How to Analyze a Mobile Home Park Deal

Mobile home parks (MHPs) have become one of the most sought-after real estate asset classes over the past decade. Warren Buffett's ownership through Clayton Homes, Sam Zell's consolidation play in the 1990s, and a new wave of institutional capital have validated the thesis: mobile home parks offer exceptional cash flow, limited management complexity, and a supply shortage that makes them structurally defensive.

MHP Basics: What You're Actually Buying

In most mobile home park investments, you're buying the land and infrastructure — not the homes. Residents own their own homes and rent the lot. This creates an unusual dynamic: your tenants have significant moving costs (relocating a mobile home costs $5,000–$15,000+), which creates very high retention rates and lower tenant turnover than any other housing type.

Key MHP Metrics

• Lot rent: Monthly rent per occupied lot — the primary revenue driver
• Occupancy rate: Percentage of lots that are occupied and paying. Target 85%+ for stabilized assets
• Park-owned homes (POHs): Homes owned by the park operator increase revenue but also management complexity
• Tenant-owned homes (TOHs): Preferred — no home maintenance responsibility, high retention
• Infrastructure (water, sewer, electric): Public utility connections are strongly preferred; private well/septic creates operational risk

The MHP Valuation Formula

MHPs trade at cap rates of 5–8% in 2026 depending on size, location, and quality of infrastructure. A 100-lot park at 90% occupancy charging $450/month generates $486,000 gross revenue. With 35% operating expenses, NOI is $315,900. At a 7% cap rate, value = $4.5M.

Value-Add Opportunities in MHPs

• Raising below-market lot rents to market rate (most common and highest-impact value-add)
• Filling vacant lots with new or refurbished homes
• Converting park-owned homes to tenant-owned homes (reduces management overhead and liability)
• Adding amenities and infrastructure improvements to justify rent increases
• Subdividing and selling individual lots in markets where this is feasible

MHP Due Diligence Checklist

• Review all lot leases and current rent rolls
• Verify infrastructure ownership and condition (private water/sewer is a risk)
• Check local zoning — is mobile home park use legal and grandfathered?
• Verify no eminent domain threats or planned road expansions
• Walk every lot and inspect home conditions
• Check for environmental liabilities (older parks may have underground storage tanks)

Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been investing in Northern Virginia real estate for 20+ years.