Case Study · California · RV & Boat Storage · SBA 504
RV & Boat Storage Feasibility Study, California — An SBA 504 Worked Case
This is how our independent feasibility study company and consultant team analyzed a new-build RV and boat storage facility underwritten to an SBA 504 credit, from the installed demand base and format-specific achievable rates through the debt-service coverage a lender must document. It is a representative, anonymized worked example of the methodology — not a specific client deal — set at a roughly 500-space covered-and-canopy facility in a fast-growing inland California submarket.
A covered-and-canopy toy-storage yard on the California growth edge.
A sponsor came to our feasibility study company with a ground-up RV and boat storage project and an SBA 504 lender that needed the projected cash flow independently tested before it would commit. The subject is roughly 11 acres in a fast-growing inland California submarket, the kind of master-planned, HOA-governed growth edge where large recreational vehicles and trailered boats are pushed off the driveway and into paid storage. The build program is about 500 spaces, anchored by covered-canopy parking, with a band of open uncovered stalls at the value end and a smaller run of fully enclosed drive-up units at the premium end.
Because owner-operated storage is an active operating business rather than passive real estate — the owner controls entry, exit, and services — the SBA treats the facility as an eligible operating company, so both 7(a) and 504 apply.14 That eligibility, which inverts the multifamily rule, is what routes a ground-up storage yard into the SBA channel in the first place. The lender's question here is not “what is the dirt worth” but “can this specific site, at this format mix, fill up and cover this specific debt.” Our scope as the feasibility consultant was the independent demand-density, achievable-rate, absorption, and debt-service analysis that supports that credit.
Representative and anonymized. Every figure below is illustrative of a typical engagement of this type; the site, submarket, and parties are composited, not a real named borrower, address, or completed transaction.
Installed demand density, not a search-volume guess.
Storage demand tracks the durable installed fleet, not annual sales. The read starts with how many RVs and boats sit within a realistic drive radius, how many have nowhere legal to park at home, and how much of that is already captured by existing yards.
The national frame is severe structural undersupply. Industry researchers converge on roughly 25 million U.S. households owning an RV, a boat, or both — RVIA's 2025 Go RVing profile counts 8.1 million primary RV-owning households plus 16.9 million more with strong five-year purchase intent, and NMMA counts about 11.8 million registered and documented boats.34 Against that base, Yardi Matrix counted only 1,937 completed dedicated stores in its Q2 2025 report, and Toy Storage Nation estimates the sector needs roughly five times its current supply to meet latent demand.12 The shortage is manufactured at the curb: roughly 65 percent of new single-family homes sit under an HOA, one widely cited estimate holds that about 85 percent of HOAs restrict RV parking, and California cities reinforce it — Los Angeles and San Jose both carry oversized-vehicle ordinances that push large rigs off residential streets.89
The critical trade-area correction for this asset is radius. RV and boat owners routinely drive 20 to 50 miles to a storage space, so a naive three-mile ring badly understates demand; but an honest study nets out competitor occupancy and registrations rather than crediting the whole catchment.10 For the subject we sized a roughly 15-mile primary catchment across a growing inland corridor, screened against registered RV and boat counts and the standing competitive set. The signal that matters is not per-capita square footage — a widely misused metric — but the achieved rents and occupancy at real competitors, which read as full, with waitlists at the newer covered yards.
| Demand driver | Basis | Supported figure |
|---|---|---|
| Installed fleet, ~15-mi catchment | Registered RVs + trailered boats, growing submarket | Deep, rising owner base |
| Off-site push | HOA and municipal restrictions (~85% of HOAs restrict RVs)8 | Structural captive demand |
| Competitive absorption | Existing yards near-full, waitlists at newer covered product1 | Unmet demand for new supply |
| Stabilized occupancy | Undersupplied market, pre-reservations10 | ≈ 92% physical |
| Captured spaces | ~500 built × stabilized occupancy | ≈ 460 rented spaces |
Demand logic grounded in RVIA/NMMA installed-base data, HOA and municipal restriction estimates, and Yardi Matrix supply counts; see sources 1, 3, 4, 8, and 9. Figures are illustrative of the engagement type and carry the single-provider data caveat noted throughout.
A full comp set, with one permitted yard on the horizon.
