SBA 7(a) Feasibility Study Case Study: Acquisition of a Transient Highway RV Park on Interstate 10 in Deming, New Mexico

A 107-site, 14.8-acre RV park at 4400 East Pine Street in Deming, Luna County, New Mexico, directly off Interstate 10, marketed at $1,400,000 after three price reductions from $2,600,000, running at an average daily rate near $12 and occupancy near 30 percent under a membership-park legacy while the competitor a mile away publishes $37. Underwritten as an SBA 7(a) change of ownership under SOP 50 10 8.1 at a total project cost of $2,170,000, a $1,818,000 loan and $352,000 of cash equity and seller standby debt, with the historical coverage test supporting no loan and the projection path supporting 1.41x in Year 3 and 1.67x in Year 5. The park passes the SBA transient test at 81 percent of revenue from stays of 30 days or less. Determination: feasible with conditions.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 1, 2026

MMCG concludes that the acquisition of the 107-site Dream Catcher RV Park in Deming, New Mexico is feasible with conditions under an SBA 7(a) change-of-ownership loan, and that it is feasible only because of the structure. On the historical test that SOP 50 10 8.1 applies to an initial acquisition, 1.25x debt service coverage on the trailing year, the park supports no loan: at an average daily rate near $12 and occupancy near 30 percent, its trailing revenue is about $140,600 and its net operating income is approximately break-even under lean owner operation. The value of the purchase is the gap between that rate card and the corridor's, where the competing park a mile away publishes $37 a night and $375 a month, and the study carries the reset as a three-year ramp: $26 and 32 percent in Year 1, $31 and 40 percent in Year 2 and $34 and 46 percent in Year 3 on the transient sites, with 22 sites held monthly at $375 to $395 plus electric. On that ramp the park covers its debt at 0.91x in Year 2 and 1.41x in Year 3, and the interest and working capital reserve of $296,775 funds the Year 1 shortfall of $139,974 and the Year 2 shortfall of $16,616 with $140,000 of margin.

The park passes the SBA eligibility test. Revenue from guests staying 30 days or less is 73.2 percent of total revenue in Year 1 and 81.1 percent at stabilization, above the more-than-50-percent threshold, and the trailing year's revenue under the seller was transient-dominant by the same measure. The price is $13,084 per site against a Year 3 net operating income of $284,677 that values the stabilized park at about $3,160,000 at Newmark's 9.00 percent Class C capitalization rate, which is why the asset is cheap: the buyer is paying for a turnaround that has not happened. The determination is conditioned on five items: the lender's determination that the park is a Special Use Property on which SOP 50 10 8.1 permits reliance on projections where the loan is fully secured, with an as-improved appraisal supporting full collateralization; a $150,000 seller note on full standby for 24 months, which with $202,000 of cash satisfies the 10 percent equity injection and funds the reserve; the rate card and a reservation platform in place before closing with a stay-length ledger the lender can audit; a current NMDOT traffic count on Interstate 10 at Deming; and the classification of the park's water system under the Safe Drinking Water Act.

This is an MMCG model study: a complete feasibility analysis performed on a real, publicly marketed RV park using public data, prepared to show SBA lenders and buyers how MMCG underwrites a change of ownership under SOP 50 10 8.1 when the historical results cannot carry the loan and the value of the purchase is a rate reset. It is not a client engagement, MMCG has no relationship with the seller, the listing broker or any prospective buyer, and the analysis does not represent an offer, an appraisal, a business valuation or a recommendation to buy the park. Figures drawn from the listing, government sources and competing parks' own websites are identified as such. Figures labeled MMCG assumption are underwriting inputs set by MMCG from industry benchmarks, and items that could not be verified from a primary source at the study date are listed in the Conditions and Limitations section rather than estimated silently. In particular, the park's trailing financial statements, rent roll and reservation data, the cap rate the broker will provide on request, the current Interstate 10 traffic count at Deming, the rates of four of the six competing parks, the City of Deming's RV park ordinance and the park's water system permit were not confirmed from primary sources at the study date and are carried as stated assumptions.

