Mobile Home Parks: The Asset Class
That Embarrasses Everyone.

1. What an MHP actually is

A mobile home park (industry term: manufactured housing community, or MHC) is a parcel of land subdivided into pads, each leased to a homeowner who places a manufactured home on it. You own the dirt, the streets, the utility infrastructure, the common areas. The tenant owns the box.

That's MHP. What it's not:

• RV parks. Transient or seasonal, very different revenue model, regulated as hospitality in many jurisdictions.
• Manufactured home subdivisions. Tenants own the land too. You're not the landlord, you're the developer who already exited.
• Park-model RV communities. Smaller units, recreational classification, different financing universe.

Roughly 43,000 MHPs in the U.S. with about 4.2 million home sites. Highly fragmented — the top 50 owners control under 20% of the inventory. That fragmentation is exactly what attracted institutional capital starting around 2015.

2. The lot-rent model — why it's the cleanest income stream in CRE

Pure lot-rent MHP works like this: tenant owns the home, you own the pad and infrastructure. Tenant pays:

• Lot rent. Monthly rent for the pad. Typical range $350-$900 depending on market.
• Utilities. Either sub-metered (best), RUBS-allocated (acceptable), or owner-paid (avoid).
• HOA-style amenities. Some parks bill separately for trash, common-area maintenance.

Your operating costs: property taxes, insurance, road maintenance, common area maintenance, on-site or regional management. Operating margins on a clean lot-rent park run 60-70%. That's higher than [multifamily](/guides/multifamily), higher than office, higher than basically anything except [NNN retail](/guides/nnn-leases).

Mobile home parks are the only asset class where "tenant pays for the building" is literal.

3. Park-owned homes — the trap that kills first-time buyers

Park-owned homes (POH) means the park owns the manufactured home and rents it out furnished or unfurnished, like a single-family rental. POH income shows up as much higher per-pad revenue on the broker's offering memo. It is not the same business.

Why POH is a trap:

• You're a residential landlord. Tenants don't have skin in the game (no equity in the home), turnover is 2-3x lot-rent turnover, and you're on the hook for plumbing, HVAC, roof, appliances.
• The homes depreciate. A 1995 doublewide that the seller booked at $18,000 is worth $3,000 in actual market and zero on a sale. The "asset" is a liability.
• Lender treatment. Most agency MHP lenders (Fannie/Freddie) cap POH percentage at 25% of pads. Above that, you're in conventional or specialty debt at worse terms.
• Cap rate haircut at exit. Buyers price POH income at 100-200 bps wider than lot rent.

The standard play on a heavy-POH park is to convert: sell the homes to existing tenants on rent-credit programs (Lonnie deals, RTO contracts), or sell out and replace with new sites for tenant-owned homes. Conversion takes 3-5 years and real operational chops.

4. Water, sewer, and the utility recapture playbook

The single biggest value-add lever in MHP is utility recapture. Three setups you'll encounter:

• Master-metered, owner-paid. Worst for the seller, best for the buyer. Park pays the city water/sewer bill, tenants have no incentive to conserve. You can implement sub-metering or RUBS post-close and shift expense to tenants. Often worth 100-200 bps of going-in yield.
• RUBS (Ratio Utility Billing System). Allocates utility expenses by formula (per home, per occupant, per square foot). Legal in most states, requires lease language and disclosure.
• Sub-metered. Each pad has its own meter, tenant gets a bill for actual usage. Operationally clean. Higher upfront capex ($800-$1,500 per pad to install).

Private utility systems (well, septic, lagoon) add complexity. They can be a margin enhancer (no city rates, no PUC) or a disaster (well goes bad, EPA gets involved on the lagoon). Get a third-party engineering review on every park with private utilities. Don't skip this.