Six competing yards operate within the primary catchment. Most read near-full, several carry waitlists on covered product, and only one new facility is permitted — the balance the undersupply thesis predicts, but tested rather than assumed.
| Competitor | Dominant format | Spaces | Distance | Read |
|---|---|---|---|---|
| Competitor A | Open / uncovered lot | ~300 | 3.5 mi | ~96% full; no covered product |
| Competitor B | Open + aging covered | ~420 | 6.0 mi | ~94% full; dated canopy |
| Competitor C | Self-storage w/ RV stalls | ~120 RV | 4.2 mi | Near full; limited big-rig depth |
| Competitor D | Covered canopy + enclosed | ~260 | 9.1 mi | ~93% full; covered waitlist |
| Competitor E | Unpaved open lot | ~180 | 11.4 mi | ~90% full; no security, no cover |
| Competitor F | Covered (permitted) | ~350 | 7.3 mi | Under construction; 2027 delivery |
Competitive set surveyed for the engagement; anonymized. Announced, permitted, and under-construction supply was scanned, not just the standing set, and informal peer-to-peer supply was noted separately — consistent with institutional storage practice. Occupancy is directional, from directory signals and site visits, not audited rent rolls.
The standing set is thin on covered and enclosed product: only Competitors B and D offer cover, B's canopy is dated, and D—the strongest comp—carries a waitlist more than nine miles away, on the far edge of the catchment. Open and unpaved lots (A, C, E) run near full but cannot defend against a new, secured, app-access covered yard on the growth side of the corridor. A rigorous study does not stop at the standing set: it counts under-construction and permitted competition, because open-lot formats have almost no barrier to entry and a first mover's rate can be competed away.1 Here the one permitted competitor (F, ~350 covered spaces, delivering 2027) was carried explicitly in the absorption forecast — the subject leases up ahead of it, and even with F online the catchment remains undersupplied against the installed fleet rather than split into oversupply.
California macro: deep demand, high cost, a statewide caveat.
The state backdrop is a tailwind for storage demand, tempered by land and construction cost and by the rule that a single statewide California number is indefensible. California is the world's fourth-largest economy, home to about 39.5 million residents as of January 2025.
California is not one market but six non-substitutable regional economies, and the demographic engine for recreational storage is the coastal-to-inland migration reshaping the state: households are moving toward the Inland Empire, the Central Valley, and greater Sacramento, which led all counties for net gains in 2025, chasing affordability and larger lots on the growth edge.12 That is precisely where RV and boat ownership concentrates and where master-planned, HOA-governed subdivisions force storage off-site. Storage as a class is generally undersupplied in California — self-storage runs about 6.5 square feet per capita against a roughly 7.0 national benchmark, with most California cities below the line, a function of high land cost and restrictive zoning.16 The same land scarcity that constrains supply is the barrier to entry that protects a delivered yard.
The offsetting reality is cost and process. California land, site work, and entitlement are expensive, and CEQA review and local permitting lengthen the schedule, so the feasibility test turns on whether stabilized cash flow covers a high California cost basis rather than on optimistic rate growth. Insurance is now a standing underwriting factor statewide after the January 2025 wildfires, and any California pro forma has to carry rising premium and availability risk explicitly.17 The capital backdrop, though, is the deepest in the country: California is the number-one SBA state, at roughly $4.8 billion across about 9,700 loans in calendar 2025, served by six SBA district offices, and the July 4, 2026 decoupling of the 7(a) and 504 caps to $10 million combined enlarged bankable deal size.13
Why the parcel captures the corridor.
Household growth, ownership density, and HOA saturation all point the same direction, and the site geometry converts that latent demand into rented spaces.
The primary catchment is a fast-growing inland submarket with a median household income near $95,000 — comfortably into the band where households own trailered boats and Class A and Class C motorhomes and will pay for covered protection against UV and heat — and a rooftop count still climbing as new master-planned phases deliver. Because those subdivisions are overwhelmingly HOA-governed, a large share of new owners have no compliant way to store a rig at home, converting rooftop growth almost directly into off-site storage demand.8 Trailing counts understate the captive base in a submarket adding households this quickly, a distortion a careful study corrects for rather than extrapolates.
Geometry does the rest. The parcel is a rectangular, gradable ~11 acres with the depth and turning radius a big-rig yard needs — 12-foot-wide covered stalls up to 45 feet deep, drive aisles wide enough for a 40-foot coach plus tow vehicle, and a single secured, camera- monitored gate on app-based access. That layout is what lets the site clear premium covered rents rather than open-lot pricing, and it is the format-to-market fit that most storage studies get wrong in one direction or the other.6 The nearest covered competitor with a waitlist sits nine miles away; the subject fills the gap on the growth side of the corridor rather than splitting a saturated node.