The SOP 50 10 8.1 provisions cited in this study, the 1.25x historical coverage test on an initial acquisition, the 10 percent equity injection, the independent business valuation, the 85 percent special use amortization rule and the projection path for loans secured by Special Use Property, are stated as reported by lender trade associations and lending press summaries of Information Notices 5000-880695 and 5000-882227, and are to be confirmed against the SOP text in the lender's file.

The Project will operate as a transient highway RV park at 4400 East Pine Street in Deming, Luna County, New Mexico, at the Interstate 10 interchange on the east side of the city, 60 miles west of Las Cruces and 50 miles east of Lordsburg on the principal southern transcontinental route between Arizona and Texas. The physical program comprises the existing 107 full-hookup sites on 14.8 acres, built in 1996 and operated for most of its life as an Escapees membership park, with gravel pads and interior roads, a clubhouse with an office, a bathhouse and laundry, and a dump station. The acquisition program upgrades 43 sites to 50-amp service so that 40 percent of sites meet the 2023 National Electrical Code standard for a new park, refurbishes the bathhouse and laundry, repairs roads, pads and drainage, installs park-wide Wi-Fi, entry signage and lighting, and replaces the membership reservation arrangement with a commercial reservation platform and a public rate card. Eighty-five sites are operated as transient sites at nightly and weekly rates with a 28-day maximum stay, and 22 sites are held as monthly sites at a published monthly rate plus metered electric, with the manager's site among them. The park will be owner-operated by the buyer with a resident manager couple and seasonal workamper staff, open year-round, with the office staffed from 8 a.m. to 6 p.m. and after-hours self check-in. The buyer will hold the land, improvements and business in a single operating entity that is the SBA borrower, with the buyer's principals providing the personal guarantees the program requires. The Project is positioned as the full-service, big-rig-accessible park at the Deming interchange at $34 nightly and $395 monthly at stabilization, below the competitor's published $37 and above its monthly rate, with the Escapees membership base released from any obligation and re-solicited at the public rate.

Marketing and Sales Strategy

The reset begins before closing. The buyer lists the park on the commercial reservation platforms and the two membership directories that interstate travelers use, replaces the membership rate card with a public card at $26 nightly and $375 monthly on day one, and raises the nightly rate in two steps as occupancy builds. The core channel is the interstate: the park sits at the interchange with westbound and eastbound visibility, and the study carries billboard placement at the two approaches and a listing on the state's travel information signage. The secondary channel is the winter visitor: Deming's elevation and mild winters draw snowbirds on the Arizona and Texas route, and the 22 monthly sites are marketed through the winter visitor clubs and the Escapees network at the public monthly rate. The tertiary channel is the region's draws, Rockhound State Park, City of Rocks State Park and the Deming Luna Mimbres Museum, through the chamber and the state parks' own referral pages. Retention is a function of the reset: the former members who return at the public rate are the Year 1 base, and the study carries their share at a third of Year 1 transient nights.

Amenities

The park occupies 14.8 acres at 4400 East Pine Street on the east side of Deming at the Interstate 10 interchange, with the Colliers listing describing it as directly off the interstate and a listing aggregator confirming the 1996 construction date. Deming is the seat of Luna County in southwestern New Mexico, at about 4,300 feet of elevation, with a city population of roughly 14,800 at the 2020 census and a county population of roughly 25,400, figures carried from the decennial census and not re-pulled from the Vintage 2025 estimates at the study date. The city lies on Interstate 10 between Las Cruces and the Arizona line and on U.S. Route 180 to Silver City, and it is a historic stopping point for westbound and eastbound traffic and for winter visitors who prefer its elevation to the Arizona desert floor.

The demand that reaches the site is the interstate's. The New Mexico Department of Transportation's segment figure for Interstate 10 from the Arizona line to Las Cruces was 15,600 vehicles per day with 30 percent trucks in 2016, described at the time as consistent over the prior five years; a current Deming-specific count was not retrieved and is the fourth condition precedent. At that volume, and at the roughly 1 to 2 percent share of interstate traffic that is recreational vehicles on the southern route in the winter months, the interchange sees on the order of 150 to 300 RVs a day in season, against which the subject's 85 transient sites at 46 percent occupancy require 39 nights a day. The park's physical position at the interchange is its asset; its membership legacy is its liability, and the acquisition converts the one into the other.

