Case Study · Arizona · RV & Boat Storage · SBA 504
RV & Boat Storage Feasibility Study, Arizona — An SBA 504 Worked Case
This is how our independent feasibility study company and consultant team analyzed a ground-up covered RV and boat storage facility underwritten to an SBA 504 credit, from the installed fleet and off-site storage demand through the debt-service coverage a bank and its Certified Development Company must document. It is an anonymized composite of the methodology — not a specific client, address, or completed transaction — set in a fast-growing snowbird and retirement submarket on the outer eastern edge of the Phoenix metro.
A covered storage yard on the snowbird fringe of the Valley.
A sponsor came to our feasibility study company with a ground-up RV and boat storage project and an SBA 504 structure — a bank first mortgage, a Certified Development Company (CDC) debenture, and a borrower equity injection — that the lender wanted independently tested before it would commit. The subject is roughly ten acres on the outer eastern edge of the Phoenix–Mesa–Chandler metro, in a snowbird and retirement submarket where master-planned and HOA-governed communities push oversized-vehicle storage off-site. The build program is about 500 spaces: 320 covered-canopy RV and boat stalls, 120 open paved spaces, and 60 enclosed drive-up units, plus a gated, camera-monitored perimeter, a dump station, and a wash bay.
Because owner-operated storage is an active operating business rather than passive real estate, the SBA treats it as eligible for 7(a) and 504 financing, and the lender's question is not “what is the dirt worth” but “can this specific format, on this specific site, absorb to stabilized occupancy and cover this specific debt.”14 RV and boat storage also spans a continuum from near-passive land to a lightly operating business, and underwriting a premium format into a market that only supports an open lot — or the reverse — is the single most common feasibility failure in the niche. Our scope was the independent demand, format-fit, competition, and debt-service coverage analysis that supports the 504 credit.
Installed fleet and off-site storage demand.
The demand read starts with the durable installed base of RVs and boats and the rules that push them off-site, not a per-capita square-footage rule of thumb. Nationally, industry researchers converge on roughly 25 million US households owning an RV, a boat, or both, against fewer than two thousand dedicated storage stores.
Storage demand tracks the installed fleet, not the shipment cycle, because an RV sits idle for roughly 93 percent of its life. RVIA's 2025 Go RVing Demographic Profile counts 8.1 million primary RV-owning households plus 16.9 million more expressing strong five-year purchase intent, and NMMA counts roughly 11.8 million registered and documented boats.23 Set against that base, dedicated supply is thin: Yardi Matrix counted 1,937 completed dedicated RV and boat storage stores in its Q2 2025 report, and Toy Storage Nation estimates the sector needs roughly five times its current supply to meet latent demand.14 The shortage is amplified by the rules that govern where an owner may keep a coach or a trailer: roughly 65 percent of new single-family homes are HOA-governed, and one widely cited estimate holds that about 85 percent of HOAs restrict RV parking.6
That national algebra is exactly what a Phoenix-fringe snowbird submarket concentrates. RV and boat owners will drive 20 to 50 miles to store, so the trade area is a wide ring, not a three-mile radius, and it is dense with the master-planned, age-restricted, and HOA-governed communities that prohibit on-lot storage. Arizona’s East Valley is a documented search-demand hot spot: StorageCafe ranks Apache Junction among the nation’s leaders for RV and boat storage search demand at roughly 6.5 inquiries per 1,000 residents.5 On the installed fleet, the HOA and municipal push off-site, and the winter-visitor influx that swells the submarket from November through March, the model supports a stabilized economic occupancy near 92 percent once the facility completes a graded two-year lease-up.
| Demand driver | Basis | Supported figure |
|---|---|---|
| Installed fleet (national base) | ~25M US households own an RV, a boat, or both23 | Durable, idle-asset demand |
| Off-site push | ~65% new homes HOA-governed; ~85% of HOAs restrict RV parking6 | Structural, captive demand |
| Submarket signal | Apache Junction ~6.5 storage searches / 1,000 residents5 | Documented latent demand |
| Seasonal overlay | Snowbird / winter-visitor influx, Nov–Mar | Waitlist pressure in season |
| Dedicated supply | 1,937 dedicated stores nationally; ~5× supply gap14 | Stabilized occ. ≈ 92% |
Demand logic grounded in RVIA/NMMA installed-base data, HOA restriction estimates, and Yardi Matrix supply counts; see sources 1–6. Figures are illustrative of the engagement type. RV and boat storage is rarely tracked separately from self-storage, and supply data traces heavily to a single dominant provider.
