MHP RV Site Underwriting: Two Cash Flows, Not One

Published October 22, 2026

A park advertised as 140 sites may be two businesses stapled together. If 28 of those sites are recreational vehicle (RV) pads, a single blended cap rate applied to a single blended Net Operating Income (NOI) can overstate value by high single digits — and the financing gap is usually wider than the valuation gap, because an agency lender may not underwrite the RV stream the way the broker's pro forma does.

Freddie Mac's Multifamily Seller/Servicer Guide is explicit on the point in a way most offering memoranda are not. The relevant text is Chapter 22, as updated through the Guide bulletin of April 22, 2025. Under Section 22.1(b)(1), owners and renters of a recreational vehicle, including a park model home, located in a manufactured housing community (MHC) are excluded from the Guide's definition of applicable community residents. Under Section 22.2(b), a property is ineligible if Freddie Mac determines it to be a recreational vehicle campground. Neither provision tells a buyer what percentage is too much, which is the whole problem.

Why MHP RV Site Underwriting Splits the Rent Roll

Lot rent from a tenant-owned manufactured home is durable real estate income: the resident owns a structure that costs thousands of dollars to move, the lease is annual, and the turnover rate is low. Pad revenue from a seasonal RV is closer to hospitality income — higher nominal rent per site, shorter tenancy, weather-driven, and dependent on a reservation flow rather than a sticky resident base.

Blending them produces two errors at once. The revenue side looks stronger than it is per dollar of durability, and the expense side looks better than it is because the park-wide ratio is dragged down by low-cost manufactured home lots. The result is an NOI that is directionally right in total and wrong in composition, which matters because the composition is what sets the cap rate and what a lender sizes against.

So at a Mobile Home Park (MHP), RV site underwriting generally starts by splitting the rent roll into two columns before any ratio is applied, which is what MHP RV site underwriting means in practice. The same discipline that applies to park-owned homes, where the expense load travels with the revenue, applies here with a regulatory overlay on top.

What the Agency Guides Actually Say

The published language is worth reading directly rather than through a broker's summary. Four provisions in Freddie Mac's Guide bear on a mixed park:

• Resident definition. Section 22.1(b)(1) excludes owners and renters of a recreational vehicle, including a park model home, from applicable community residents — the population the Guide's tenant protections are written around.
• Ineligibility. Section 22.2(b) makes a property ineligible where Freddie Mac determines it to be a recreational vehicle campground. The test is discretionary, so a park at roughly a fifth RV pads and a park at nearly half may receive different answers, and the answer tends to arrive after the application.
• Appraisal treatment. Section 22.5(b)(1) requires the appraiser to consider the percentage of recreational vehicles and their rent structure in both rent and sales comparables, and to declare whether comparable sale prices included revenue from snack bars, restaurants, water parks, golf courses, or related membership payments.
• Non-realty allocation. Section 22.5(b)(3) requires the appraisal to allocate value for contributory business value, personal property, and other non-real-estate items.

Two other Guide provisions frame the site count and home ownership. Section 22.2(f) requires an MHC to contain five or more Home Sites, which the Guide defines as sites where a manufactured home is permitted to be located. Section 22.2(b) also makes a loan ineligible where the borrower, its affiliates, and any third-party investors own, in aggregate, more than 25% of the manufactured homes in the community. Fannie Mae's manufactured housing community term sheet sets a 50-site minimum, generally caps park-owned homes at 25% with up to 35% allowed under a reduction plan, and requires Quality Level 3, 4, or 5 — and does not address recreational vehicle sites. Whether RV pads count toward a site minimum is therefore a question for the lender rather than an assumption for the model. Agency terms change, so current requirements are worth verifying directly with the lender.

A Worked Example: 140 Sites, 28 of Them RV Pads

Example — illustrative. A 140-site park in a Southeast secondary market. 112 manufactured home lots, 104 occupied, all tenant-owned homes, lot rent of $395 per month: 104 × $395 × 12 = $492,960. 28 RV pads: 12 on annual tenancy at $540 per month (12 × $540 × 12 = $77,760) and 16 seasonal at $820 per month for a season averaging five and a half months (16 × $820 × 5.5 = $72,160), or $149,920 of pad rent. Other income of approximately $22,000, allocated about $8,000 to the manufactured home side (storage and fees) and about $14,000 to the RV side (bathhouse laundry and RV fees). The example assumes full collection on occupied sites; a collection-loss allowance would lower both streams.

The park-wide expense ratio of roughly 41% is the number that ends up in the marketing package, and it is a blend of a 38% manufactured home operation and a 52% RV operation. Apply that blended ratio to the RV revenue alone and RV NOI comes out near $96,000 rather than $79,000 — an overstatement of about 22% on that stream, before any cap rate is chosen.