The park is an existing, operating RV park and the acquisition requires no entitlement. The City of Deming's zoning and any RV park licensing ordinance were not retrieved at the study date, and the study carries the park's existing use as conforming, with the buyer's counsel confirming that the 50-amp upgrade, the bathhouse refurbishment and the signage are permitted as maintenance and improvement of an existing use. No stay-length ordinance for Deming or Luna County was identified; the 28-day maximum on transient sites is the operator's own policy, adopted to keep the transient ledger clean for the SBA test.

The park's water source and wastewater system were not confirmed at the study date. A park of 107 sites serving transient guests at the subject's occupancy serves an average of at least 25 individuals daily for at least 60 days a year and is a public water system under 40 CFR 141.2, normally a transient non-community system, and if it draws on its own well it carries the monitoring and operator requirements of that classification; the 22 monthly sites would move it toward the community system category only if 25 or more of their occupants became year-round residents, which the 28-day transient policy and the monthly product's design avoid. The classification is the fifth condition precedent. Electric service is carried at the serving cooperative's commercial tariff, with transient sites inclusive of electric and monthly sites metered.

Property tax is carried at $18,000 in Year 1, or $168 per site, as an MMCG assumption reflecting New Mexico's assessment at one-third of value and Luna County's combined rate on a commercial property near the contract price, escalating 2 percent per year. New Mexico's lodgers' tax applies to transient stays and is collected from the guest; stays of more than 30 days are exempt, which aligns the tax ledger with the SBA stay-length ledger.

The trade area for a highway park is the corridor, not the county, and the county's demographics describe the labor pool and the monthly market rather than the guest. Luna County is one of New Mexico's lower-income counties, with a median household income in the $35,000 to $40,000 range and a poverty rate above 25 percent on the last American Community Survey figures MMCG carried, which were not re-pulled at the study date and are stated as such. For the subject that profile means two things: the resident manager couple and seasonal workampers are available at the regional wage, and the 22 monthly sites have a local demand base among construction, agricultural and border-services workers who will pay $375 to $395 plus electric for a full-hookup site when the alternative is a scarce and aging rental stock.

The transient guest is not local. The winter visitor who stops at Deming is a retiree on the southern route between the Texas and Arizona snowbird markets, and the summer guest is a traveler between the coasts; neither is counted in the county's statistics, and the study counts them through the traffic series and the competing parks' demonstrated occupancy.

The demand model is built from the corridor and from the competitive set's capacity. The six parks within the Deming trade area hold roughly 500 sites, of which the competitor a mile away holds 153 pull-throughs and publishes a $37 nightly rate. The subject's 107 sites are about 20 percent of the local supply, and at 46 percent transient occupancy the subject needs about 39 occupied transient sites a night on average, or roughly 14,300 site-nights a year.

The penetration test is the subject's own history read against its rate. At an average daily rate near $12, a membership rate that admits members at roughly a third of the corridor's rate, the park ran at about 30 percent occupancy, which is to say that at a third of the market price the park sold a third of its sites. The reset assumes the park can sell 46 percent of its transient sites at $34, below the competitor's $37, once it is listed on the commercial platforms and visible from the interstate, and that the former members return at the public rate in the share the study carries. The broker's own summary projected occupancy near 45 percent at prevailing market rates of $35 to $40 a night, and the study's Year 3 figures of 46 percent and $34 sit at and below that projection. The ramp is deliberately slow: Year 1 is carried at 32 percent, below the park's historical occupancy, because the reset loses the members who will not pay the public rate before it gains the travelers who will.

MMCG identified six parks in the Deming trade area. One publishes a full rate card on its own website and is quoted; the others were located through aggregators and their rates are flagged.

Competitor Number 1 Little Vineyard RV Park and Resort This park is located at 2901 E Pine Street, Deming, NM 88030, a mile west of the subject on the same frontage, and is listed by a travel association as 153 full-hookup pull-through sites. Its own website publishes a nightly rate of $37 plus lodging tax, a discount rate of $33.30 for club members, a weekly rate of five nights at the member rate with two free, and a monthly rate of $375 plus electric; a second site operated by the same owner lists monthly rates starting at $400. The park is the subject's direct comparable and its published card sets the subject's stabilized rate.

