There's one formula that drives nearly every mobile home park sale price. Here's how it works—and a real example you can follow.
If you want to know what your park is worth, there is one formula that matters above all else:
Park Value = NOI ÷ Cap Rate
That's it. That one formula drives the vast majority of mobile home park transactions. Whether you're selling to an individual investor, a family office, or an institution, this is what they're calculating in the background.
Let's break down what each part means:
NOI is the money your park actually makes. It's your total annual rent minus all operating expenses (property taxes, insurance, maintenance, utilities, payroll, etc.)—but before paying any debt service or taxes.
If your park collects $300,000 in rent and spends $120,000 operating it, your NOI is $180,000. That's the number that goes into the numerator of the formula.
The cap rate is the annual return an investor expects to earn. It's expressed as a percentage. If an investor buys a park for $2.5 million and expects to earn 6% annually on that capital, the cap rate is 6%.
Different parks command different cap rates depending on risk. A newer park in a strong market might be bought at a 5.5% cap rate. A smaller rural park might sell at 8.5%. The better the park, the lower the cap rate—which paradoxically means a higher sale price (since you divide by a smaller number).
Let's value a mid-size mobile home park with the following characteristics:
Lot rent: 65 lots × $375/month × 12 months = $292,500
Other income: $1,500/month × 12 months = $18,000
Total Gross Income = $310,500
Vacant lots: 7 × $375/month × 12 months = $31,500
Gross Income after vacancy: $310,500 − $31,500 = $279,000
Annual operating expenses: $9,583/month × 12 = $115,000
NOI = $279,000 − $115,000 = $164,000
Now we know the park generates $164,000 in NOI. What's it worth? That depends on what cap rate the market is paying. For this park—a Class B property in a stable market—let's assume a 6% cap rate:
Park Value = $164,000 ÷ 0.06 = $2,733,333
So this park is worth approximately $2.73 million.
Notice that same $164,000 NOI, but change the cap rate:
Same park, same income, but small changes in cap rate swing the value by hundreds of thousands of dollars. This is why the quality of the park matters so much—it determines what cap rate buyers are willing to accept.
Let's use the same park ($164,000 NOI, 6% cap rate, $2.73M value) and see what happens when you make operational improvements:
Additional annual income: 65 occupied lots × $25/month × 12 = $19,500
New NOI: $164,000 + $19,500 = $183,500
New Park Value: $183,500 ÷ 0.06 = $3,058,333
Increase in value: $325,000
Additional annual income: 5 lots × $375/month × 12 = $22,500
New NOI: $164,000 + $22,500 = $186,500
New Park Value: $186,500 ÷ 0.06 = $3,108,333
Increase in value: $375,000
New NOI: $164,000 + $10,000 = $174,000
New Park Value: $174,000 ÷ 0.06 = $2,900,000
Increase in value: $166,667
You might ask: why not just look at what similar parks sold for, like with houses? There are two good reasons:
Mobile home parks don't trade frequently. In many markets, only a handful of parks sell in a year. And each park is different—different lot count, different locations, different infrastructure. Finding true "comparables" is nearly impossible.
A park is fundamentally different from a house. You don't buy a mobile home park to live in it. You buy it to earn income from lot rents. So the only thing that really matters to a buyer is how much cash that park generates each year. The formula captures that directly.
Submit your park details and we'll calculate your valuation using this formula.
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