RV and Boat Storage Feasibility Study in Granbury, Texas: Why This SBA 504 Loan Does Not Work

Storage demand comes from owners who cannot or will not keep a boat or RV at home, and it is measured by drive time to home or to the launch ramp rather than by a fixed radius. Radius and drive-time demographics were not available, so the table brackets the market with city, county and state figures. A lender should order a drive-time profile around the lake's residential shoreline.

Three things in the numbers favor the use. The city is small and old, with a median age of 51 against 45.9 for the county [3][4], and its households are small, 2.13 persons each against 2.69 statewide [1]: retirees with time and money for an RV. County income is high, with per capita income of $43,607 against $40,752 for Texas [1]. And visitors spend real money: the city's accommodation and food services sales were $136,781,000 in the 2022 Economic Census [1], and its hotel and motel tax brought in $1,087,725 in fiscal 2023 against $1,132,517 the year before [25].

The employment base is anchored by Comanche Peak, the nuclear plant in neighboring Somervell County, with more than 600 employees and more than 200 permanent contractors at a 2,400-megawatt station [23]; its two units are licensed into 2050 and 2053 [24]. Hood County also faces eight data center proposals covering more than 7,600 acres, and Texas has at least 248 data centers planned, nearly half in unincorporated areas [26]. Those are proposals, not commitments, and the study counts no demand from them.

Tourism is real but it is not storage demand. The city's 2023 financial report shows tourism revenue of $1,715,589 and conference center revenue of $1,036,030, from an 18,000 square foot center next to a hotel [25]. Visitors who tow a boat to the lake for a weekend take it home again; the storage customer is the resident or second-home owner who keeps a boat or RV within reach of the water. The study therefore sizes demand from the resident base and treats visitor spending as evidence of the lake's pull, not as a source of tenants.

The national demand inputs are weakening. The RV Industry Association cut its 2026 wholesale shipment forecast to a median of 314,000 units in its Summer 2026 outlook, an 8.2% decline [35]; its year-end count put 2025 shipments at 342,220 units, up 2.5% on 2024 [57], and shipments through August 2026 were 207,191, down 14.2% [36]. New powerboat retail sales were 214,292 in the twelve months to April 2026, down 7.1% [37]. The installed base still grows each year, and storage demand follows owners rather than new sales, but softer sales mean slower growth in the pool of new customers. RVIA's 2025 owner profile counts 8.1 million RV-owning households, 6.7% of households with vehicles [39], and Texas had 552,138 registered recreational vessels in 2024 [38].

The hypothetical project sits on about 2.5 acres of unimproved land on the US 377 corridor in Granbury, Hood County, in a district that permits vehicle storage; the district is a condition to confirm, not a fact taken from any parcel. Land is an assumption at $400,000 an acre, inside the range of two other US 377 asks the research found: the 2.17-acre tract listed at $1,300,000 that is the subject of a storage permit application [7][8], and a 5.73-acre tract whose asks were reported across listing portals at $1,125,000 to $2,495,988 [56]. Asks are not sales; an appraisal sets the value, and it is a condition.

Zoning is the first open question, because the study takes no district from any parcel. Granbury's use table permits auto, boat, trailer, RV and truck storage by right in the Industrial district, requires a Specific Use Permit in Heavy Commercial, and prohibits it in the lighter commercial districts; self-service or mini-warehouse storage needs a permit in both Heavy Commercial and Industrial [5]. The supplemental standards require a site plan, lighting directed away from homes, no wrecked vehicles and an improved hard surface [5]. If the lot is Heavy Commercial, a permit is required. A permit goes from the Planning and Zoning Commission to the City Council, becomes a zoning amendment and may be time-limited [6]; the one hearing cycle observed in 2026 ran about three weeks between the commission and the council [7].

The flood zone and the water, sewer, electric and gas providers are conditions: the lot's flood zone must be confirmed on FEMA's map before the loan is sized, and utility service must be confirmed for the lot. No TxDOT count at the site was found; the state's public traffic count layer, updated January 6, 2025, is the source a lender should read [32]. TxDOT's US 377 corridor study notes that 84 miles of US 377 are not yet four lanes [27], which matters for towing customers more than for daily traffic.

The tax rows are the most important in the table for this asset. Inside the city and Granbury ISD, three taxing units levy on the parcel: the school district at $0.9296, the county at $0.2797 and the city at $0.4200 per $100 [28][29][30]. The city's 2025 rate rose from $0.3850 and sits above its no-new-revenue rate [30]. Special district rates were not found. The model applies the three rates to land and improvements at cost, which is how a new facility is likely to be valued in its first years.

RV and boat storage is cheap to run. A 1,489,149 square foot Florida facility on 56.28 acres carried an expense ratio of 29.2% and a net operating income margin of 70.8% in its 2023 securitization underwriting [43]. The subject has no on-site staff: a third-party manager at 6.0% of revenue, the typical self-storage fee [44], runs it remotely, and a fixed allowance of $30,000 covers insurance, utilities, repairs, software and marketing.

Property tax breaks the pattern. Those benchmark margins belong to large or mature facilities whose assessed value is low relative to their rent roll. A new facility on land bought at the assumed corridor level and improvements at 2026 cost carries a tax bill sized to that cost, and in this model the tax line is the largest expense, ahead of insurance, utilities and repairs combined. That is why the net operating income margin is only 25.8% in Year 3. A successful protest of the assessed value could lower the bill, but even with no tax at all, Year 3 income would cover only a fraction of debt service.