Competitor Number 2 Deming Roadrunner RV Park This park is located in Deming, NM and is reported on an aggregator by a guest at $28 nightly and $275 monthly plus electric. Its site count and its own rate card were not retrieved at the study date.

Competitor Number 3 Hidden Valley Ranch RV Resort This park is located in Deming, NM. Its site count and rates were not retrieved at the study date.

Competitor Number 4 81 Palms RV Resort This park is located in Deming, NM. Its site count and rates were not retrieved at the study date.

Competitor Number 5 Wagon Wheel RV Park This park is located in Deming, NM. Its site count and rates were not retrieved at the study date.

Competitor Number 6 City of Rocks State Park This New Mexico state park is located on NM 61 northwest of Deming and offers developed campsites with electric hookups at state park rates well below the private parks. It is a destination rather than an interstate stop and competes for the leisure guest, not the transient traveler.

No new RV park under construction or approved in Deming or Luna County was identified at the study date, and the subject's own 491 days on market at falling prices is the clearest evidence that the local supply is not attracting new capital.

The subject's rate card is set against the one published card in the trade area and against the corridor to the east. Little Vineyard's $37 nightly and $375 monthly plus electric are the ceiling and the floor; Fort Stockton Resort and RV Park on the same interstate 380 miles east publishes $35 nightly and $435 to $635 monthly on its own website, which brackets the Deming rates from the Texas side. The subject opens at $26 nightly, a third below the competitor to recapture the members and fill the platforms, and moves to $31 in Year 2 and $34 in Year 3, $3 below the competitor for a park with older pads and a smaller amenity set. The monthly rate opens at $375, matching the competitor, and moves to $395 by Year 3 with electric metered separately.

The SBA test is managed through the rate card and the stay policy. Transient sites carry a 28-day maximum, weekly rates are priced at six nights for seven, and monthly guests sign a monthly agreement on a monthly site; the reservation platform records the stay length on every booking, which is the ledger the lender audits at annual review. Rates escalate 3 percent per year from Year 3, and other income, which comprises laundry, propane and fees, is carried at 3 percent of site revenue.

The acquisition closes in the first quarter of 2027 with the upgrades completed in the second quarter, and the ramp runs through 2029.

Transient occupancy is annual and includes the summer trough; the park's winter months run at twice the annual figure and its summer months at half. The reserve funds the Year 1 and Year 2 shortfalls against debt service, as shown in the pro forma.

Location: 4400 E Pine Street, Deming, NM 88030 Sites: 107

Source: Marshall & Swift CoreLogic, MMCG

Total project cost of $20,280 per site is about 35 percent of the per-site cost of the clean new-build comparables in MMCG's reference set and about a quarter of the stabilized value per site the park would carry at the corridor's rates, which is the arithmetic of a turnaround purchase. The reserve of $296,775 is the largest line after the price, and it is the condition that makes the structure work: it funds the Year 1 shortfall of $139,974 and the Year 2 shortfall of $16,616 against debt service with $140,000 of margin for a slower ramp. The guaranty fee is carried at the fiscal 2026 schedule on the guaranteed portion of $1,363,500.

Loan Assumptions

The loan is sized to the project, not to the historical coverage test, which supports no loan. Under SOP 50 10 8.1 an initial acquisition is tested at 1.25x on historical results and projections cannot satisfy coverage, with an exception reported for loans secured by Special Use Property where the historical information cannot carry the loan and the loan is fully secured by the collateral. The study relies on that exception, states the collateral position, an as-improved real estate value near $1,720,000 against a loan of $1,818,000 with the shortfall to be covered by additional collateral or a smaller loan, and makes the lender's determination the first condition precedent. The 85 percent special use amortization rule is applied on the basis that the land, pads, utilities and buildings carry substantially all of the $1,400,000 price, with the allocation to be confirmed by the independent business valuation that every change of ownership requires. A quality of earnings report is not required at a business purchase price under $3 million.