A covered format into a mostly open-lot competitive set.
Six competing facilities sit within the fifteen-mile drive ring, most of them full or near it, but the standing set is dominated by open gravel and paved lots. The covered and enclosed product the affluent, high-value-coach end of this submarket will pay for is thinly supplied.
| Competitor | Dominant format | Distance | Occupancy | Read |
|---|---|---|---|---|
| Competitor A | Open paved lot | 3.2 mi | ~96% | Nearest; waitlist, no covered product |
| Competitor B | Covered + open | 6.8 mi | ~93% | Aging canopy; only covered peer nearby |
| Competitor C | Enclosed + climate | 9.1 mi | ~90% | Premium, higher rate; different tier |
| Competitor D | Open lot (self-storage add-on) | 11.5 mi | ~88% | Secondary use; limited RV depth |
| Competitor E | Covered canopy | 13.4 mi | ~91% | Cross-submarket, opposite corridor |
| Competitor F | Open gravel | 14.6 mi | Variable | Price-led; thin security, edge of ring |
Competitive set surveyed for the engagement; anonymized. Under-construction, permitted, and informal peer-to-peer supply (for example Neighbor.com listings, which do not appear in Yardi or Radius+ data) were scanned separately, consistent with institutional site-selection practice.
Only one covered competitor sits inside seven miles, and it carries a dated canopy — a weak defender against a new covered-and-enclosed program with a gated, camera-monitored perimeter and a growing captive base of HOA-restricted households behind it. Rates cascade by format, not by geography: on a per-space-per-month basis, open uncovered lots rent for roughly $75 to $150, covered canopy carries a 40 to 80 percent premium at $125 to $250, and enclosed drive-up runs $150 to $400, with desert-Southwest climate product reaching $200 to $400 and beyond.7 The subject’s blended program is placed against that cascade rather than a single market average.
A rigorous study does not stop at the standing set. National scarcity is not a submarket guarantee: dedicated RV and boat rents proved resilient through the 2023–2025 correction, but the broader storage sector is normalizing, and parts of Arizona and Texas already show localized rate weakness in overbuilt suburban nodes.1 We scanned announced, permitted, and under-construction supply, and netted out the informal peer-to-peer capacity the trailing directory data cannot see, so the absorption forecast is not quietly overstated. Here the read is a genuinely undersupplied covered-and-enclosed niche inside an otherwise open-lot-heavy submarket — the subject fills a format gap rather than splitting a saturated one.
Arizona macro: growth and in-migration, no supply brake.
The state backdrop is a tailwind for a metro-fringe storage site, tempered by the reality that Arizona is a non-CON state with no supply gate, so every project carries its full demand burden. Arizona reached roughly 7.6 million residents, and metro Phoenix dominates.