5. Class A, B, and C — what each actually means

The MHP class system isn't a formal designation, but everyone in the business uses roughly the same definitions:

• Class A. 200+ pads, paved roads, city utilities (sub-metered or RUBS), homes built post-1995, age-restricted or family with strong screening, amenities (clubhouse, pool). Trades 5.5-6.5%. Sun, ELS, RHP, Brookfield buyers.
• Class B. 80-200 pads, mix of paved and gravel, city utilities or modern private systems, mostly post-1980 homes, regional operator-quality. Trades 7.0-8.5%. Mid-market PE and family-office buyers.
• Class C. Under 100 pads, often gravel roads, private utilities, mix of POH and TOH, older homes. Trades 9-12%+. Mom-and-pop, syndicators, value-add operators.

The cap rate spread within MHP is wider than any other asset class we cover. A Class C tertiary park in a small town can trade at 11%; a Class A on the I-95 corridor in Florida can trade inside 6%. Same asset class, different businesses.

6. The institutional bid and the political backlash

Institutional capital arrived in MHP starting around 2015 and went vertical 2018-2023. Sun Communities, Equity LifeStyle Properties, RHP Properties, Brookfield, Stockbridge, Carlyle, Blackstone (briefly). They built or scaled platforms, paid premium prices for Class A and B parks, and pushed rent.

The political reaction has been intense. John Oliver did a segment in 2023. Several states passed MHP-specific rent control (CA, OR, MN, NY, NJ have varying flavors). Federal attention to community closures — where parks are sold to developers and tenants are displaced — is rising. The Biden FTC opened inquiries into roll-up activity in the space.

What this means for underwriting: rent escalations cannot be modeled as 8-10% per year forever. In strong markets without rent control, 4-6% annual is achievable for 3-5 years. In rent-controlled jurisdictions, model the cap. Aggressive escalations are now political theater, and the asset value will reflect that at exit.

7. Pad-rent escalations: how the math works over a 10-year hold

Compounding pad rent is where MHP returns come from. A simple example, no rent control, modest assumptions:

200-pad park, $450 average lot rent at acquisition, 95% occupied, 4% annual lot-rent escalation, OpEx grows 3%, utility recapture in year 1 saves $40/pad/month.

Year 1 NOI: ~$840,000. Year 10 NOI: ~$1,420,000 (after compounding rent and OpEx growth, holding occupancy flat). Buy at 7% cap = $12M. Exit year 10 at 6.5% cap = $21.8M. Plus 10 years of distributions. Plus depreciation and accelerated depreciation via cost segregation on the infrastructure.

The catch: that 4% annual escalation assumption is doing a lot of work. If your market gets rent-controlled at 3%, the year-10 NOI drops to ~$1,300,000 and the exit drops by $1.5-2M. Model the bands.

8. The 1031 fit

MHP is a top-tier 1031 destination. Stable income, demographic tailwind (affordable housing demand isn't going anywhere), strong depreciation, and a deep enough buyer pool that you can find product. Pairs particularly well with sellers exiting [multifamily](/guides/multifamily) who want similar economics with less management intensity per door.

The catch is the same one as MOB: sourcing. Class A and B inventory is heavily picked over by institutional buyers. Class C is available but requires operational chops. Build a relationship with an MHP-specific broker (Marcus & Millichap, Capital Square, Yale Realty, etc.) before you trigger the [45-day ID period](/cre-terms/identification-period). Read our [1031 buyer's field guide](/guides/1031-exchange) for the full process.

9. Underwriting reality vs. broker pitch

Standard broker pitch on an MHP: "It's 95% occupied, lot rents are $50 below market, utilities are master-metered (huge upside!), and the seller has been hands-off so there's tons of management upside."

Translate:

• "95% occupied." Of what — physical occupancy, economic occupancy, or pads with a home on them? A pad without a home is vacant. Verify.
• "$50 below market." Pull comp parks within 5 miles. Verify the comp set is the same class. Then assume you can capture 60-70% of the gap over 3-5 years if you're not in a rent-control state.
• "Utilities master-metered." Real upside, but how much will it cost to install sub-meters, what's the legal lift in this state, what's your billing system going to be, and how much pushback from tenants will you absorb.
• "Seller hands-off." Means deferred maintenance, deferred capex, missing leases, missing tenant ledger, possibly missing rent.

