How to value a mobile home park on lot rent
A mobile home park is worth its net operating income divided by a cap rate. NOI is what the park collects (lot rent first, then home rent, utility bill-backs and fees) minus what it costs to run, before any loan payment. If an 80-pad park nets $268,000 and buyers in your market pay a 7.75% cap rate, it’s worth about $3.46 million. Most of the work is getting the $268,000 right.
Step 1: lot rent you actually collect
Start with occupied pads times lot rent, not total pads. Using the example park from the valuation worksheet:
- 80 pads, 68 occupied, lot rent $450 a month.
- Lot rent if every pad were full: 80 × $450 × 12 = $432,000.
- Lot rent collected: 68 × $450 × 12 = $367,200.
The $64,800 gap is the upside a seller will try to sell you. It isn’t income until someone puts a home on those pads, and a lender won’t count it.
Step 2: the other income, on separate lines
- Home rent from park-owned homes: 5 rented at $500 a month on top of lot rent = $30,000.
- Water and sewer billed back from submeters: $2,000 a month = $24,000.
- Late fees, laundry and storage: $300 a month = $3,600.
- Less 2% bad debt on all of it: about $8,500.
Collected income: about $416,300.
Keep home rent apart because lenders cap how much of the park can be park-owned homes (25% at Freddie Mac, 35% at Fannie Mae; see park-owned homes and lenders). Keep bill-backs apart because a lender will set them against the water bill.
Step 3: expenses, including the ones the seller left out
| Expense | Per year |
|---|---|
| Property taxes | $24,000 |
| Insurance | $14,000 |
| Water, sewer, trash, common electric | $38,000 |
| Repairs, roads, grounds | $18,000 |
| Payroll and on-site manager | $15,000 |
| Admin, legal, other | $7,000 |
| Park-owned home repairs and turnover | $6,000 |
| Management, 5% of collected income | $20,800 |
| Reserves: $50 a pad, $250 a park-owned home | $5,500 |
| Total | $148,300 |
NOI: $416,300 − $148,300 = about $268,000.
The last two lines are the ones sellers skip. An owner who runs the park himself shows no management fee; a buyer and a lender charge one anyway, because someone has to be paid to do the job. The reserves are Freddie Mac’s minimums: $50 per site per year on the term sheet, and $250 per borrower-owned home per year in its Guide.
Step 4: the cap rate, as a range
No government source publishes cap rates for parks. Brokers who sell parks in your area know where recent sales traded; ask two of them. Use a range, because the value moves a lot:
- At 7.00%: $268,000 ÷ 0.07 = $3.83 million.
- At 7.75%: $3.46 million.
- At 8.50%: $3.15 million.
That’s $680,000 between the ends, on the same park, which is why a single “value” from a seller’s broker should come with the sales behind it.
How a lender adjusts your NOI
A lender re-underwrites the park, and a few adjustments are predictable.
Vacancy floor
Fannie Mae underwrites at least 5% economic vacancy. The example park is already well above that (it collects about 84% of its potential), so nothing changes. A full park with no bad debt would be cut to 95% of potential income.
Rents in place
A rent increase in a letter that hasn’t taken effect yet isn’t income. Lenders use the rent roll.
Utilities
If the park pays water and sewer and doesn’t bill back, expect the lender to read the water and sewer bills line by line, because that cost is all the park’s.
Taxes after the sale
Some states reassess property when it sells. Ask the county how it assesses after a transfer and use that number, not the seller’s.
The loan sizer takes the NOI from here and shows the loan each program will make on it.
A note on rent increases
Value goes up when lot rent does. Raise rents only as the leases and your state’s notice rules allow, and if you take an agency loan, the tenant site lease protections require at least 30 days’ written notice. Apply the same rent and fees to every resident in the same situation. Charging differently by race, religion, sex, disability, familial status, national origin, or any class your state protects violates the Fair Housing Act.
Sources
- Freddie Mac, MHC term sheet (April 2026): $50 per site replacement reserve; Guide Ch. 22: $250 per borrower-owned home.
- Fannie Mae, MHC term sheet (© 2026): minimum 5% economic vacancy assumption.