 50-60 glamping units and about $11 million in gross revenue with 120 employees. He also has one Texas park on the ropes after interest costs rose 50% and submarket supply more than doubled in 24 months.

What follows is the math he uses, the site screen he applies, how the operations differ from a leased building, the full post-mortem on the Texas deal, and how he raises capital for a niche asset without writing promises the SEC will read differently than he does.

Why RV Parks Pencil When Multifamily and Industrial Don’t

The argument is a spread argument. After 25 years in commercial real estate and syndications, Mulcahy’s conclusion is that stabilized commercial product forces a choice: current income or total return, rarely both.

• Existing retail or industrial: roughly 6-8% per annum to the investor, with a total IRR in the low teens at sale. High teens if you get lucky.
• New development: a 20% IRR is achievable, but with effectively no interim distributions and the full exposure of a development project.
• RV parks: he can reasonably project 8-10% annual distributions and a roughly 20% IRR as total return on a five-year hold.

The reason is the entry basis. In May he closed two properties, one at just over a 13 cap and one at 7.9. His read on competing product at the time: multifamily trading around 5-7 caps, industrial around 6-8. Nothing he saw was selling below an eight cap in the conventional lanes.

There is a secondary benefit that matters for anyone raising money. Investors are shown luxury apartment buildings, industrial parks and retail centers constantly. Nobody was calling them about campgrounds. That gave Mulcahy a story to tell that wasn’t on the table anywhere else — which is a real advantage in a crowded capital market, though it cuts both ways when you have to explain an unfamiliar asset.

Treat those return figures as one operator’s projections on his own deals, not as a benchmark for the asset class. The 13 cap and the 7.9 cap are actual closings; the 20% IRR is a five-year underwriting assumption that has not been realized yet.

What the Demand Picture Actually Looks Like

The strongest argument against a pandemic-fad thesis is the timeline. Mulcahy points to record year-over-year RV sales in almost every year from 2011 through 2019 — the growth curve predates COVID, so the 2020-2021 spike was an acceleration rather than the origin.

On the supply side, his figures: roughly 53 million people went camping last year against an estimated 20,000 to 25,000 campgrounds nationally. That ratio matters less than how the demand behaves. There are only about 100 to 120 days a year when most people camp, and within that window everyone converges on the same weekends — Fourth of July, Labor Day. Your revenue model has to survive that concentration.

The interesting growth is at the edges of the calendar. Mulcahy estimates winter camping is growing 10-15% per year, driven by two things:

• Remote-work tolerance. Even with return-to-office mandates, employers in the professional class now accept occasional remote work. Five to twenty remote days a year, stacked onto vacation, extends trips outside peak season.
• Heat. Summers have gotten hot enough that spring and fall are simply better camping, and mild winters open up destinations that used to be closed.

He also notes the broader outdoor industry — everything from coolers and chairs to RVs and apparel — growing at roughly 7-8% annually, second only to tech. These are his numbers and estimates, not published research, but the operational point holds: shoulder-season and winter occupancy is where an operator can add revenue without adding sites.

Things typically don’t go wrong overnight. But often sponsors don’t tell people until it’s already shit the bed.

— Danny Mulcahy, USA Camping Company

How to Underwrite an RV Park Site: Utilities, Drive Time, Amenities

Start with utilities, and specifically with whether the park is on city water and city sewer. Mulcahy calls that a huge value driver over septic for three separate reasons:

• Reliability and water quality. Guests want fresh water. Water quality complaints show up in reviews immediately.
• Maintenance drag. Septic pumps and septic problems are a recurring operational headache with no upside.
• Land consumption. Leach fields occupy usable acreage that could otherwise hold paying camp spots. That is a permanent hit to your site count and therefore your revenue ceiling.

Second screen is drive distance from population. Third is amenity — and the key question is whether you are building the amenity or borrowing it. Are you digging a fishing pond and installing glamping units, or are guests camping with you and then going to nearby lakes, rivers, hiking trails or vineyards? Borrowed amenities cost nothing to maintain but you don’t control them.

