RV park income: separate annual sites, seasonal contracts and nightly stays

An RV park can combine annual site agreements, seasonal stays and nightly reservations on the same parcel. Those streams should be underwritten separately because their pricing, cancellation terms, operating costs and demand drivers differ. A blended occupancy percentage can conceal both the source of income and the capacity available to sell additional nights.

Sun Communities’ 2025 Form 10-K distinguishes transient from other real-property revenue and discusses conversions of transient RV sites to annual sites. It also describes seasonality in its RV business. This supports separating the revenue streams, not using that company’s portfolio results as a forecast for a particular park. Sun Communities, 2025 Form 10-K

Count sites once and sold nights separately

Assign every physical site to a documented operating category for each period. An annual agreement may occupy a site even when the guest is away. That site cannot also be counted as nightly inventory unless the actual agreement and operation permit it. Seasonal availability should reflect opening dates, weather closures and any use restrictions.

Keep the legal characterization separate from the revenue label. Calling a payment “annual site rent” does not determine residential tenancy rights, permitted occupancy, tax treatment or program eligibility. Review the actual agreement and jurisdiction with appropriate advisers, especially where guests remain for extended periods.

A deposit ledger belongs alongside this schedule. Money received for a future stay is not the same as revenue already earned or cash freely available for distribution.

Hypothetical 80-site park

Assume 30 sites have annual agreements at $600 per month, producing $216,000 of annual receipts. Another 20 sites are sold for a six-month season at $4,500 per site, producing $90,000. The remaining 30 transient sites are available for 180 nights, achieve 60% occupancy and charge $70 per occupied night, producing $226,800.

Transient variable operating cost is $18 per occupied night, or $58,320. Assume all other park operating costs, including the modeled costs of annual and seasonal sites, total $220,000. Cash before debt and capital is $254,480. This example assumes all earned amounts are collected and excludes sales taxes, deposits and ancillary activities.

The annual and seasonal categories are not automatically risk-free. Examine renewals, collections and any concentration in an employer or travel pattern. Their different contract structure is a reason for separate evidence, not an assumption of guaranteed payment.

Test a proposed site conversion on contribution

Suppose the owner proposes converting ten transient sites to annual agreements at $650 per month. Those sites currently produce 10 × 180 × 60% × $70 = $75,600 of annual transient revenue. Their avoided variable costs are $19,440, leaving $56,160 of current contribution.

The proposed annual revenue is $78,000. Assume the conversion creates $8,000 of additional annual utility and service costs beyond the existing fixed-cost budget. New contribution is $70,000, an increase of $13,840. If physical changes cost $50,000, simple cost recovery from that incremental contribution is about 3.61 years before financing, taxes, demand changes or maintenance differences.

Now test a stronger transient year at 80% occupancy. The same ten sites would contribute 10 × 180 × 80% × ($70 − $18) = $74,880, which exceeds the proposed annual contribution by $4,880. The conversion is therefore not inherently superior. It exchanges one revenue pattern and operating exposure for another.

Evaluate the cash calendar as well as the annual result

Annual agreements may be billed monthly, upfront or on another schedule. Seasonal customers may pay before arrival. Reconcile deposits transferred by a seller, refunds still owed and receipts that fund future service obligations. A large closing cash balance can include money needed to operate the coming season.

For the proposed conversion, compare monthly receipts and costs under both categories, including when construction removes sites from service. The annual contribution increase does not pay the initial $50,000 before it is earned. Identify a committed source and preserve the cash needed for the park’s low season.

Present the underwriting conclusion with limits

A useful financing package includes the site inventory, category-specific agreements, reservation and collection history, legal-use evidence, operating costs and a conversion sensitivity. The lender can then decide which streams it recognizes and what additional documentation is needed.

The investor’s decision should be framed as a supported tradeoff: how much contribution changes, how the receipt calendar changes, what capital is required and which legal or operating conditions remain unresolved. That is more informative than promoting a higher blended occupancy rate or assuming that longer stays automatically create a multifamily-style credit profile.