The Phoenix–Mesa–Chandler MSA reached 5,186,958 as of July 1, 2024, and Maricopa County alone reached 4,673,096, the fourth most-populous US county and among the largest numeric county gains in the country; the state’s Office of Economic Opportunity projects metro Phoenix to hold about 73.5 percent of the state population by 2060.910 That rooftop growth on the outer ring is exactly the demand engine a storage facility needs, and it is reinforced by in-migration: more than 630,000 Californians moved to Arizona over the decade through 2022, though 2025 brought a material Sun Belt migration slowdown that a careful study treats as a downside sensitivity rather than a straight-line input.11
Decisively for storage supply, Arizona operates no general Certificate of Need program — the National Conference of State Legislatures places it among only three states with no CON regime — so there is no permit gate on new storage capacity, supply is market-driven, and oversupply risk is elevated.12 The feasibility consequence is the opposite of a full-CON state: the study, not a regulator, must carry the demand test. Two factors cut in the sponsor’s favor. Arizona levies a 2.5 percent flat personal income tax, the lowest flat rate in the country, alongside a business personal-property exemption rising to $500,000 in 2026, which lightens the fixtures-and-equipment tax load.13 And the SBA channel here is deep: TMC Financing has been named Arizona’s SBA 504 Lender of the Year for four consecutive years, the state ’s 7(a) book runs to roughly 7,055 loans and $4.37 billion since fiscal 2020, and the SBA’s combined 7(a)-plus-504 ceiling rose to $10 million effective July 4, 2026, enlarging bankable deal size.1617
Why the site captures the submarket.
Ownership density, HOA governance, and a seasonal population all point the same direction, and the site’s access and adjacency convert that demand into leases.
The wide trade area is dense with the master-planned, age-restricted, and HOA-governed communities that prohibit on-lot RV and boat storage, and it carries a large winter-visitor population that peaks from November through March. The seasonal overlay is a feature, not a bug, for storage: snowbird coaches that leave in spring convert to in-and-out and covered demand, and the captive HOA base underwrites year-round tenancy. The subject sits within the 20-to-50-mile catchment that RV and boat owners will actually drive, close to the gated communities that generate the demand rather than in a remote industrial node.
Format fit does the rest. The affluent, high-value-coach end of this submarket will pay the covered and enclosed premium the standing open-lot set does not offer, which is why the model weights the program toward covered canopy and a smaller enclosed tier rather than a cheaper all-open build. One Arizona-specific diligence step matters even for a low-water use: greenfield development in the Phoenix Active Management Area must respect the Assured Water Supply regime, so the study confirmed the site is served by an existing municipal provider with adequate designation and that the facility’s water demand — a wash bay and restrooms, not irrigation — is immaterial to that determination.19
The SBA 504 structure.
Total project cost lands at $5.00 million. The 504 program is purpose-built for owner-occupied fixed assets and construction, and it splits the capital stack three ways: a bank first mortgage, a long-dated fixed-rate CDC debenture, and a borrower equity injection.
| Cost component | Amount |
|---|---|
| Land (~10 acres, metro-fringe) | $0.75M |
| Site work, grading, drainage & paving | $1.05M |
| Covered canopy structures (steel)8 | $1.60M |
| Enclosed drive-up building (60 units) | $0.70M |
| Security, gate, cameras, lighting & access tech | $0.25M |
| Office / caretaker & utilities | $0.20M |
| Soft costs, design, permits & contingency | $0.30M |
| Working capital, lease-up reserve & fees | $0.15M |
| Total project cost | $5.00M |
Development cost cascades by format, from roughly $15/SF for a paved open lot to $72+/SF for climate-controlled product; the covered-and-enclosed mix here sits between those poles. See source 8.
| Item | Figure |
|---|---|
| Bank first mortgage (50%) | $2.50M |
| CDC / SBA 504 debenture (40%)15 | $2.00M |
| Borrower equity injection (10%) | $0.50M |
| Bank term / rate / amortization | ~9.5% / 25-year amortization |
| Debenture rate / amortization | ~6.5% fixed / 25-year |
| Annual debt service (blended) | ≈ $424k ($262k bank + $162k debenture) |
Structure per SBA 504 conventions under SOP 50 10 8: bank first mortgage, CDC debenture, borrower equity; owner-occupancy 60% for new construction; rates illustrative. See sources 14 and 15.
