MHC Database · Manufactured housing transaction intelligence
How to Value a Mobile Home Park: Methods, Cap Rates & Comps
Quick answer: There are three accepted ways to value a mobile home park: the income approach (capitalize net operating income at a market cap rate), the sales-comparison approach (a price per site drawn from recent comparable sales), and the cost approach (land plus the depreciated cost to develop). Serious buyers do not pick one, they triangulate across all three and reconcile to where the numbers cluster.
A manufactured housing community is a land-lease business: the owner rents sites to residents who own their own homes, and that single fact shapes how it is valued. You are not just pricing land, you are pricing a stream of lot rent that the land produces. So the value of a community tracks what it earns far more closely than it tracks what the land cost to acquire. That is why two physically similar communities in the same market can carry very different values: one runs full at a strong lot rent with low expenses, the other does not.
Appraisers and acquirers handle this with the same three approaches used across commercial real estate, adapted to the land-lease nature of a community. This guide walks through each one, shows the math, and explains how to weight them. It pairs with the broader How to Buy a Mobile Home Park playbook, which puts valuation in the context of the whole acquisition.
Why a community is valued as a business plus real estate
Most commercial properties earn rent under leases, and a community does too, but the structure is distinctive: residents own their homes and lease only the site, so turnover is low and lot rent is sticky. Revenue depends on how full the community runs, the lot rent it charges, and how much of that revenue survives expenses, which hinges heavily on who pays for utilities. The land matters, but the earnings drive the value. This is why the income approach tends to lead, and why a credible valuation always starts by understanding what the property actually produces.
The income approach
The income approach converts earnings into value. The core input is net operating income (NOI): total revenue minus operating expenses, measured before debt service and before capital items like a road repave or a utility-system replacement. NOI is what the asset throws off on its own, independent of how a particular buyer finances it.
Once you have NOI, the formula is simple:
- Value = NOI / cap rate
The capitalization rate (cap rate) is the market's required return, expressed as a percentage. A lower cap rate means buyers will pay more per dollar of income (a higher value), and a higher cap rate means they pay less. Suppose, purely for illustration, a community produces $1,000,000 of NOI and the market cap rate is 6 percent. The indicated value is $1,000,000 / 0.06, or about $16,667,000. Those figures are illustrative round numbers chosen to show the arithmetic, not market data for any real property or market.
Two things make or break this method: the quality of the NOI (it should reflect normalized, sustainable operations, not one unusually strong year) and the cap rate you choose. Because a small change in the cap rate moves value substantially, cap-rate selection deserves its own treatment, covered in Mobile Home Park Cap Rates Explained.
The sales-comparison approach
The sales-comparison approach values a community by reference to what similar communities actually sold for. The unit of comparison is price per site: a sale price divided by the site count. Expressing every comp per site puts properties of different sizes on one scale, so a 120-site sale and an 80-site sale can be compared directly.
To apply it, gather recent arms-length sales of communities of similar quality, market, and condition, convert each to price per site, then adjust for the ways your subject differs (newer or older, public or private utilities, better or worse location) and apply the resulting per-site figure to your site count. The sourcing method, including how to pull comps from public records rather than an expensive terminal, is in How to Find Mobile Home Park Sale Comps. This approach is strongest when the market is active enough to supply genuinely comparable, recent sales.
The cost approach
The cost approach asks a different question: what would it cost to recreate this community today? You take the value of the land, add the current cost to develop equivalent sites and infrastructure, then subtract depreciation for age, wear, and any functional or external obsolescence. Land plus depreciated replacement cost gives the indicated value.
For most stabilized communities the cost approach is a secondary check, because buyers care more about earnings than about development cost, and because new communities are rarely built. It carries the most weight in two situations: a newly developed property, where depreciation is minimal and cost closely tracks value, and a unique or special-purpose asset for which genuine sales comps and a reliable income history are hard to find.
Reconciling the three
The three approaches rarely produce the exact same number, and they are not supposed to. The final step is reconciliation: weighing each result by how reliable it is for this specific property and arriving at a supportable value. For a stabilized, operating community the income approach usually leads, with sales-comparison as a strong cross-check and cost as a backstop. For a new development, weight shifts toward cost; for an asset in an active trading market, sales-comparison gains weight. Where the credible approaches cluster is your value, and a number that sits far outside that cluster is a flag to revisit your inputs, not a bargain to chase.
| Approach | What it measures | Best for |
|---|---|---|
| Income | Value of the earnings stream (NOI capitalized at a market cap rate) | Stabilized, operating communities |
| Sales comparison | What similar communities sold for, on a price-per-site basis | Active markets with recent, comparable sales |
| Cost | Land value plus depreciated cost to develop | New development and unique or special-purpose assets |
Notice how much of this rests on two things you can verify independently: a defensible cap rate and a clean set of comps. Get the cap rate right and the income approach holds; get the comps right and both the income and sales-comparison approaches are anchored to reality. Both come from the same public record that drives the rest of an acquisition.
Frequently asked questions
What are the three approaches to mobile home park valuation?
There are three accepted approaches: the income approach (capitalize net operating income at a market cap rate), the sales-comparison approach (apply a price per site drawn from recent comparable sales), and the cost approach (land value plus the depreciated cost to develop). Serious buyers run all three and reconcile to where they cluster.
What is the income approach for a mobile home park?
The income approach converts a community's earnings into value. You start with net operating income (NOI), which is revenue minus operating expenses, measured before debt service and capital items, then divide it by a market capitalization rate: Value = NOI / cap rate. It is the primary method for a stabilized community because value tracks what the property earns.
What does price per site mean?
Price per site is a community's sale price divided by its site count. Expressing a sale this way lets you compare properties of different sizes on the same scale, so a 120-site sale and an 80-site sale become directly comparable. It is the unit the sales-comparison approach is built on, drawn from recent comparable sales.
Which valuation method is most important for a mobile home park?
For a stabilized, operating community the income approach usually leads, because value is driven by what it earns. The sales-comparison approach is a strong cross-check, and the cost approach matters most for new development or unusual assets. You weight them and reconcile rather than relying on any single number.