How to Value a Mobile Home Park: A Full Walkthrough

A mobile home park is valued on its income, plain and simple. You figure out what the park really earns in a year after honest expenses, and then you divide that by a cap rate that reflects how risky and how much work the park is. That's the whole engine. Everything else is detail. But the details are where owners get their number wrong by hundreds of thousands of dollars, so let me walk you through the entire thing the way I do when I price a park for real.

This is the long version. Grab a coffee. By the end you'll be able to ballpark your own park, and you'll understand every question my valuation model asks you and why.

Step 1: Add up the real income

Start with what comes in. For a tenant-owned, lot-rent park, that's your lot rent times your occupied lots times twelve. If you own some of the homes and rent them out, add that home rent in too, but keep it in your head that home rent and lot rent are different animals, which matters in a minute.

The word that trips people up is "occupied." Use paying lots, not total lots. A 50-lot park that's 40 occupied is a 40-lot park for income purposes. Empty lots are upside, not income, and a buyer will treat them that way. Be honest here, because inflating occupancy is the fastest way to a number nobody will pay.

Step 2: Subtract honest expenses to get NOI

Net operating income, NOI, is what's left after the real cost of running the park, but before any mortgage. This is the number the whole valuation hangs on, so it has to be honest.

On a tenant-owned park your expenses are lighter, you're maintaining roads, common areas, and grounds, not homes, so the expense ratio tends to run around a third of income. On a park-owned-home park it's heavier, because now you're insuring, repairing, and turning the homes themselves, so the ratio climbs. Then your utilities move it further: a well, septic, or private plant adds cost and a licensed-operator obligation on top. Property taxes belong in here too, and remember they'll reassess when the park sells, so a buyer underwrites tomorrow's tax bill, not yesterday's.

Whatever survives all that is your NOI. If your park brings in $200,000 and runs at a 35 percent expense ratio, your NOI is about $130,000. That's the number that gets turned into a value.

Step 3: Put a cap rate on it

Now divide the NOI by a cap rate to get the value. Lower cap rate, higher value. The art is picking the right cap rate for your park, and it's driven by a handful of things I've written about separately.

The biggest driver is who owns the homes. Tenant-owned parks price at a much lower cap than park-owned communities, often four to five points lower, because they're cleaner, lighter, and eligible for the good agency financing. After that comes your market, your utilities, your occupancy, and your size. For the older Florida parks I sell, honest cap rates usually land in the 8s and low double digits, not the 5s and 6s you see in national headlines built from institutional deals. I go deeper on that in my piece on park cap rates in Florida.

Take that $130,000 NOI. At a 9 cap, the park is worth about $1.44 million. At a 10.5 cap, it's about $1.24 million. Same park, and the cap-rate call alone swings the value two hundred grand. That's why getting it right matters so much, and why a national average is a dangerous thing to price off of.

Step 4: The per-lot reality check

Here's the step most online calculators skip, and it's the one that keeps you honest. Even when the income math produces a big number, buyers apply a ceiling on price per lot, especially on older park-owned communities. National median price per lot has been running around the mid-forties per pad and actually fell about 11 percent recently. If your income approach spits out a number that works out to a per-lot price way above what buyers are paying in your kind of market, the market will pull it back down.

So I always calculate the value two ways, the income approach and a sanity check on price per lot, and I lean toward the lower of the two. A park with great cash flow can still be capped by what a buyer will pay per pad, and ignoring that is how a listing sits for a year.

Step 5: Give it a range, not a single number

Finally, no honest valuation is a single point. It's a range, because the cap rate is a judgment call and small changes in it move the number. I give owners a low and a high and a most-likely middle, and I'm clear that where you land inside that range depends on how the park shows, how clean the books are, and how competitive the buyer pool is when you go to market.

The one thing that isn't in the formula

Financing. It's not a line in the math, but it shapes everything, because a park that can't get good debt has a smaller buyer pool, and a smaller pool means a softer price. That's a whole topic on its own, and I wrote it up in why older parks are so hard to finance. Read it after this one, because it explains why two parks with identical NOI can sell for very different numbers.

Put your park through it

That's the entire method: real income, honest expenses to get NOI, the right cap rate for your park, a per-lot reality check, and a range. My valuation model runs exactly these steps, and it's built for real Florida parks, not the institutional communities every generic calculator assumes. You answer a few questions about your lots, rents, occupancy, homes, and utilities, and it does the rest, the same income approach I'd run if you hired me to price it.

Give it your park and you'll get the honest number in a few minutes. And if you want a human to sanity-check it, that's what the phone number's for.