The valuation math
As with other income property: Value = NOI ÷ cap rate. The nuance in parks is which income counts, and at what rate.
Illustrative example (not a real property)
- 72 lots, 60 occupied, lot rent $400/month → $288,000 collected
- Operating expenses (taxes, insurance, utilities, management, repairs): $101,000
- NOI from lot rent = $187,000
- At an 8% cap rate: $187,000 ÷ 0.08 ≈ $2,337,000
Any park-owned homes and the 12 vacant lots would be considered separately, typically at a lower value than the lot-rent stream above.
Lot rent versus home rent
This distinction drives more value than almost anything else. Lot rent is land income: the resident owns their home, maintains it, and pays you for the site. It is stable and cheap to operate, so buyers capitalize it as real estate. Home rent from park-owned homes carries maintenance, turnover, and collection costs, so it is usually capitalized less favorably or valued nearer the homes' depreciated worth.
A park where residents own most of the homes is generally worth more than an identical park where the owner does — even at the same gross collections.
Infrastructure is the real diligence item
- Water and sewer. City-connected and direct-billed is cleanest. Private well, septic, or lagoon systems bring regulatory and capital exposure that gets priced.
- Metering. Sub-metered utilities billed back to residents protect NOI when rates rise; bundled utilities do not.
- Electrical. Older pedestals and undersized service are a common and expensive surprise.
- Roads and drainage. Private roads are the owner's responsibility and their condition shows up quickly in an offer.
- Zoning status. Legal non-conforming use is common in older parks and needs disclosing early.
Who buys parks
Larger, stabilized, city-utility parks attract institutional capital and specialized funds. Smaller parks, parks with private utilities, and parks with a meaningful number of park-owned homes tend to trade to private operators and individual investors instead — a smaller pool, but one that generally moves faster and asks for less process.
What to have ready
A rent roll separating lot rent from home rent and showing occupancy by lot, trailing twelve months of income and expenses, your utility bills, any state or county inspection records for water and sewer, and a note on which homes the park owns. That set lets a buyer value the park on what it is rather than on what they fear it might be.
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Frequently asked questions
- How is a mobile home park valued?
- On the income from lot rent, capitalized at a market rate. Buyers focus on lot rent because it is the durable, low-maintenance portion of the income. A park with 60 occupied lots at $400 a month producing $210,000 of NOI would imply roughly $2.6 million at an 8% cap rate.
- Do park-owned homes add to the value?
- Less than most owners expect. Income from renting out homes you own is generally capitalized at a higher rate — or valued closer to the depreciated worth of the homes — because it carries maintenance, turnover, and collection costs that lot rent does not. Many buyers value lot rent as real estate and treat park-owned homes as a separate, lower-value line.
- Why do buyers care so much about the utilities?
- Because they represent the largest hidden liability in the asset class. City water and sewer with direct-billed meters is the cleanest scenario. Private well, lagoon, or septic systems bring regulatory exposure and large capital costs, and buyers underwrite that risk directly into the price.
- Does it matter if the lots are individually metered?
- Yes. Sub-metered utilities that are billed back to residents keep expenses stable as rates rise. When the park pays all utilities out of lot rent, every rate increase compresses NOI, and buyers price that exposure in.
- My park has vacant lots. Are they worth anything?
- Some value, but usually less than owners hope. Vacant lots represent upside a buyer has to fund and execute — filling them requires bringing in homes, which is capital and time. Buyers typically pay primarily for occupied lots and assign modest credit to vacancy, unless demand in the market is clearly proven.
- Is zoning or non-conforming use a problem?
- It is one of the first things diligence checks. Many older parks are legal non-conforming uses, meaning they are permitted to continue but might not be rebuildable if destroyed. That is workable and common, but it needs to be disclosed early because it affects both financing and price.
- Can I sell an RV park the same way?
- Similar mechanics, with one difference: buyers separate long-term monthly residents from transient nightly and weekly income. Long-term income is treated as more durable and capitalized more favorably; seasonal transient income is treated more like a business and discounted accordingly.