The equity injection sits at the SBA-minimum 10 percent, which SOP 50 10 8 (effective June 1, 2025) restored for start-ups and changes of ownership. That 10 percent is defensible here precisely because a mixed-format storage yard is unlikely to draw the special-purpose designation that raises the required injection to 15 or 20 percent; single-use climate-controlled product is the format that draws heightened scrutiny, and this program is deliberately mixed.14 On a 25-year amortization, the $2.50 million bank note at an illustrative 9.5 percent costs about $262,000 a year, and the $2.00 million CDC debenture at an illustrative 6.5 percent fixed costs about $162,000, for a blended annual debt service near $424,000 — the number the projected coverage must clear. The study exists to support exactly that: the debt-service coverage the bank and the CDC must document, tested against an independent read of demand and absorption rather than the sponsor’s own projection.
Feasible and bankable, on coverage the credit can document.
The stabilized model builds effective gross income from the format-weighted rent roll, nets a low-but-not-zero operating expense load, and carries the coverage through a graded lease-up to a stabilized 1.45x in Year 3.
| Line | Basis | Amount |
|---|---|---|
| Covered canopy (320 spaces) | 320 × ~$165/space/mo7 | ≈ $633.6k |
| Open paved (120 spaces) | 120 × ~$95/space/mo7 | ≈ $136.8k |
| Enclosed drive-up (60 units) | 60 × ~$260/space/mo7 | ≈ $187.2k |
| Gross potential rent | 500 spaces, stabilized mix | ≈ $957.6k |
| Vacancy & credit loss (8%) | Stabilized economic occupancy ~92% | ≈ ($76.6k) |
| Ancillary income | Admin/late fees, dump station, wash bay, in-and-out | ≈ $44.0k |
| Effective gross income (EGI) | Collected rent + ancillary | ≈ $925.0k |
| Operating expenses (~33.5% of EGI) | Management, security, insurance, R&M, property tax, G&A7 | ≈ ($310.0k) |
| Net operating income (NOI) | EGI less operating expense | ≈ $615.0k |
Format rates within cited ranges (covered $125–250, open $75–150, enclosed $150–400); expense ratio ~33.5% within the 25–37% storage band, NOI margin ~66%. Property-tax reassessment to purchase price is carried, not assumed away. See source 7.
| Year | Stage | Occupancy | NOI | Debt service | DSCR |
|---|---|---|---|---|---|
| Year 1 | Lease-up (reserve-supported) | ~62% | ~$382k | ~$424k | 0.90 |
| Year 2 | Building | ~78% | ~$488k | ~$424k | 1.15 |
| Year 3 | Stabilized | ~92% | ~$615k | ~$424k | 1.45 |
DSCR computed as NOI divided by the ~$424k blended annual debt service. The Year-1 shortfall is covered by the funded lease-up reserve; break-even coverage is reached within 24 months, consistent with the SBA absorption gate. See sources 1 and 14.
The stabilized 1.45x coverage is the figure the bank and the CDC document, and it clears the roughly 1.20x to 1.25x minimum that storage lenders size to — increasingly stress-tested at about 85 percent occupancy with no credit for forward rent growth — with real headroom.7 By Year 2 the project already covers fully amortizing debt service at 1.15x. The Year-1 figure of 0.90x is intentionally below 1.0 — it is the lease-up year — which is exactly why the structure carries a funded lease-up reserve: the reserve covers the ramp, and permanent coverage is measured once the facility reaches its supportable occupancy. Crediting pandemic-era absorption in a normalizing cycle, or modeling advertised street rates as if they were collected rents, are the two most common ways these storage pro formas fail review; the ramp here is deliberately graded and built on effective, discount-adjusted rents.1
On the equity side, the $0.50 million injection is the SBA-minimum 10 percent, and the levered return is graded by a deliberately conservative set of exit and reserve assumptions rather than a capitalized peak. The stabilized model funds a canopy-and-paving replacement reserve, holds rent growth to a modest through-cycle pace rather than extrapolating the 2021–2022 surge, and values the Year-10 exit against a normalizing storage market in which national street rates have already turned negative and dedicated RV and boat product trades wide of traditional self-storage — roughly 6.0 to 7.5 percent for Class A and 7.5 to 8.5 percent for Class B.18 Under that conservative frame — a two-year lease-up that is a genuine cash drag before it turns, a funded reserve, and an exit capitalization held wide of the going-in yield on cost — the model returns an illustrative levered equity IRR near 16 percent over a 10-year hold. The feasibility study treats that figure as a sensitivity output, not a promise, and stresses it against slower absorption and softer rents.