The park is an eligible business under SOP 50 10 8: more than 50 percent of its revenue for the prior year was derived from transients who stay for 30 days or less at a time, on the seller's description of a majority-transient park and the membership-park operating model, and the buyer's projections show 73.2 percent in Year 1 and 81.1 percent at stabilization. The 28-day transient maximum, the monthly agreement on the 22 monthly sites and the reservation platform's stay-length record are the compliance mechanisms, and the study recommends an annual stay-length ledger as a loan covenant. Mobile home parks are ineligible and the park has no mobile home or park model lots.

The acquisition is an initial acquisition under SOP 50 10 8.1. The equity injection of $352,000, cash and a seller note on full standby, exceeds the 10 percent minimum on total project cost; an independent business valuation by a qualified source is required and is carried in the budget; the historical 1.25x coverage test is not met and the projection path is relied on as stated above; the seller note on full standby for 24 months is excluded from debt service during the standby. The 7(a) loan of $1,818,000 is below the $5,000,000 program maximum, and the guaranty fee is carried at the fiscal 2026 schedule. The maximum rate on a loan over $350,000 is the base rate plus 3.0 percent; the study carries prime plus 2.75 percent and runs a sensitivity at 100 basis points above it.

The Year 3 operating budget at 46 percent transient and 92 percent monthly occupancy is built by line for an owner-operated 107-site park in southwestern New Mexico.

The expense ratio of 52.4 percent sits below the 54 to 56 percent range MMCG carries from Newmark's RV park expense analysis for a stabilized park because the park is owner-operated with no management fee and because New Mexico's property tax and insurance lines are light; payroll at 19.5 percent of revenue and utilities at 14.2 percent are the two lines that carry the budget, and both are above the Newmark averages because the park's revenue per site at $5,594 is modest. Insurance is carried at $22,000 in Year 1, or $206 per site, in a desert market without wind, flood or wildfire loading, escalating 5 percent per year. The reservation platform and card processing are carried at platform pricing within the administrative line.

The Year 1 and Year 2 shortfalls of $156,590 together are funded from the $296,775 reserve, leaving $140,185 against a slower ramp. The park reaches 1.25x in Year 3 and builds to 1.67x by Year 5 as the rate card completes its reset and expenses grow at 3 percent against revenue growing with rate and occupancy. The Year 3 yield on total project cost of 13.1 percent is the return a turnaround earns when it works, and it is why the structure can absorb two years of shortfall.

At Year 3 rates, the park's fixed operating cost is $303,039 including the replacement reserve, and its variable cost is the 4.5 percent administrative and processing line. Occupancy is stated on a blended basis across all 107 sites.

The 1.0x threshold at 43.3 percent blended sits twelve points under the forecast, and it is the credit fact: the park ran at about 30 percent at a third of the market rate, and the loan covers once it runs at 43 percent at the market rate.

The park holds coverage above 1.0x in every single-factor case except a stabilized transient occupancy of 35 percent, and the combined case of a lower rate and 40 percent occupancy falls to 0.86x. The last row is the determination's premise: if the reset does not happen, there is no loan. The lender's protection is the reserve, the seller's standby note and the rate card in place before closing.

The determination of feasible with conditions is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the park's trailing financial statements, rent roll, reservation data and the broker's cap rate, in place of which the study carries the listing's stated average daily rate and occupancy; the site count, which the listing states as 107 and aggregators as 84 and 117; the current asking price and status as of October 1, 2026, carried at $1,400,000 from the Crexi listing; the rates and site counts of Deming Roadrunner, Hidden Valley Ranch, 81 Palms and Wagon Wheel from their own websites; City of Rocks State Park's current fees; the City of Deming's RV park ordinance and zoning; Luna County's property tax rate and the park's assessment; the Vintage 2025 population estimates; the American Community Survey income figures for Luna County; the serving electric cooperative's commercial tariff; and the SOP 50 10 8.1 text on the Special Use Property projection path and the 85 percent amortization rule, which are carried as reported by lender trade sources.

This model study applies the methodology described on MMCG's RV park feasibility study and SBA RV park feasibility study pages. MMCG prepares RV park and campground feasibility studies for SBA 7(a) and 504, USDA Business and Industry and REAP, and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.