How to value a mobile home park: from lot rent to NOI, value per lot, and loan size

Why a mobile home park is valued by the lot

In most mobile home parks, also called manufactured housing communities, the owner owns the land and rents lots to residents who own their homes. Equity LifeStyle Properties, a public owner of these communities, describes its business that way in its annual report, and reports that its core portfolio was about 92% homeowners and 3% renters. That is a large owner, not a benchmark, but the structure is common: the park earns lot rent, and the resident owns, insures, and maintains the home.

That structure is why park income is often steady. Moving a manufactured home is expensive, so residents tend to stay. It is also why park-owned homes need their own line. When the park owns the home, it collects more rent but also pays for repairs, turnover, and eventually replacement, and the same report treats the homes themselves as personal property, not real estate. Lenders and buyers usually look at the two streams separately.

Step 1: gross potential, vacancy, and occupancy

Gross potential rent is every lot that could pay lot rent, at today's lot rent, plus every park-owned home at today's home rent, for twelve months. Lots that hold park-owned homes are counted once, at the home rent, so they are not double counted.

Physical occupancy is occupied lots divided by total lots. Economic occupancy is rental income divided by gross potential rent. They differ when the empty lots and empty homes rent for different amounts. Check both, and check whether the empty lots can take a home at all: an empty pad with no utilities or one that does not meet current setbacks may never fill.

Example

Illustrative example. These are example inputs so the math is visible, not a real park, a market average, or a benchmark. The park has 100 lots: 82 hold resident-owned homes, 8 hold homes the park owns (7 rented, 1 empty), and 10 are empty.

Lot rent is $450 a month, so the 82 resident-owned lots pay $442,800 a year. The 7 rented park-owned homes pay $1,050 a month, or $88,200, which is $50,400 more than the same lots would pay in lot rent. Gross potential rent is $597,600, rental income is $531,000, and vacancy is $66,600. Physical occupancy is 89% and economic occupancy is 88.9%. Park-owned homes earn 16.6% of rent.

Bad debt of 2% is $10,620, leaving net rental income of $520,380. Water and sewer bill-backs at $45 a month on 89 occupied lots are $48,060 and trash at $15 is $16,020. With $6,000 of fees and other income, other income totals $70,080 and EGI is $590,460.

Expenses: property tax $28,000, insurance $18,000, payroll $30,000, utilities $75,000, repairs $20,000, park-owned home upkeep at $1,200 a home $9,600, office and marketing $8,000, and other $6,000. The 5% management fee on EGI is $29,523, so operating expenses are $224,123, a 38.0% expense ratio. The reserve at $75 a lot is $7,500. NOI is $358,837, a 60.8% margin on EGI, or $3,588.37 a lot. The bill-backs recover 85.4% of the $75,000 utility bill.

Step 2: value, value per lot, and the cap rate

At a 7.5% cap rate, $358,837 of NOI points to a value of $4,784,493.33, about $47,845 a lot. At a $4,500,000 price, $45,000 a lot, the going-in cap is 8.0%.

The cap rate moves the answer a lot. At 6.5% the same NOI is worth about $5,520,569, and at 8.5% it is worth about $4,221,612, a spread of about $1.3 million on one input. There is no single right cap rate for mobile home parks. Use recent sales of similar parks with a similar share of park-owned homes and similar utility setups, and ask whether the quoted cap rate was on NOI before or after a management fee and reserve.

Price per lot is a cross-check, not a valuation method. A park where residents own every home and pay their own utilities can sell at the same price per lot as a park full of park-owned homes with very different risk. Compare price per lot only after you compare how the NOI was built.

Step 3: what a lot rent increase is worth

Lot rent is the main lever. In the example, raising lot rent by $25 a month on the 82 resident-owned lots adds $24,600 a year before bad debt and management, and $22,902.60 of NOI after them. At a 7.5% cap that is about $305,368 of added value, or about $12,215 of value for each dollar of monthly lot rent.

That math only holds if the increase is allowed and residents stay. Leases, state law, and some city rules set notice periods and, in some places, limits on lot rent increases. Equity LifeStyle Properties notes in its annual report that some of its leases tie increases to an inflation index and that Florida has its own rules for manufactured home lot rent. Read the leases and the local rules before you count on a raise.

Step 4: break-even occupancy and the loan

Break-even occupancy scales the occupied resident-owned lots and rented park-owned homes down together. In the example NOI reaches zero at 31.5% occupancy, and NOI just covers the loan payment at 70.8%. The park is 89% occupied today.