The SBA 504 structure.
Total project cost lands at $6.10 million. The 504 program is purpose-built for owner-occupied fixed assets and ground-up construction, which is why a long-hold, real-estate-heavy storage yard routes here rather than to a working-capital-flexible 7(a).
| Cost component | Amount |
|---|---|
| Land (~11 acres, inland California) | $1.60M |
| Site work, grading, drainage & paving | $1.35M |
| Canopy structures & enclosed buildings (steel) | $1.85M |
| Security, access control & perimeter | $0.35M |
| Utilities & site lighting | $0.30M |
| Soft costs (A&E, permits, entitlement) | $0.35M |
| Contingency | $0.20M |
| Lease-up & interest reserve | $0.10M |
| Total project cost | $6.10M |
Development cost cascades by format, from roughly $15/sf for a paved open lot to $72+/sf for climate-controlled; covered canopy sits in between, and the mix here is weighted to covered. See sources 6 and 7. Land and site costs reflect a California inland basis.
| Item | Figure |
|---|---|
| Bank first mortgage (50%) | $3.05M — 25-yr amortization, ~9.5% |
| CDC / SBA 504 debenture (40%) | $2.44M — 25-yr, fixed ~6.5% |
| Borrower equity injection (10%) | $0.61M |
| Total project cost | $6.10M |
| Annual debt service (stabilized) | ≈ $517k (bank ~$320k + debenture ~$198k) |
Structure per SBA 504 conventions under SOP 50 10 8; 50% bank first / 40% CDC debenture / 10% equity; owner-occupancy 60% for new construction. See sources 13 and 14.
The equity injection sits at the 10 percent SBA baseline, and holding it there was a considered call. SBA policy escalates the required injection for projects that are both special-purpose and start-ups, and some lenders tag single-use climate-controlled storage as special-purpose — but a mixed-format yard, with open, covered, and a modest enclosed component, is less likely to draw that designation, which supports the standard 10 percent here.14 The $2.44 million CDC debenture sits well inside the program's debenture ceiling, so the 504 works in a single stack, and the combined SBA cap — now $10 million after the July 2026 decoupling — leaves ample headroom.13 On a 25-year amortization, blended annual debt service is about $517,000 — a bank first near $320,000 and a 504 debenture near $198,000 — and that is the number the projected coverage has to clear. California's 504 market is the deepest in the country, led by TMC Financing, the nation's number-one 504 lender, and CDC Small Business Finance, so the CDC side of this stack is well served.13
Feasible and bankable, on coverage the credit can document.
The stabilized model builds effective gross income from a format-tiered rent roll, nets a storage-grade operating expense load, and carries the coverage across a graded lease-up ramp to a stabilized DSCR the lender can rely on.
| Line | Basis | Amount |
|---|---|---|
| Gross potential rent | 340 covered @ ~$185 + 100 open @ ~$115 + 60 enclosed @ ~$310 /space/mo5 | ≈ $1.116M |
| Less vacancy & credit loss | ~8% at stabilized ~92% occupancy | ≈ ($0.089M) |
| Plus other income | Admin, late, tenant-protection (~4% of rent) | ≈ $0.045M |
| Effective gross income (EGI) | Collected rent + ancillary | ≈ $1.072M |
| Operating expenses | Property tax, insurance, security, management, R&M, G&A (~30% of EGI)6 | ≈ ($0.322M) |
| Net operating income (NOI) | EGI less operating expense | ≈ $0.750M |
Format rates are held to achievable levels within the covered ($125–$250), open ($75–$150), and enclosed ($150–$400) national bands, at a California inland basis, not coastal-premium pricing; the ~30% expense ratio and 60%+ NOI margin track the storage benchmark. See sources 5 and 6. A ~70% NOI margin on EGI implies a stabilized yield on cost near 12%.
| Year | Stage | Avg occupancy | NOI | DSCR |
|---|---|---|---|---|
| Year 1 | Lease-up | ~62% | ~$466k | 0.90 |
| Year 2 | Building | ~78% | ~$595k | 1.15 |
| Year 3 | Stabilized | ~92% | ~$750k | 1.45 |
DSCR computed as NOI divided by the ~$517k full amortizing annual debt service. The Year-1 shortfall below 1.0x is covered by the funded lease-up and interest reserve carried in the project budget. See source 10 on absorption realism and the SBA break-even gate.
