Mobile Home Park Cap Rate: How to Value a Mobile Home Park
Cap rate is the first number every buyer, lender and investor checks. Learn how to calculate it, what moves it, and how to avoid the mistakes that make a park look better on paper than it really is.
Cap rate = Net Operating Income (NOI) ÷ purchase price. To estimate what a park is worth, flip it: value = NOI ÷ cap rate. For a mobile home park, build NOI from lot rent first, then treat income from park-owned homes separately.
Example: $158,400 NOI ÷ $1,980,000 price = 8.0% cap rate.
Key takeaways
- Cap rate compares a park’s income to its price and ignores financing.
- Underwrite on lot rent, and keep park-owned home income separate.
- Price off in-place numbers. Treat pro forma as a plan, not a fact.
- A small change in cap rate or NOI changes value a lot, so verify every number.
What is a cap rate in a mobile home park?
New to the asset class? Start with how to invest in mobile home parks. The capitalization rate, or cap rate, shows a property’s annual net operating income as a percentage of its price or value. It lets you compare one mobile home park (also called a manufactured housing community, or MHC) against another without worrying about how each deal is financed.
A higher cap rate means more income for every dollar paid, and it usually comes with more risk or more work. A lower cap rate means the market is paying a premium for stable, predictable income. Neither is automatically “better”; what matters is whether the income is real and repeatable.
The mobile home park cap rate formula, step by step
- Start with lot rent. Multiply the number of lots by the share that are occupied, then by monthly lot rent, then by 12.
- Add other documented income. Utility billback, late fees and similar items count only if the books show them.
- Subtract operating expenses. Property taxes, insurance, water and sewer, trash, repairs, payroll, management and marketing. Do not subtract mortgage payments or depreciation.
- The result is NOI. Divide NOI by the purchase price to get the cap rate, or divide NOI by a target cap rate to estimate value.
Many buyers also set aside a separate reserve for capital repairs such as roads and water lines, so they don’t overstate how much cash the park really produces.
How to value a mobile home park: 4 common methods
Cap rate is the most-used tool, but experienced buyers cross-check it with other methods before making an offer on a manufactured housing community.
| Method | How it works | Best used for |
|---|---|---|
| Income (cap rate) | Value = NOI ÷ cap rate | Primary valuation of stabilized parks |
| Sales comparison | Compare price per lot and cap rate with recent sales of similar parks | Checking that your cap rate is realistic |
| Price per lot | Price ÷ total lots (and occupied lots) | A fast screen, not a final value |
| Cost / replacement | Land plus cost to rebuild infrastructure | Understanding downside and value-add potential |
Appraisers and lenders usually weight the income approach most heavily for income-producing parks. Get a local broker opinion or appraisal before relying on any single number.
Worked example: same park, three different values
Take a 100-lot park with 80% occupancy and $300 monthly lot rent. These numbers are illustrative only.
| Line item | Annual |
|---|---|
| Occupied lots (100 × 80%) | 80 lots |
| Effective lot income (80 × $300 × 12) | $288,000 |
| Operating expenses (45% of income) | −$129,600 |
| Net operating income (NOI) | $158,400 |
The cap rate you choose changes the answer dramatically, even though the park hasn’t changed:
A swing from a 7% to a 10% cap rate moves value by about $678,857. This is why comparable sales and clean financials matter. These figures are an example, not a Treeside property or a projection.
Lot rent vs. park-owned home income
In a typical park, residents own their homes and pay rent for the land underneath. That lot rent is income from the land and infrastructure. Some parks also own homes and rent or rent-to-own them. That income comes with the cost of owning, repairing and re-renting each home.
Lot rent
Income from the land and infrastructure. Lower expenses, steadier, and what lenders and appraisers typically look at first when underwriting a park.
Park-owned home income
Income from homes the park owns. Usually higher costs and more turnover, so it should be tracked and valued separately.
A seller who combines both into one revenue line can make the cap rate look stronger than it is. This mistake shows up often in seller-financed deals, where there is less lender scrutiny. Always ask for a rent roll that separates lot rent from home rent.
In-place vs. pro forma cap rate
Listings often show two cap rates. The in-place cap rate uses current, actual income and expenses. The pro forma cap rate uses projected numbers after planned changes, such as raising below-market rents, filling vacant lots or cutting costs.
Pro forma is a business plan, not a fact. The price you pay should reflect what the park earns today; the pro forma shows the upside you will have to earn through execution. A wide gap between the two numbers means a lot of the value depends on getting that plan done.
Mobile home park cap rates in 2026: market context
Cap rates move with interest rates, investor demand and the quality of the park. In February 2026, Matthews reported that premium communities were trading at cap rates around 4%–5%, while stabilized assets typically transacted between 5% and 7%. The same report noted national occupancy near 94% and growing regulatory attention on rent and tenant protections (Matthews, Feb 2026).
Treat those ranges as headlines, not a price list. Smaller, older or rural parks with well-and-septic systems, deferred maintenance or high park-owned-home counts can price very differently from large, city-served communities. Always confirm against recent comparable sales in the specific market.
Source figures are third-party broker commentary and may change. They are not Treeside Capital data or a prediction of future pricing.
What moves a mobile home park’s cap rate
Utilities
City water and sewer generally mean fewer surprises than wells and septic systems. Who pays for water, sewer and trash also changes NOI.
