I had a conversation recently with someone who was genuinely excited. They had submitted an LOI on an RV park, and the seller accepted it. In their mind, that acceptance was the milestone, the moment the deal became real. What they had not done yet was underwrite the deal. RV park LOI mistakes almost always start exactly this way, excitement outrunning the math.
Here is what the numbers actually showed once we ran them. The park’s stated income was $500,000 a year. The offer included a balloon payment of $2.95 million due in five years, structured with 50 percent down and 15 percent of profits going to the seller on top of that. Run the actual math on that structure over five years, and the deal does not just fail to produce a profit for the buyer, it comes in roughly $500,000 negative once you account for what it would actually take to pay off that balloon.
This buyer had an accepted LOI on a deal that could not mathematically pay itself off, and they found that out from me, after the seller had already said yes. This is exactly how RV park LOI mistakes turn into real financial exposure instead of just a near miss.
Why RV Park LOI Mistakes Happen Before the Ink Is Even Dry
The order of operations gets flipped constantly in this business. Find a deal, feel good about the seller relationship, submit an offer, get excited when it is accepted, and only then start looking seriously at whether the numbers actually work. RV park LOI mistakes are baked into that sequence from the very first step, because an LOI submitted before underwriting is essentially a guess dressed up as an offer.
Part of the problem is emotional. Getting an LOI accepted feels like winning. It feels like progress. And that feeling can push a buyer straight past the step that actually protects them, running the numbers before committing to terms. This emotional pull is at the root of most RV park LOI mistakes, because excitement moves faster than a spreadsheet ever will. In the example above, the buyer had offered a structure that, on paper, looked generous and collaborative, half down, a profit share for the seller, a reasonable sounding balloon timeline. Not one part of that structure had been tested against whether the park could actually generate enough cash flow to support it.
There is also a knowledge gap that drives RV park LOI mistakes. A balloon payment due in five years is a real, hard deadline. The property has to either refinance, sell, or generate enough retained cash flow to cover that number when it comes due.
If the stated income of $500,000 a year is accurate, and a meaningful chunk of that has to service debt payments, a profit share to the seller, and operating reserves, there may not be enough left over to also build toward a $2.95 million payoff in five years. That gap between what sounds reasonable and what the math supports is where most RV park LOI mistakes actually live, and that math needs to happen before the offer goes out, not after the seller has already said yes.
What Buyers Get Wrong Before They Submit an LOI
They accept the seller’s stated income without rebuilding it. A stated $500,000 a year in income is not the same as a verified, defensible NOI. RV park LOI mistakes frequently trace straight back to a number nobody actually stress tested before it became the foundation of an offer.
They structure creative terms without modeling the full term of the loan. Half down and a profit share sound flexible and buyer friendly on the surface. Without modeling every year of the hold period against the balloon due date, RV park LOI mistakes like this one only become visible once the deal is already accepted and much harder to walk back from.
They treat seller acceptance as validation instead of just a starting point. A seller saying yes tells you they like your terms. It tells you nothing about whether those terms are actually sustainable for you as the buyer. This is one of the most common RV park LOI mistakes, treating acceptance as the finish line instead of the point where real underwriting should begin. Of all the RV park LOI mistakes on this list, this one is the easiest to fix and the most consistently ignored.
They do not calculate what the balloon actually requires in cumulative cash flow. A $2.95 million balloon in five years means the deal has to generate enough retained cash flow, appreciation, or refinancing capacity to cover that number on schedule. Skipping this calculation is one of the more dangerous RV park LOI mistakes because the consequence does not show up until year five, when there is very little room left to fix it.
They negotiate profit sharing terms without knowing what profit is actually left over. Offering the seller 15 percent of profits sounds reasonable until you calculate whether there is enough profit left after debt service and reserves to make that split survivable for the buyer too. Skipping that calculation is one of the quieter RV park LOI mistakes, because it does not show up as a red flag until the profit share and the balloon payment collide in the same bad year.
How to Actually Make an Offer the Right Way
Underwrite the deal before you write the LOI, not after. Rebuild the seller’s NOI from real financials, not the number they hand you. This is the same discipline I covered in my post on the mistake of accepting a seller’s NOI without rebuilding it, and it applies just as much before an offer goes out as it does during formal due diligence.
Model the entire loan term, not just year one. If a balloon payment is part of the structure, calculate exactly what cumulative cash flow, appreciation, or refinancing capacity would be required to cover it on the due date. My post on how to analyze a seller carry deal walks through this exact kind of term by term modeling.
Test the structure against a downside scenario, not just the best case. If the deal only works assuming steady or growing income for five straight years, it is not a deal that is worth buying as written. The deal needs to pay for itself or it is not a deal at all. My post on what makes an RV park deal worth buying covers the downside testing that should happen before terms are ever put on paper.
Know your real number before you negotiate profit sharing or down payment terms. Creative structures can absolutely work, but only when both sides know the underlying cash flow actually supports them. This is exactly the kind of modeling I do with clients before an LOI ever goes out, not after a seller has already accepted terms that cannot hold up.
Only submit the LOI once the underwriting is fully done, not before. The LOI should be the output of your analysis, not the trigger for it. If the numbers do not work, the terms in your LOI need to change before you send it, not after the seller has already said yes to something that cannot hold up.
RV park LOI mistakes are almost always mistakes of sequence, offering terms before testing whether those terms can actually be paid off. A balloon payment is a hard deadline with a real dollar amount attached to it, and any offer built around one needs to be tested against the full term of the loan before it ever reaches the seller’s desk.
If you are putting together an offer right now and want the numbers run before you submit it, that is exactly the kind of work I do. I uncovered this mistake in the first 30 seconds of looking at this deal. Reach out at PVIFinancial.com.
For more on running a profitable, well managed park, check out my Resource Library, and grab a copy of my book From Offer to Operation: The Complete RV Park Investor’s Guide, also available on Amazon.
~Wendi | Fractional CFO | PVIFinancial.com
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