10. The mistakes we see

• Buying a high-POH park without a conversion plan. POH is a different business. If you don't have a 36-month plan to sell the homes to tenants, don't buy the deal.
• Skipping the utility engineering review on private systems. A failed lagoon or contaminated well can kill a deal entirely. Pay for the report.
• Underwriting straight-line 8% rent growth. Politically and economically unrealistic. Use 3-5% with a haircut after year 3.
• Ignoring the road and infrastructure capex. Asphalt overlays every 15-20 years, water main replacements, electrical upgrades. Build a real capex reserve, not the $50/pad/year the seller suggests.
• Not verifying the rent roll. Bank statements, deposits, ledger reconciliation. Sellers in MHP routinely overstate collections by 5-15%.
• Buying in the wrong state. Some states are MHP-friendly (TX, FL, NC, AZ, IN, OH). Some are increasingly hostile (CA, OR, NY, MN). Match your strategy to the state.

11. What to do if you're underwriting an MHP right now

• Pull two years of bank statements and reconcile. Don't trust the broker's T-12.
• Tour every pad. Count the homes. Count the empty pads. Note the home age and condition. Photo everything.
• Engineering report on utilities. Especially private systems. Get the EPA history, well test results, septic permit status.
• Pull comp lot rents within 5 miles. Three real comps, same class.
• Verify zoning and conditional use. Many MHPs are non-conforming uses. Confirm rights to rebuild after a fire or storm.
• Check the state for rent control or pending legislation. Plus any local ordinances on park closures.
• Build the recapture model. What's the cost to install sub-meters, what's the timeline, what's the legal exposure, what's the post-recapture NOI lift.
• Stress the exit. If cap rates widen 75 bps and you can't push rent as fast as planned, does the deal still hit your IRR hurdle?

Compare MHP returns and operating profile against other asset classes in our [asset class comparison tool](/compare).

12. FAQ

What's a typical cap rate for a mobile home park?

Class A institutional-quality MHPs in primary markets trade 5.5-6.5% in 2026. Class B regional parks with city utilities and stable tenancy trade 7.0-8.5%. Class C tertiary parks with private utilities and park-owned homes trade 9-12%, sometimes wider. The biggest cap rate spread in CRE happens inside this single asset class.

What's the difference between lot rent and park-owned homes?

Lot rent means the tenant owns the home and pays you for the dirt and utilities — clean, simple, low-maintenance income. Park-owned homes (POH) means you own the houses and rent them out like a landlord. POH income looks higher on paper but eats it back in repairs, turnover, and depreciation. POH is operationally a different business than lot rent.

Why is institutional capital piling into MHPs?

Three reasons. (1) Affordable housing demand keeps growing while no new MHPs are getting entitled. (2) Lot-rent operating margins are best-in-class in CRE — often 60-70% NOI margins. (3) The asset class was historically mom-and-pop owned, so there was a long runway to consolidate. Sun Communities, ELS, RHP, and Brookfield all built or expanded major platforms between 2015-2024.

What's utility recapture?

Utility recapture means switching from owner-paid utilities to either sub-metered (you bill tenants for actual usage) or RUBS (Ratio Utility Billing System, where you allocate by formula). On a park where the seller is paying water/sewer, capturing those expenses can drop OpEx by $30-80 per pad per month — often 100-200 basis points of going-in yield. It's the #1 value-add play in MHP.

Are mobile home parks a good 1031 exchange target?

Yes, MHP is one of the most popular 1031 destinations. Stable cash flow, demographic tailwinds, manageable management with a regional operator, and strong depreciation. The challenge is supply — institutional capital has bid up the Class A and B inventory hard. Class C parks are still available but require operational expertise and patience.

What about the political risk — rent control, community closures, the bad press?

Real and growing. Several states (CA, NY, OR, MN) have passed or expanded MHP rent control. Federal and state attention to community closures (where parks are sold for redevelopment) is rising. The political risk is concentrated in states with strong tenant-protection regimes and in markets where institutional buyers paid huge premiums and pushed rent fast. Underwriting needs to assume rent escalations are bounded by political reality, not by Excel.