Under SOP 50 10 8.1 with Technical Policy Updates, effective October 1, 2026 [53], the 504 structure is Third Party Lender 50%, debenture 40%, borrower 10%; debenture 35% at a 15% contribution and 30% at 20%. RV and boat storage is not on SBA's special purpose list [53], so the property does not raise the tier. The business does: a borrower with two years or less of operating history must contribute 15%, not the standard 10%. Had the facility also been special purpose, the tier would be 20%.

The sponsor's 10.0% proposal treats the project as an existing business. Restructured to the new-business tier, the debenture is $1,093,914, well inside the $5 million limit, priced at the 25-year effective rate of 6.97% from the October 8, 2026 pricing posted by a CDC [48]. The model also finances the fiscal 2027 upfront fee of 0.50% [54], which the effective rate already reflects, so the fee is counted conservatively; the annual service fee is 0.203% [54]. The bank's first lien is priced at 7.03%, the 10-year fixed rate a broker quoted for self-storage loans on July 27, 2026 [47], with Prime at 7.00% on October 9, 2026 [55]. Both rates are set at pricing.

Two eligibility checks run before any of this. Since March 1, 2026 every direct and indirect owner must be a U.S. citizen or U.S. national with a principal residence in the United States [49]. And no 504 loan to a Hood County borrower in 2024 to 2026 was found; the SBA loan-level file dated June 30, 2026 is where a lender would look for local precedent [50]. Storage itself is a strong credit class when it is underwritten on real rents: the self-storage CMBS delinquency rate was 0.1% in September 2025 against 6.6% for all CMBS [46].

Other 504 cases on this site show the same rules producing workable loans. The Seguin car wash case is a new business in a special purpose property and clears at its tier, and the Weatherford dealership case, also in Dallas-Fort Worth, is a 504 project outside the special purpose list. The SBA 7(a) and 504 practice page describes how we scope these studies.

The 504 coverage floor is 1.15x [53]. SBA measures it on historical EBITDA where a business has history; a new facility has none, so the test falls on Year 2 of the projection.

As proposed, the sponsor contributes $312,625, 10.0% of cost. The structure fails the equity test, because a new business must contribute the higher tier, and it fails coverage by a wide margin: Year 2 income covers debt service 0.04x.

As restructured, the contribution rises to 15.0%, $468,820, and debt service falls to $225,428. The equity test is met. Coverage is still 0.04x in Year 2 and 0.13x in Year 3. The engine then looks for the smallest equity share that would meet the floor and finds none: in a 504 project the bank's first lien stays at half of cost however much the sponsor puts in, and the facility's income does not cover even that first-lien payment. Raising equity shrinks the debenture, but it cannot shrink the bank loan below half of cost inside the program.

A 7(a) loan would not change the arithmetic either. A single bank loan for most of the cost would carry a higher rate than the blended 504 structure, so debt service would rise, not fall. The problem is the ratio of cost to income, and no SBA program changes that ratio.

The determination is therefore negative, and it is not a close call. A lender should not approve this structure, and should not look for one by stretching amortization or lowering the rate. The sensitivity table below shows that no plausible combination of rent and occupancy changes the answer.

The matrix moves occupancy and covered rent by up to 20% each way. Coverage in Year 3 runs from -0.04x to 0.32x; the best case, with both inputs 20% above the underwriting, still covers only a fraction of debt service. Occupancy above the stabilized level is not realistic in a market with open space at every posted operator, and a 20% premium on the 50-foot covered rate would put the subject above every posted Granbury price for a space of that length.

What would change the answer is not on either axis. The land basis and the tax bill on new improvements are the inputs that sink the project. A sponsor who could buy a smaller, cheaper industrial tract, or acquire an existing facility at a price its income supports, would face a different calculation.

A workable version would start from the cost side. Land zoned Industrial, where vehicle storage is permitted by right [5], avoids the permit risk and usually trades below highway commercial frontage. Building open, paved spaces first and adding canopies only as occupancy proves the covered rent defers the most expensive line until the market has priced it. And buying an operating facility lets the lender underwrite real rent rolls and real tax bills rather than a projection. Each of those is a different project with its own study; none of them is this one, and the lender should not let the sponsor's land contract drive the structure.

• Local oversupply. Thirteen operators confirmed on their own sites, open space at those that post availability, and a Dallas-Fort Worth market that delivered 28.3% of its inventory in three years [33] mean any new facility competes on price from day one.
• Price competition. Vanguard advertises uncovered space from $15 and a $1 move-in [11]. Cushman & Wakefield reports numerous examples of occupancy loss from aggressive rate increases at storage facilities [34], so rent growth is not a reliable cure.
• Softer equipment sales. RV shipments were down 14.2% through August 2026 [36] and new powerboat sales down 7.1% over twelve months [37]; fewer new units slow the growth of the storage customer pool.
• Land basis. At the assumed corridor level, land alone costs most of what finished facilities sold for per acre in 2025 [33]. A buyer who paid that would struggle to sell the facility at cost.
• Entitlement. If the parcel is Heavy Commercial, the use needs a Specific Use Permit that may be time-limited and must pass the council [5][6]; a denial or a short term would end the project after land costs are sunk.
• Tax growth. The city's 2025 rate rose to $0.4200 from $0.3850 [30]. A storage yard has little ability to pass a tax increase through to tenants who can move their boat across town.
• Weather. Local operators market hail and ice-storm protection [11]; a hail event on unprotected open spaces can drive tenants to covered competitors, and canopies themselves need wind and hail coverage.
• Speculative demand. Data center proposals covering more than 7,600 acres in Hood County [26] could bring construction workers and RV living demand, but none is committed, and the county faces litigation over them.

The SOP 50 10 8.1 note covers the rule changes that took effect on October 1, 2026, and the Bastrop hotel case shows a Texas 504 project where the market does carry new construction.