How to Calculate NOI for a Mobile Home Park

What Is NOI? Why Does It Matter?

NOI stands for Net Operating Income. It's the money your park actually earns after paying all operating expenses—but before paying any debt service (mortgage payments) or taxes.

NOI is critical because it's the foundation of every mobile home park valuation. Professional buyers don't care about your gross income or how long you've owned the park. They care about one thing: what does this park earn? And that's exactly what NOI measures.

Step 1: Calculate Your Gross Income

Start by calculating every dollar your park brings in annually.

Lot Rent Income

Multiply your lot rent by the number of occupied lots, then multiply by 12 months. If you charge $350/month and have 55 occupied lots:

$350 × 55 lots × 12 months = $231,000/year

Other Income

Add any additional revenue your park generates:

• Laundry facility income
• Storage unit rentals
• Pet fees (if you charge monthly)
• Late fees or application fees (normalize these—don't count one-time windfalls)

Total Gross Income = Lot rent + Other income

Step 2: Subtract Vacancy Loss

Not every lot will be occupied year-round. If you have 60 total lots but only 55 are rented, your vacancy is 5 lots, or 8.3%.

Calculate the annual rent you lose from those vacant lots:

Vacant lots × Lot rent × 12 = Annual vacancy loss

Example: 5 vacant lots × $350/month × 12 = $21,000

Subtract this from your gross income:

$231,000 − $21,000 = $210,000 (Gross Income after vacancy)

Step 3: List Your Operating Expenses

Operating expenses are all costs to run the park—except debt service and income taxes. These typically include:

Expense Category	Notes
Real Estate Taxes	Annual property tax on the land. Look at your tax bill.
Insurance	General liability, property insurance. Get actual quotes if valuing for sale.
Water & Sewer (if park-paid)	Monthly utility bills. If sub-metered to residents, don't include.
Trash & Recycling	Dumpster service and collection fees.
Payroll (Maintenance, Management)	Wages for maintenance, office staff, managers. Include payroll taxes.
Repairs & Maintenance	Road repairs, utility system upkeep, common area maintenance. Separate from capital improvements.
Landscaping	Grass cutting, tree trimming, snow removal if contracted out.
Management Fee	5-7% of gross income if professionally managed. If you self-manage, this should still be normalized at market rate.
Advertising & Vacancy Filling	Signs, online listings, lease agreements.
Legal & Professional Fees	Accounting, legal advice, valuation fees.
Utilities (Office/Common Areas)	Electric for office, common building, streetlights, pump houses.

Step 4: Calculate Your NOI

NOI = Gross Income (after vacancy) − Total Operating Expenses

Worked Example: 60-Lot Park

Let's walk through a complete example so you can see exactly how this works.

Common Mistakes When Calculating NOI

Avoid these errors that can throw off your valuation:

Mistake 1: Including Debt Service in Expenses

Your mortgage payment is NOT an operating expense. NOI is calculated before debt service. If your mortgage is $5,000/month, don't subtract it from NOI. Buyers will finance the deal based on the NOI you report.

Mistake 2: Normalizing Owner Salary Incorrectly

If you manage the park yourself and don't take a salary, professional valuators will add a "management fee" (typically 5-7% of gross income) to normalize for the cost of professional management. This is fair—it shows what the park would cost to operate under new ownership.

However, if you take an above-market salary, buyers will reduce NOI by a normalized market rate, not your actual salary.

Mistake 3: Treating Capital Improvements as Operating Expenses

Replacing the entire water line is a capital improvement. Fixing a leaky faucet is maintenance. Only regular maintenance and repairs count as operating expenses. Major capital projects (over $5,000-$10,000) are deducted differently in valuations.

Mistake 4: Forgetting Vacancy Altogether

Some owners calculate NOI assuming 100% occupancy. But if your park typically runs at 85% occupancy, using 100% will overstate your NOI and your valuation.

Mistake 5: Including One-Time Expenses

Did you do an emergency roof repair last year? A major equipment replacement? Don't include one-time events in your normalized NOI. Use a 3-year average or normalize for typical annual costs.

Related Resources

• The Mobile Home Park Valuation Formula
• How Is a Mobile Home Park Valued?
• The Income Approach to MHP Valuation