Now the valuation. Capitalizing the combined NOI at a 6.25% cap produces roughly $6.24M. Capitalizing the manufactured home NOI at 6.25% and the RV NOI at an illustrative 11% — reflecting the shorter tenancy and the business-income character the Guide's non-realty allocation contemplates — produces roughly $4.98M plus $718,000, or about $5.69M.

Proceeds above assume a 1.25x Debt Service Coverage Ratio (DSCR) floor and a debt constant near 8.15% — roughly a 7.2% coupon on 30-year amortization, about 208 basis points over the 10-year Treasury, which stood at 5.12% on October 20, 2026 per the Federal Reserve's H.15 series as published on FRED (DGS10). Rate quotes change daily, so current pricing is worth verifying with the lender.

The third row is where deals die. A roughly $545,000 valuation gap is a re-trade conversation. A roughly $775,000 proceeds gap is an equity call, and it lands between signing and closing, when the lender's credit committee decides how much of the RV stream it will carry. Cap rates, coupons, and expense ratios here are illustrative and vary materially by market, mix, and operator.

The Seasonality a Trailing Statement Hides

A seasonal park's trailing 12-month statement can be accurate and still misleading. Freddie Mac's Guide anticipates this directly: Section 22.5(b)(2)(A) requires the appraiser to review how management's rent collection policies accommodate seasonal fluctuations in operating income, including those from recreational vehicles, and requires analysis where residents pay rent more than 30 days in advance of the due date.

Prepayment is the line people miss. A snowbird park that collects a full season up front books cash in one or two months that relates to five or six, so any annualization from a partial-year statement can be badly wrong in either direction depending on where the window falls. At closing, unearned prepaid season rent is a proration item that moves real dollars, and it is easy to overlook in a rent roll that shows a pad as paid-current.

Occupancy deserves the same separation. Section 22.2(e) of Freddie Mac's Guide generally defines stabilized occupancy as at least 85% of the Home Sites, and RV pads are generally not Home Sites. In the example above, blended physical occupancy on a 140-site count looks healthy, while occupancy on the 112 manufactured home lots alone is roughly 93% — fine here, but the arithmetic runs the other way on a park whose RV side is full and whose manufactured home side is not. The same gap between a headline occupancy figure and what actually collects shows up in economic occupancy on the pad side and in how utility recovery is measured rather than billed.

Where This Analysis Breaks

The split-cap framing can undervalue a genuinely good mixed asset. An RV operation with a long annual-tenancy base, pricing power that resets monthly rather than yearly, and no home-title drag may deserve something much tighter than an 11% cap, and an operator who runs reservations and amenities well can hold margins that look nothing like the illustrative 52%. Treating every RV pad as hospitality income is a heuristic, not a valuation.

The 11% figure itself is the weakest input in the model. It is a judgment about a buyer pool rather than a number drawn from a comparable sale, and the Guide's own requirement that appraisers disclose whether comparable sales included amenity and membership revenue exists precisely because that comp data is inconsistent. A reader who wants a defensible split needs sales comps on the RV side, which in most secondary markets are thin.

The financing concern may also be overstated for a given deal. Banks and credit unions underwrite mixed parks regularly without reference to the agency box, and local lenders who know the submarket sometimes give full credit to seasonal income that an agency would haircut. A park that cannot go agency is not unfinanceable — it is financed at different terms, and the comparison that matters is total proceeds and total cost, not program eligibility.

Finally, the exit may be kinder than the entry. A mixed park can be marketed to campground and RV resort buyers as well as manufactured housing community buyers, and a seller facing two bid pools sometimes gets paid more for the RV side than a split-cap model would suggest. That cuts against the whole thesis for the right asset, which is why the same analysis belongs in the exit value work and not only in year one. The one structural constraint that holds across all of it is that proceeds on a park like this are usually set by the coverage floor rather than the leverage cap.

The Underwriting Takeaway

Three tests travel from this, and MHP RV site underwriting generally lives or dies on the first. Split the rent roll by site type before any ratio touches it, and allocate expenses from the actual lines rather than applying one park-wide percentage to both streams. Ask the lender how it treats the RV pads — toward the site minimum, toward occupancy, and in underwritten income — before the application, because a discretionary campground determination that arrives late is an equity problem rather than a pricing problem. And capitalize the two streams separately, with the seasonal line checked against prepayment timing, so that a season collected in one month is not annualized into revenue that does not exist.

The sign at the entrance counts every site the same way. The Guide, the appraiser, and the credit committee do not.

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This analysis reflects current market interpretations as of the publication date and may evolve as new data becomes available. Figures cited are drawn from public sources including Freddie Mac's Multifamily Seller/Servicer Guide Chapter 22, Fannie Mae's manufactured housing community term sheet, and the Federal Reserve's H.15 10-year Treasury series via FRED, and are subject to revision. Nothing in this post is investment advice; readers should conduct their own diligence and consult qualified professionals before making investment decisions.