The arithmetic
NOI ÷ capitalization rate = an indication of value.
Turned around: NOI ÷ price = the cap rate. If a park produces $200,000 of NOI and sells for $2,500,000, the buyer bought at an 8% cap rate. If the same NOI sold for $2,000,000, that is a 10% cap rate. Same income, different price, different rate.
The rate is not a rule handed down from anywhere. It is a description of what a buyer was willing to accept as a first-year return given everything they knew about the risk.
What pushes a rate lower (higher price)
- Documented, verifiable income with clean records
- Stable occupancy across the full year, not just one strong season
- A meaningful base of long-term or annual residents
- Modern, well-documented water, wastewater and electrical infrastructure
- 50-amp service and site sizes that accommodate current rigs
- Strong location, access and visibility
- Room to expand with the utilities to support it
- Available, reasonably priced financing at the time of sale
What pushes a rate higher (lower price)
- Reconstructed or partial financial records
- Income concentrated in a short season with little summer floor
- Aging or undersized utilities, especially wastewater
- Significant deferred maintenance
- Small site count, which limits the buyer pool and financing options
- Remote location or weak surrounding demand drivers
- Zoning, permitting or legal uncertainty
- Tight lending conditions or high borrowing costs
Why we won't publish a statewide Arizona number
Because it would be misleading. A well-documented, year-round-occupancy park in a strong metro submarket and a seasonal park with an aging septic system two hours away do not trade at the same rate, and pretending otherwise sets sellers up for disappointment or, worse, causes them to reject a fair offer. Anyone quoting you "the Arizona cap rate" without looking at your park is selling you something.
Small differences, large dollars
Cap rate sensitivity is worth internalizing. On $200,000 of NOI, a one-point move from 8% to 9% changes the indicated value from $2.5 million to roughly $2.22 million — nearly $280,000 on a single point. This is why documentation, disclosure and a clean story about your season are not cosmetic. They move the rate, and the rate moves the price far more than most sellers realize.
What to ask a buyer
- What NOI are you using, and how did you build it?
- What adjustments did you make to my reported numbers, and why?
- What rate did you apply, and what specifically made you choose it?
- What would change that rate in my favor?
A buyer who cannot answer those four questions clearly has not done the work. We will answer them for any park we look at.
Educational information only. This page is general commentary about buying and selling RV parks in Arizona and is not legal, tax, engineering, environmental, appraisal or accounting advice, and not an offer to purchase. Requirements vary by property, county, municipality and water provider, and they change over time. Confirm anything that affects your property with the applicable Arizona agency and with your own attorney, CPA and licensed professionals.