Positioning is a deliberate exclusion decision. Mulcahy does not compete in the Class A luxury lane — he cites AutoCamp, with its Airstream fleet in premium destinations and its Hilton partnership, as a strong operator in a segment he has no interest in. He also avoids 800 to 1,000-space parks, which he notes often drift into age-restricted, 60-and-over communities. His view is that those parks make money; they just lose the intimate camping experience he wants to sell.

His actual filter is simpler than any spreadsheet: would he stay there with his own family? Is it safe, clean, and not nickel-and-diming guests? He can only diagnose what a park needs if he is the customer. He explicitly rules out man camps near oil fields or data centers for exactly that reason — he doesn’t know what that guest wants.

The Operating Economics: Low CapEx, Pricing Elasticity, People

An RV park behaves less like a leased building and more like a hospitality business sitting on improved dirt. Three economics drive that.

CapEx is genuinely low. Outside of glamping units, there is no paint, carpet, beds, or HVAC to replace on a cycle. That removes a large recurring line item that multifamily and hotel operators carry permanently.

Depreciation is available because pulling water, power and sewer to raw land makes it improved property. Mulcahy raises this as part of his investor pitch. How that treatment applies to any particular deal is a question for your CPA, not an article.

Pricing is elastic. There are no 12-month leases, so nightly and weekly rates move with demand in both directions. His team now uses AI to help set them. Compare that to a stabilized apartment building where you wait for renewals to reprice.

The offset is people. Mulcahy runs about 120 employees, and the on-site park manager is the first critical hire — he is blunt that he could not operate without them. Oversight across 12 parks in seven states runs on:

• Corporate site visits at every park once a month, once every two months at most
• Security cameras and Teams for day-to-day contact
• Manager check-ins that range from daily to almost never, depending on performance

The feedback loop is public reviews. With roughly 80,000 guests served last year, Google, TripAdvisor and Airbnb reviews function as real-time operations reporting — a cleanliness or rudeness complaint often posts while the guest is still driving out. Because people are far more likely to report a bad experience than a good one, a steady flow of positive service reviews tells him a manager is performing well above baseline.

The Texas Park That Went Sideways — And What It Cost

One deal, two independent problems, both traceable to underwriting assumptions that stopped being true after close.

The debt. Mulcahy underwrote the park for traditional financing. Right before closing, the seller offered two years of interest-only seller financing. He pivoted, reasonably, because interest-only improved early cash flow. Then rates ran from near zero to five percent over about 18 months. At the 12-month mark — with another year of interest-only still available — he moved to lock permanent debt rather than gamble. The new debt was roughly 50% more expensive than planned: 4.5% to 6.5%.

The supply. Simultaneously, the submarket went from 400 spaces when he bought to over 1,000 within about 24 months. The barriers to entry he had assumed simply did not exist in Texas. Revenue dropped 20%.

Interest cost up 50%, revenue down 20%, same asset, same team — a team he still describes as amazing. He has waived his own fees for more than two years to protect investor equity, and the park is, in his words, on the ropes.

The lesson worth stealing is the decision framework. When a deal breaks, there are two honest options: pull the band-aid off and let the asset go rather than sinking more time, money and attention into it, or make accommodations and work it out. Both require the same thing first.

Mulcahy’s favorite quote is Mike Tyson’s — everybody has a plan until they get punched in the face — and he says he thinks about it weekly. Deals rarely deteriorate overnight. What kills sponsor relationships is silence during the deterioration.

Raising Capital for a Niche Asset Without Overpromising

The structural discipline comes first: write the operating agreement the way you’d want it written if you were the LP. Mulcahy gives investors as much control and protection as he can without tying his own hands on real operating decisions, and he refuses greedy splits — a sponsor taking 50% of the profits is a deal he wouldn’t invest in himself.

