Capitalization Rate (Cap Rate)

A property's annual NOI divided by its purchase price, expressed as a percentage.

The capitalization rate (cap rate) is the most common metric for valuing income-producing real estate, including mobile home parks. It is calculated as net operating income divided by purchase price (or current market value), expressed as a percentage. A park sold for one million dollars that produces eighty thousand dollars per year in NOI has an 8 percent cap rate. Lower cap rates indicate more expensive properties (higher price per dollar of income) and are typical in tier-1 metros and stabilized parks; higher cap rates appear in tier-2 markets and value-add opportunities. As of 2026, stabilized MHP cap rates in tier-1 markets cluster between 6.5 and 7.5 percent; tier-2 markets between 7.5 and 9 percent.

Related Terms

Net Operating Income (NOI)

A park's annual revenue minus operating expenses, but before debt service and capex.
Park Valuation

The estimated market value of a mobile home park, typically calculated by capitalizing NOI.
Price Per Lot

The total purchase price divided by the lot count — a quick benchmark for park acquisition deals.

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