Lot rent vs. market
Rents far below nearby parks signal upside, but only if the market and local rules support increases.
Occupancy and vacant lots
Empty lots with working infrastructure can be an infill opportunity. See our guide to mobile home park infill.
Home ownership mix
A park with mostly tenant-owned homes behaves differently from one with many park-owned homes.
Roads and infrastructure
Deferred maintenance reduces what a buyer will pay or requires a repair budget on day one.
Size and location
Market strength, local demand for affordable housing and park size all influence the cap rate buyers accept.
Mobile home park cap rate calculator
Change the numbers to test a park. Results update as you type. This tool is for education and is not investment advice.
Results
Uses lot income only. Add park-owned home income separately, and always verify income and expenses with the seller’s actual financials.
How rent and occupancy move value
Because value is NOI divided by cap rate, every dollar of added NOI is multiplied. Using the 8% example park:
Raise rent by $25 a month
80 occupied lots × $25 × 12 = $24,000 more NOI if expenses stay flat. At an 8% cap rate, that is about $300,000 of added value.
Fill 10 vacant lots
10 lots × $300 × 12 = $36,000 revenue. Assuming 25% goes to added costs, NOI rises $27,000, or about $337,500 at an 8% cap rate, before the cost of homes and setup.
Illustrations only. Real results depend on market rents, lease terms, local rules and execution, and gains are never guaranteed. Learn more in our infill guide and why mobile home parks are a good investment.
Cap rate vs. other mobile home park metrics
| Metric | What it tells you | Includes debt? |
|---|---|---|
| Cap rate | Income compared with price. Best for comparing and valuing parks. | No |
| Cash-on-cash return | Annual cash flow after debt, divided by cash invested. | Yes |
| DSCR | NOI divided by yearly debt payments. The lender’s safety check. | Yes |
| Price per lot | Price divided by lots (or occupied lots). A quick check against nearby sales. | No |
Seven cap rate mistakes to avoid
- 1
Mixing lot rent and home rent in one revenue number.
- 2
Trusting low expenses. Unusually low ratios often leave out management, payroll, repairs or utilities the park pays.
- 3
Pricing off the pro forma instead of in-place income.
- 4
Ignoring who pays water, sewer and trash.
- 5
Skipping deferred maintenance like roads, septic and water lines.
- 6
Forgetting vacancy and bad debt when counting rent.
- 7
Using cap rate alone. Check cash-on-cash and DSCR too. Use our due diligence checklist.
Mobile home park valuation glossary
- NOI (net operating income)
- Income after vacancy and operating expenses, before debt service and depreciation.
- Cap rate
- NOI divided by price or value, shown as a percentage.
- Lot rent
- The monthly rent a resident pays for the land and infrastructure under a home they own.
- MHC / MHP
- Manufactured housing community, or mobile home park. Industry terms for the same type of property.
- Pro forma
- A projection of future income and expenses after planned improvements.
- DSCR
- Debt service coverage ratio: NOI divided by yearly loan payments.
- Cash-on-cash return
- Annual pre-tax cash flow divided by the cash an investor puts in.
- Infill
- Placing homes on vacant, already-serviced lots to raise occupancy.
Mobile home park cap rate questions
What is a good cap rate for a mobile home park?
There is no single good number. Cap rates vary by market, park size, utilities, occupancy, how much income comes from lot rent versus park-owned homes, and how much work the park needs. Compare a park against recent sales of similar parks nearby, and focus on how reliable the income is, not just the percentage.
How do you calculate the cap rate of a mobile home park?
Divide annual net operating income (NOI) by the purchase price. NOI is effective income (lot rent after vacancy, plus documented other income) minus operating expenses, before debt service and depreciation.
How do you value a mobile home park?
A common starting point is value = NOI ÷ cap rate. Build NOI from verified lot rent and actual expenses, choose a cap rate supported by comparable sales, then cross-check with price per lot and cash-on-cash return.
Should park-owned home rent count toward cap rate?
Lenders and appraisers typically underwrite a park on lot rent and treat home income separately, because owning and maintaining homes adds costs and risk. Ask for a rent roll that separates the two.
What is the difference between in-place and pro forma cap rate?
In-place cap rate uses current, actual income and expenses. Pro forma uses projected numbers after planned changes such as rent increases or filling vacant lots. Pro forma is a plan, so it should not set the price you pay.
Is a higher cap rate better for a mobile home park?
Not automatically. A higher cap rate means more income per dollar paid, but it often reflects more risk, such as older infrastructure, well and septic systems, lower occupancy or a weaker market. A lower cap rate usually means the market sees the income as more stable.
What are mobile home park cap rates in 2026?
Published broker commentary from early 2026 describes premium communities trading around 4% to 5% and stabilized assets between 5% and 7%, but rates vary widely by market, size and quality. Always verify with recent comparable sales.
Does cap rate include the mortgage?
No. Cap rate ignores financing. Use cash-on-cash return and debt service coverage ratio (DSCR) to see how a loan changes the picture.
Want to invest in parks that have already been underwritten?
Treeside Capital acquires, operates and improves mobile home parks. Accredited investors can learn about current mobile home park investment opportunities, passive investing and how our process works.