You've found a mobile home park for sale. The listing looks promising. Now what?
This guide walks through a complete deal analysis—from calculating Net Operating Income to deciding whether to proceed. By the end, you'll know how to evaluate any MHP opportunity.
Keep three layers apart as you go—what the property earns, what you pay to finance it, and what cash you actually keep—and start with the business as it runs today. Your improvement plan comes later, once you know where you're starting from.
Define the property you are analyzing
List the permitted sites, occupied sites, resident-owned homes, park-owned homes, and every other income source. Then reconcile the seller's site count against the approvals, a site map, and an inspection.
A vacant site isn't automatically ready to rent. It may need utility service, a suitable home, approvals, or a buyer who can afford the whole housing package. Put a cost and a timeline on it before you forecast a dollar of income from it.
If one payment covers both a home and its site, split those pieces apart wherever the records let you. Home rentals bring repair, replacement, ownership, and sometimes financing obligations that site rent doesn't.
The introductory guide explains those ownership arrangements.
Rebuild revenue from the rent roll
A rent roll lists who occupies each site, what they owe, and the related account details. It tells you what's scheduled. It doesn't tell you the money showed up.
Take a hypothetical 40-site park. Thirty-six sites are occupied at $500 a month, so scheduled annual rent from occupied sites is:
36 × $500 × 12 = $216,000.
Now assume 5% never gets collected. Subtract $10,800. Add $4,800 of other collected operating revenue and you land at $210,000 in annual revenue.
Watch one trap here: the four vacant sites are already out of that math. Knocking off another 10% for those same vacancies counts the loss twice. Same idea if you start from actual collections; don't subtract historical collection losses on top.
Your move: match the rent roll to account ledgers and bank deposits, allowing for timing differences, deposits, prepayments, refunds, and non-rent items. Look at several months and the trailing twelve, not one flattering month.
Build an expense budget for your ownership
Use historical expenses to understand the property, then adjust for changes you can document: insurance, management, property taxes, vendor contracts, deferred maintenance.
Here's an illustrative operating budget for the same park:
| Annual operating expense | Example |
|---|---|
| Property taxes | $25,000 |
| Insurance | $12,000 |
| Water and wastewater | $20,000 |
| Management | $15,000 |
| Recurring maintenance | $10,000 |
| Administration, professional services, and other operations | $8,000 |
| Total | $90,000 |
These numbers are invented for the lesson, not benchmarks to borrow. For each line, find out who pays it and get evidence for the amount you plug in.
Budget for management even if you plan to do it yourself. Paying yourself on paper is what lets you compare a park you self-manage against one with a hired manager.
And keep routine maintenance separate from major capital work. A small plumbing repair and a full water-system replacement shouldn't vanish into the same vague allowance.
Calculate NOI before adding the loan
Net operating income = operating revenue − operating expenses.
Our example gives $210,000 − $90,000 = $120,000 NOI. Here, that's before loan payments, income taxes, and the capital items we budget separately.
That definition earns its keep when you compare seller statements, lender underwriting, and calculator output. A lender might deduct reserves or make other adjustments. Write the definition down next to the number and you'll never be confused about what you're comparing.
Use the Mobile Home Park Calculator to build the operating scenario, then check that its expense and reserve categories line up with your model.
Use cap rates to connect income and price
A capitalization rate, or cap rate, divides annual NOI by the price. At $1.6 million, our $120,000 NOI gives a 7.5% cap rate.
Flip the same formula and you get an income-based value indication:
Value = NOI ÷ cap rate.
| Assumed cap rate | Value indicated by $120,000 NOI |
|---|---|
| 7.0% | About $1,714,286 |
| 7.5% | $1,600,000 |
| 8.0% | $1,500,000 |
That table shows sensitivity; it isn't a report on today's cap rates for mobile home parks. Back your market assumption with relevant closed sales, and account for differences in location, condition, infrastructure, home ownership, and income quality.
One more thing to watch: park-owned homes. If your valuation already capitalizes their rental income, adding the full separate value of that same fleet inflates your answer. The mobile-home valuation guide covers home-level values, and an appraiser can help you allocate mixed assets consistently.
Add debt and owner cash needs
Say the loan takes $85,000 in annual payments and you set aside $10,000 for capital needs. Our example then leaves:
$120,000 NOI − $85,000 debt payments − $10,000 reserve = $25,000 before income taxes.
A simplified debt-service coverage ratio, or DSCR, is $120,000 ÷ $85,000 = 1.41. It compares your defined income to your loan payments, and does nothing more. It isn't a loan approval, and it doesn't promise every obligation is covered.
If you put in $600,000 of total initial cash, that $25,000 works out to a 4.17% cash-on-cash return. Make sure the initial investment includes closing costs, immediate work, and working capital. And say plainly whether your cash-flow figure is before or after reserves.
Now run it the other way. Say that in our example you fill two of the four vacant sites at the same $500, so 38 sites pay instead of 36. Scheduled rent is 38 × $500 × 12 = $228,000; take off the same 5% for collections and add the same $4,800 of other revenue and you're at $221,400. Against the same $90,000 expense budget that's $131,400 of NOI, and after the same $85,000 of debt payments and $10,000 reserve you keep $36,400, a 6.07% cash-on-cash return on that same $600,000.
The financing guide covers loan sizing and maturity risk.
Test one change, then several together
Now push the numbers the wrong way: revenue drops $10,000 and operating costs climb $10,000. NOI becomes $100,000. After the same debt payments and reserve, your cash flow lands at $5,000.
That single test tells you more than any label like "conservative deal." A $20,000 swing in operations just ate $20,000 of your original $25,000. That is how you size the cushion you hold, and how hard you push on price, terms, and reserves.
Now stack a few together: infrastructure work, slower infill, an insurance deductible, a less favorable refinance. Risks travel in packs. An interruption can cut collections while it raises repair and temporary-service costs.
Model improvement plans on their own line. For each new dollar of projected income, name the action, the cost, the timing, the legal requirements, and the evidence that demand exists. Rent increases and filled sites stay assumptions until something backs them up.
Turn your analysis into a decision record
Keep a short note with verified NOI, total cash needed, financing terms, downside cash flow, and open conditions. Give every open issue an owner: a document, an inspection, an estimate, or a professional review.
The due diligence checklist helps you test those assumptions. The MHP Valuation Calculator lets you explore a range of values once you've defined the income correctly.
Frequently asked questions
What is a good cap rate for a mobile home park?
There's no universal number. Compare a consistently defined NOI against relevant closed sales, then adjust for condition, infrastructure, location, financing, and the work ahead. A high advertised cap rate often reflects risk or missing expenses.
Is NOI the same as owner profit?
No. The NOI we used leaves out loan payments, income taxes, and separately budgeted capital costs. Subtract your actual obligations to see what cash is available.
Should I value vacant sites at full occupancy?
Keep that scenario in its own column. Estimate what each site costs and how long it takes to make usable and occupied, confirm the permitted use, and test demand. A stabilized projection is a plan, not collected income.
What if the seller's records do not reconcile?
Pin down the differences and ask for supporting records. Don't paper over gaps with hopeful assumptions. From there you might revise your price, add a contract condition, dig further, or walk away.
Six layers, in order: rent roll, revenue, expenses, NOI, price, and what's left after the loan and a bad year. Run a listing you're looking at through them tonight, and the number you most need to go verify will be obvious by the time you reach the bottom.