Verdict: financially feasible and bankable. On independently derived off-site storage demand, a stabilized 1.45x DSCR that clears the storage lending floor with headroom, and an illustrative ~16% levered equity IRR, the projections support the SBA 504 credit.
Independent demand, format-fit, competition, and DSCR stress.
The engagement was scoped the way a credit committee reads it. As an independent feasibility consultant, our role is to test the sponsor’s projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. We built demand from the installed fleet, the HOA and municipal off-site push, and competitor occupancy and effective rents, then matched the format program to what the submarket will actually pay rather than defaulting to the cheapest or the most premium build. Absorption was modeled on a graded two-year ramp to a documented, discount-adjusted stabilized occupancy, not a pandemic-era pace.
The coverage analysis was then stress-tested. We ran the debt-service coverage against slower absorption and softer effective rents — the two variables a lease-up storage deal is most exposed to — to confirm the 504 credit still holds when the ramp stretches or street rates compress. Two scope boundaries are worth stating plainly: as the feasibility consultant we reference, but do not perform, the Phase I environmental site assessment and the separate, licensed appraisal, each of which runs in parallel to the study.14 That combination — independent demand, format-fit, competition, and a stressed DSCR — is what lets the bank and the CDC rely on the file.
Underwriting an Arizona RV or boat storage project for an SBA 504 loan? Start with the feasibility study.
Feasibility Study Company prepares independent RV and boat storage feasibility studies for SBA 504 and 7(a) credits, built to the coverage standard your bank and its CDC must document. A methodology briefing walks through the installed-fleet demand, HOA density, format fit, absorption, and DSCR analysis behind a case like this one, calibrated to your submarket and program.
Request a methodology briefingData sources and dates.
The deal figures are illustrative of the engagement type; the market data that grounds each dimension is real and sourced, drawn from our standing Arizona, RV & Boat Storage, and SBA 7(a) & 504 analyses and the primary authorities they cite. RV and boat storage is rarely tracked separately from self-storage, so supply readings are point-in-time and lean heavily on a single dominant provider, as noted throughout.
- Yardi Matrix, Q2 2025 National RV & Boat Storage Report (data as of April 10, 2025): 1,937 completed dedicated stores within a 2,186-store database and a 249-project pipeline; same-store advertised rents $5.99/SF (+1.1% YoY, March 2025); the single dominant supply provider for the niche. Sector-normalization commentary (national street rates −1.1%, February 2026), as compiled in the firm’s RV & boat storage analysis.
- RVIA, 2025 Go RVing Demographic Profile (conducted by IPSOS): 8.1 million primary RV-owning households, 16.9 million expressing five-year purchase intent, and a broader ~11.2 million ownership figure (not interchangeable); an RV sits idle roughly 93% of its life.
- NMMA, U.S. Recreational Boating Statistical Abstract (2024): ~11.8 million registered and documented boats (11.9M in 2022), plus an estimated 3.6 million non-registered craft; combined with RV ownership, industry researchers converge on ~25 million US households owning an RV, a boat, or both.
- Toy Storage Nation / Modern Storage Media / Inside Self-Storage (2024–2025): supply-gap estimates (“5× supply needed,” ~70 projects per month required to close the gap). Industry estimates, not audited.
- StorageCafe (2025): RV and boat storage search-demand rankings, including Apache Junction, Arizona at ~6.5 inquiries per 1,000 residents; national all-type average monthly rate (~$171).
- Foundation for Community Association Research (2023–2024): ~65% of new single-family homes (2023) HOA-governed; industry estimate that ~85% of HOAs restrict RV parking; municipal oversized-vehicle ordinances reinforcing off-site demand.
