MHC Database · Manufactured housing transaction intelligence
Lot Rent, Occupancy & the Metrics That Move an MHC Deal
Quick answer: A manufactured housing deal turns on a short list of metrics. Lot rent (the monthly site rent) and physical occupancy build revenue; the expense ratio (operating expenses as a share of revenue, driven by who pays for utilities) determines how much of that revenue survives; net operating income (NOI) is what is left; and per-site value is how you compare one community to another. Together they flow straight into value.
A manufactured housing community is a land-lease business: residents own their homes and rent the site, so its value follows what those sites earn. A handful of operating metrics describe how the community is doing: lot rent, occupancy, the expense ratio, NOI, and per-site value. They are simple to compute and easy to misread, and they sit directly upstream of every valuation number a buyer cares about. This guide defines each one cleanly, shows the math on a hypothetical property, and connects them to net operating income and value. All figures below are illustrative.
Lot rent: the core revenue line
Lot rent, also called site rent, is the monthly amount a resident pays to lease the site their home sits on. Because the resident owns the home and rents only the ground, lot rent is the engine of community revenue. To estimate annual site-rent revenue, multiply average lot rent by the number of occupied sites by twelve:
Annual site-rent revenue = average lot rent × occupied sites × 12
Take a hypothetical 100-site community with 90 occupied sites and an average lot rent of $400 per month. Annual site-rent revenue is $400 × 90 × 12 = $432,000. Lot rent tends to grow steadily and rarely falls, because residents who own their homes are reluctant to relocate them, which is part of why lot-rent income is prized for its durability. Lot rent tells you about price, but it says nothing about how full the community is, which is where occupancy comes in.
Occupancy: how full the community runs
Physical occupancy is the share of sites that are occupied. The formula is occupied sites divided by total sites:
Occupancy = occupied sites / total sites
Continuing the hypothetical, the 100-site community with 90 occupied sites is 90 / 100 = 90 percent occupied. Because moving a manufactured home is expensive, turnover is low and occupancy in a stabilized community is sticky. Vacant sites are also where upside lives: filling empty pads adds lot rent at almost no added fixed cost, so a partly occupied community can be a value-add play rather than a flaw.
The expense ratio: how much revenue survives
Revenue is only half the story. The expense ratio measures how much of it is consumed by operating costs:
Expense ratio = operating expenses / revenue
The single biggest swing factor is utilities. In a community where residents are billed directly for water, sewer, and trash, the owner carries far less expense than in one where those costs sit on the owner's statement. Suppose the hypothetical community collects $450,000 of total revenue and runs $180,000 of operating expenses. The expense ratio is $180,000 / $450,000 = 40 percent. A lower expense ratio means more of each revenue dollar reaches the bottom line, which is exactly what the next metric captures.
NOI: what is actually left
Net operating income (NOI) is total revenue minus operating expenses, measured before debt service and capital items. It is what the community throws off on its own:
NOI = total revenue - operating expenses
For the hypothetical, NOI is $450,000 - $180,000 = $270,000. NOI is the number every valuation leans on, because it is what a buyer is really purchasing: the durable cash the sites produce, independent of how any particular buyer finances the deal.
Per-site value: comparing one community to another
Per-site value is a community's price or value divided by its site count. It is the manufactured-housing analog of price per unit in apartments, and it lets communities of different sizes be compared at a glance:
Per-site value = value / total sites
If the hypothetical community is worth $4,500,000 across 100 sites, that is $45,000 per site. Per-site value is the unit the sales-comparison approach is built on, and it is not the whole story (it ignores how the sites earn), but it is the anchor every other valuation method circles back to.
How the metrics roll up to value
These metrics are not trivia, they are the links in the valuation chain. Lot rent times occupied sites gives site-rent revenue. Add any other income (home sales, fees, billed-back utilities) to reach total revenue. Subtract operating expenses, governed by the expense ratio, and you arrive at net operating income (NOI). Capitalize NOI at a market cap rate and you have an estimate of value, which you can cross-check against per-site value from comps. The full math, with worked examples, is in How to Value a Mobile Home Park, and the cap rate step has its own deep dive in Mobile Home Park Cap Rates Explained.
| Metric | Formula | What it tells you |
|---|---|---|
| Lot rent | Average monthly site rent | The price residents pay per site (the revenue engine) |
| Occupancy | Occupied sites / total sites | How full the community runs (volume and upside) |
| Expense ratio | Operating expenses / revenue | How much revenue survives, driven by who pays utilities |
| NOI | Total revenue - operating expenses | The durable cash the community produces |
| Per-site value | Value / total sites | A normalized basis for comparing communities |
Reading these numbers is one step in a larger underwriting process. The full sequence, from sourcing to financing, is laid out in How to Buy a Mobile Home Park.
Frequently asked questions
What is lot rent?
Lot rent, also called site rent, is the monthly amount a resident pays to lease the site their manufactured home sits on. In a land-lease community the resident usually owns the home and rents only the ground beneath it, so lot rent is the core revenue line. Multiply average lot rent by occupied sites and by twelve to estimate annual site-rent revenue.
How is physical occupancy calculated for a community?
Physical occupancy is occupied sites divided by total sites. A 100-site community with 90 occupied sites is 90 percent occupied. Because residents own their homes and rarely move them, occupancy in a stabilized community tends to be sticky, which is part of why the asset class is valued for durable income.
What is the expense ratio in a mobile home park?
The expense ratio is operating expenses divided by revenue. It is shaped heavily by who pays for utilities: a community where residents are billed directly for water, sewer, and trash runs a lower expense ratio than one where the owner absorbs those costs. A lower expense ratio means more of each revenue dollar reaches net operating income.
What is per-site value?
Per-site value is a community's price or value divided by its site count, the same idea as price per unit in apartments. It normalizes communities of different sizes onto one scale so they can be compared, and it is the unit the sales-comparison approach is built on. It pairs with the income approach, which capitalizes NOI at a market cap rate.