He went further than most and deliberately admitted investors he classified as high maintenance, knowing they would push him. They did. They rewrote portions of his operating agreement and changed how he reports. He says he sometimes regrets it, and that it made him a better sponsor.

On disclosure, his warning is specific and worth reading twice. “I’ve never missed a distribution in five years” can be a 100% true statement and still be false and misleading — if distributions were missed in the three years before that, if debt was drawn to fund them, or if they were cut from 99 cents to a penny. Those are material facts that change how an investor reads the claim, and the SEC evaluates false-and-misleading differently than sponsors do.

Two pro forma sins he sees constantly in packages investors forward to him:

• Using a year-three cash-out refinance to reach the projected yield.
• Buying at an 8 cap and exiting at a 5 in the model.

His test: would you invest in your own package?

Next step for the platform is structural. Getting from 12 parks to 50 or 60 probably isn’t achievable through single-purpose LLCs on five-to-seven-year horizons, so he is working toward a non-traded REIT — a level of sophistication he acknowledges he has never operated at.

Frequently asked questions

What cap rate can you actually buy an RV park at right now?

Mulcahy closed two parks in May at just over a 13 cap and a 7.9 cap. For comparison, his read on the same market was multifamily trading around 5-7 caps and industrial around 6-8, with essentially nothing in those lanes selling below an eight cap.

Cap rates in this space vary enormously by utility infrastructure, operating history, submarket supply and how much of the revenue is seasonal, so treat 8-13 as a range where deals exist rather than a number you should expect on any given listing.

What return profile should an RV park syndication project — distributions or IRR?

Both, which is the point. Mulcahy underwrites 8-10% annual distributions to the investor plus roughly a 20% IRR as total return on a five-year hold. Stabilized retail or industrial typically delivers 6-8% per annum with a low-teens exit IRR, and new development can reach 20% IRR but with no interim distributions.

These are projections on his deals, not guarantees. If a sponsor’s package reaches its target return through a year-three cash-out refinance or an exit cap lower than the entry cap, the return profile is a modeling artifact.

Is city water and sewer worth paying up for versus septic on a campground?

Yes, and Mulcahy treats it as a major value driver. Three reasons: guests judge water quality directly and it shows up in reviews, septic pumps and system failures create recurring maintenance with no revenue upside, and leach fields eat usable land that could otherwise hold paying camp sites.

That last point is the one investors underweight. A septic system permanently caps your site count, which caps revenue no matter how well you operate.

How many employees and how much oversight does a multi-park RV portfolio require?

Mulcahy runs about 120 employees across 12 parks in seven states, roughly 1,000 RV spaces, 50-60 glamping units, 50 boat slips and some storage, producing about $11 million in gross revenue.

Oversight runs on physical site visits from the corporate team once a month to once every two months per park, plus security cameras, Teams, and manager check-ins that range from daily to rare depending on performance. Public reviews across Google, TripAdvisor and Airbnb serve as the real-time quality signal — with roughly 80,000 guests served last year, service problems surface fast.

What are the biggest risks in RV park investing — and what killed this operator’s Texas deal?

Supply and debt structure, and Mulcahy’s Texas park got hit by both at once. He underwrote for traditional financing, took a two-year interest-only seller-financing offer right before close, then refinanced at 12 months into debt roughly 50% more expensive as rates ran up — 4.5% to 6.5%.

At the same time, the submarket grew from 400 spaces to more than 1,000 in about 24 months because the barriers to entry he assumed in Texas did not exist. Revenue fell 20%. He has waived his fees for over two years to protect investor equity. The underwriting takeaway: stress-test how quickly a competitor can add supply near you before you stress-test anything else.

The bottom line

If you’re screening your first campground deal, do the supply work before the financial model — count entitled or permittable space capacity within your drive-time radius and ask what stops someone from tripling it, because that is the assumption that took down a park run by a good team with good managers.