- analytics.loan and MMCG (2025–2026), with Extra Space Storage and HomeGuide format ranges: per-space monthly rates by format (open $75–150, covered canopy $125–250, enclosed drive-up $150–400, climate/desert-Southwest $200–400+); operating-expense (25–37%) and NOI (60%+) benchmarks; break-even occupancy; lender DSCR sizing near 1.20–1.25x with stress at ~85% occupancy; property-tax reassessment risk.
- RecNation, Baja Carports, Trachte, MakoRabco, and Modern Storage Media contributor estimates (2025): builder and turnkey development cost by format ($15/SF open lot to $72+/SF climate-controlled). Land excluded unless noted; steel-price sensitive.
- U.S. Census Bureau, Vintage 2024 Population Estimates (Phoenix–Mesa–Chandler MSA 5,186,958 and Maricopa County 4,673,096 as of July 1, 2024; Arizona approximately 7.6 million); city-growth rankings April 2020–July 2024, as compiled in the firm’s Arizona market analysis.
- Arizona Office of Economic Opportunity, state and county population projections (2023–2060): metro Phoenix projected to hold about 73.5% of state population by 2060, with several rural counties projected to lose residents.
- StorageCafe, Migration Trends report (November 2024, analyzing U.S. Census county-to-county data 2013–2022): more than 630,000 California-to-Arizona movers; Multi-Housing News (February 2026), 2025 Sun Belt migration slowdown.
- National Conference of State Legislatures, via the Arizona HB2197 bill summary: Arizona among only three states operating no Certificate of Need program, so storage and most commercial supply is market-driven with no permit gate.
- Arizona Department of Revenue and Arizona Commerce Authority: 2.5% flat personal income tax (effective January 1, 2023, Proposition 132), 4.9% corporate rate, and a business personal-property exemption rising to $500,000 in 2026.
- U.S. Small Business Administration, SOP 50 10 8 (effective June 1, 2025) and 13 CFR 120.160(b): owner-operated storage eligible for 7(a) and 504 as an active operating business; a feasibility study is discretionary but expected for special-purpose properties and start-ups; 10% equity injection restored for start-ups and changes of ownership, higher for special-purpose; owner-occupancy of 51% (existing) or 60% (new construction); SBA 7(a) ground-up break-even expected within 24 months of the certificate of occupancy; management-agreement review of owner control.
- U.S. Small Business Administration 504 program structure and SBA Form 2234 (Part C): the 504 debenture pairs a bank first mortgage, a CDC debenture in second position, and borrower equity; owner-occupancy certification (at least 51 percent of the rentable property); equity generally 10%, higher for start-ups and special-purpose property.
- TMC Financing (PR Newswire), “Arizona SBA 504 Lender of the Year,” four consecutive years; Business Development Finance Corporation (rebranded Arizona Capital Source) CDC; sbalenderdata.com computed from the SBA 7(a) FOIA dataset (FY2020–Q1 FY2026): Arizona ~7,055 loans / ~$4.37B.
- SBA Policy Notice 5000-879058 (dated May 18, 2026; effective July 4, 2026): combined 7(a)-plus-504 cap increased to $10 million, enlarging bankable deal size.
- Cushman & Wakefield via easystoragesearch (2025) and MMCG database (2026): traditional self-storage cap rate ~5.8–5.9% in H1 2025 as the closest proxy; dedicated RV and boat storage trades 50–150 bps wide, implying Class A ~6.0–7.5% and Class B ~7.5–8.5%. No standardized cap-rate survey exists for the dedicated niche; proprietary single-provider estimates.
- Arizona Department of Water Resources, Phoenix Active Management Area and Assured Water Supply program (1980 Groundwater Management Act; June 2023 groundwater findings): greenfield development must confirm the serving provider’s Assured Water Supply or designation status; low-water-use facilities verify provider adequacy as a diligence step.