The stabilized 1.45x coverage is the figure the lender documents, and it clears the roughly 1.20x–1.25x minimum storage lenders size to, with real headroom against a stress at 85 percent occupancy.10 The ramp is deliberately graded. Year 1 posts 0.90x — intentionally below 1.0x — because a ground-up yard fills over time; the funded lease-up reserve bridges that gap, and permanent coverage is measured once the site reaches supportable occupancy. Crediting pandemic-era absorption in a normalizing cycle is the single most common way storage pro formas fail review, so the forecast leans on pre-reservations and documented competitor absorption rather than a fast pace assumed from the national undersupply story. For an SBA ground-up credit this is not just prudence: the project must reach break-even within 24 months of the certificate of occupancy, which makes absorption realism an eligibility question, not only an underwriting one.10
On the equity side, the $0.61 million injection earns free cash flow that builds as the yard fills — the early years absorb into the lease-up reserve and replacement reserves before distributions normalize once stabilized. The exit is valued on the stabilized rent roll, the way lenders and appraisers value open-and-covered storage: capitalizing a conservative, untrended stabilized NOI near $0.75 million at a normalized exit rate around 7.5 percent — within the roughly 6.0 to 8.5 percent range dedicated RV and boat product trades at, and held deliberately wide of a peak given the single-provider data caveat and a normalizing storage cycle — implies a gross value near $10.0 million; net of selling costs and the outstanding SBA 504 balance, and blended with the graded lease-up, the illustrative levered equity IRR lands in the mid-teens, about 16 percent over a 10-year hold.11
Verdict: financially feasible and bankable. On independently derived demand, a stabilized 1.45x DSCR across a graded lease-up, and a ~16% illustrative levered equity IRR, the projections support the SBA 504 credit.
Independent demand, format fit, achievable rates, 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 sized demand from the installed fleet across a realistic drive radius, netted out competitor occupancy and permitted supply, and matched format to market so the covered-canopy anchor is underwritten to rents the trade area will actually pay rather than a coastal premium. Rates were held to achievable, discount-adjusted levels, not advertised street rates, so economic occupancy does not quietly outrun physical occupancy.
The coverage analysis was then stress-tested. We ran the debt-service coverage at roughly 85 percent occupancy with no credit for forward rent growth, the way storage lenders now underwrite lease-up, to confirm the credit still holds off its stabilized peak. Two scope boundaries are worth stating plainly: as the feasibility consultant we reference, but do not perform, the Phase I environmental site assessment, and we do not perform the appraisal — both are separate professional engagements that run in parallel. And we flag the data caveat that governs this whole niche: RV and boat storage is rarely tracked separately from self-storage, so much of the supply and rate data traces to a single dominant provider and to builders with commercial incentives.1 That combination — independent demand, format fit, achievable rates, and a stressed DSCR — is what lets the lender rely on the file.
Representative engagement
This is an anonymized, illustrative worked example of our methodology, built on market data current to 2026; figures are representative of a typical engagement of this type and do not depict a specific client, site, or completed transaction.
Underwriting a California 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 lender must document. A methodology briefing walks through the installed demand, format fit, achievable rates, absorption, and DSCR analysis behind a case like this one, calibrated to your California submarket and format mix.
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 California, 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 readings are point-in-time and provider-dependent, 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, against roughly 52,000 traditional self-storage properties; same-store advertised rents ~$5.99/SF (+1.1% YoY); measured under-construction pipeline. Effectively the single dominant supply provider for the niche, a caveat carried throughout this study.
- Toy Storage Nation / Modern Storage Media / Inside Self-Storage (2024–2025): supply-gap estimates ("5x supply needed," ~70 new projects per month to close the gap), operating economics, and format commentary. Industry estimates, not audited.
- RVIA, 2025 Go RVing Demographic Profile (conducted by IPSOS): 8.1 million primary RV-owning households, 16.9 million more expressing strong five-year purchase intent, and a broader ~11.2 million ownership figure (not interchangeable); an RV sits idle roughly 93% of its life, so storage demand tracks the installed base, not shipments.
- 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 roughly 25 million U.S. households owning an RV, a boat, or both.