The lender sizes the loan three ways. At 70% loan-to-value on the lower of price and value, the loan is $3,150,000. At a 1.25 minimum DSCR, 6.75% interest, and 30-year amortization, NOI supports about $3,688,334. At an 8% minimum debt yield, it supports $4,485,462.50. The LTV test is lowest, so the loan is $3,150,000.

That loan costs $20,430.84 a month, or $245,170.08 a year. The DSCR is 1.46 and the debt yield is 11.4%. Equity is the price plus 2% closing costs and $60,000 of day-one capital, $4,650,000, minus the loan: $1,500,000. Year-one cash flow after debt service is $113,666.92, a 7.6% cash-on-cash return.

Step 5: the hold, the exit, and the IRR

In the calculator's example, lot rent grows 4% a year, other income and home rent 3%, and expenses 3%, with occupancy held steady. The park sells after five years at an 8% cap on year-six NOI of $439,644.67, a sale price of about $5,495,558.

After 3% selling costs and a loan payoff of about $2,957,085, the equity gets back about $2,373,607. Put the five years of cash flow and the sale together and the example shows a 17.5% levered IRR, a 10.7% unlevered IRR, and a 2.06x equity multiple. Those are outputs of example inputs, not a forecast.

Common pitfalls

Water, sewer, and roads. Private wells, septic systems, lagoons, and old water lines are among the largest costs a park can carry, and a failed system can cost more than years of reserve. Get the systems inspected and set day-one capital to match.

Utility bill-backs. Many states regulate how a park bills utilities to residents. Confirm the method is allowed and that the meters work before you count bill-back income, and compare bill-backs with what the park pays.

Park-owned homes. Home rent is higher than lot rent but carries repairs, turnover, and replacement. Count the upkeep, and do not value park-owned home rent at the same cap rate as lot rent without checking with your lender.

Seller statements. Owner-run parks often leave out a management fee, skip payroll for work the owner does, or run personal costs through the park. Rebuild the expense side yourself and use the property tax you expect after the sale.

Run your own numbers

The mobile home park calculator loads with this exact example. Replace the inputs with the park's own rent roll and statements and it rebuilds the income, the P&L, the value and value per lot, the lot rent upside, break-even occupancy, the loan, the projection, and the IRR, then prints the whole thing. For a quick check on one piece, the cap rate calculator turns NOI into value and the DSCR calculator checks coverage.

These pages run the math on the numbers you type. They do not supply market data, and nothing here is an appraisal, a loan offer, or financial, legal, or investment advice. Have a lender, an appraiser, and your own advisors review any park before you buy.

Sources

Equity LifeStyle Properties, Inc., Annual Report on Form 10-K for the year ended December 31, 2025 (filed February 18, 2026; accessed November 4, 2026), https://www.sec.gov/Archives/edgar/data/895417/000162828026008722/els-20251231.htm. Describes owning the land and leasing sites to residents who own their manufactured homes, reports a core portfolio of about 92% homeowners and 3% renters, treats the homes as personal property, and notes inflation-index lease increases and Florida lot rent rules.

Steps

1. Get the rent roll, the leases, and the trailing twelve months

   Ask for a rent roll that shows every lot as empty, resident-owned, or park-owned, the lot leases, the utility bills, and twelve months of operating statements. Walk the park and match the rent roll to the lots.

2. Split lot rent from park-owned home rent

   Resident-owned lots pay lot rent. Park-owned homes pay one rent for the home and the lot. Every lot and home rented at today's rents is gross potential, and what they really pay is rental income.

3. Take off bad debt and add bill-backs and other income

   Bad debt and concessions come off rent. Water, sewer, and trash charges billed to residents, late fees, and application fees are added back. The result is effective gross income, or EGI.

4. Subtract expenses, home upkeep, a management fee, and a reserve to reach NOI

   Property tax at the post-sale assessment, insurance, payroll, the utilities the park pays, repairs to roads and lines, upkeep on each park-owned home, office costs, a management fee on EGI, and a capital reserve per lot.

5. Value it, check it per lot, and size the loan

   Value = NOI ÷ cap rate. Divide by the lot count for value per lot. The lender tests LTV, DSCR, and often debt yield, and lends the smallest result.

6. Price the lot rent increase and find break-even occupancy

   Work out what a realistic lot rent increase adds to NOI and value, then scale occupancy down until NOI, and then cash flow after debt service, hits zero.

Questions