- Extra Space Storage, HomeGuide, and StorageCafe (2025–2026): advertised monthly rate ranges by format — open uncovered ~$75–$150, covered canopy ~$125–$250, enclosed drive-up ~$150–$400, climate-controlled/luxury $300–$500+ (above $582 in the densest coastal markets). California inland readings run below coastal premiums (e.g., Central Valley outdoor ~$60–$140).
- analytics.loan and MMCG (2025–2026): format rate ranges, operating-expense (25–37%) and NOI (60%+) benchmarks, break-even occupancy near 40–50%, stabilized occupancy routinely above 90%, and replacement-cost cross-check discipline. Proprietary single-provider estimates.
- RecNation, Baja Carports, MakoRabco, Trachte, and Modern Storage Media contributor estimates (2025): builder and turnkey development cost by format, roughly $15/SF for a paved open lot to $72+/SF for climate-controlled, with covered canopy in between; steel-price sensitive, and generally excluding land.
- Foundation for Community Association Research (2023–2024): ~65% of new single-family homes (2023) HOA-governed; widely cited industry estimate that ~85% of HOAs restrict RV parking — a structural driver of off-site storage demand.
- City of Los Angeles and City of San Jose oversized-vehicle ordinances (2024): municipal RV and boat parking restrictions that reinforce off-site demand in California submarkets; consistent with the broader off-site push documented in the firm's RV and boat storage analysis.
- U.S. Small Business Administration, SOP 50 10 8 (effective June 1, 2025) and industry underwriting practice: undersupplied facilities with pre-reservations can stabilize above 90% within 12–24 months, while oversupplied Sun Belt self-storage has stretched to 36–48 months; SBA ground-up credits require break-even within 24 months of the certificate of occupancy; lenders size to ~1.20–1.25x DSCR and stress-test near 85% occupancy with no forward rent-growth credit.
- Cushman & Wakefield self-storage cap-rate series (via easystoragesearch, 2025), used as the closest proxy (~5.8–5.9% H1 2025), and MMCG dedicated RV and boat cap-rate spread estimates (stabilized Class A ~6.0–7.5%, Class B ~7.5–8.5%). The exit rate used here is held deliberately wide of a peak given the single-provider data caveat and a normalizing storage cycle.
- California Department of Finance, E-1 and related estimates (39,529,000 residents as of January 1, 2025; the world's fourth-largest economy); coastal-to-inland migration with Sacramento and inland counties leading net gains in 2025, as compiled in the firm's California market analysis.
- U.S. Small Business Administration and California CDC data (FY/CY 2025): California the number-one SBA state (~$4.8 billion across ~9,700 loans in calendar 2025) with six district offices; TMC Financing the nation's number-one 504 lender (548 loans, $2.4 billion in FY2025) and CDC Small Business Finance among the largest; combined 7(a)-plus-504 cap decoupled to $10 million effective July 4, 2026.
- U.S. Small Business Administration, SOP 50 10 8 (effective June 1, 2025) and 13 CFR 120.160(b): owner-operated storage is SBA-eligible as an active operating business for both 7(a) and 504; a feasibility study is discretionary but expected for special-purpose and start-up/ground-up projects; owner-occupancy 60% for new construction; 10% equity injection baseline, higher where a project is both special-purpose and a start-up; single-use climate-controlled facilities may draw a special-purpose designation while mixed-format sites are less likely to.
- USDA Rural Development, OneRD Guaranteed Loan Program final rule (December 10, 2021; 86 FR 70356) and 7 CFR 5001.115: removal of the self-storage B&I ineligibility; up to $25 million, an 80% guarantee, and terms up to 30 years for rural (≤50,000 population) projects; the California Rural Development state office (Davis) administers B&I, and large areas of the Central Valley, North State, and deserts are USDA-eligible.
- California self-storage supply data as compiled in the firm's California market analysis (2025–2026): ~6.5 square feet per capita statewide against a ~7.0 national benchmark, with most California cities below the line and the San Gabriel Valley under 2, a function of high land cost and restrictive zoning — used here as directional evidence that storage as a class is generally undersupplied in California.
- California Department of Insurance and FAIR Plan disclosures (2025): FAIR Plan exposure of $649.4 billion by June 2025 (+42% in nine months) and a post-January-2025 wildfire-insurance market in which rising property-insurance premium and availability must be modeled explicitly on any California pro forma, including operating-expense loads for this asset.