Lot Rent vs. Park Owned - Revenue Calculation


I’m new here and I just bought the Due Diligence Manual on MHU and I’m really enjoying it as I evaluate a park that I think has potential in Okeechobee, FL (anyone have any tribal knowlege about this area?).

One thing I noticed is that Frank and Dave always use “Lot Rent” in your revenue calculations when evaluating a property. What about park owned homes that rent for more since the tenant is renting both the home and the lot?

Are they doing this to be as conservative as possible?

Dave Reynolds wrote in a post about estimating park value: “A good rule of thumb that I use to start with is that I take the number of occupied spaces and multiply this by the average monthly space rent and multiply this by 70.”*

And Frank wrote in the manual:

Let’s start with the revenue.

The park you are looking at buying has _____ lots at a lot rent of $______._

There are _____ occupied lots, leaving a total revenue of $______. Does this number match the number given by the seller? If not, let’s throw up a red flag right now. Something is wrong. How can this number be wrong?"_

Why leave out park owned homes that rent for more. I’m new to all of this so just trying to learn as much as possible.

Thanks in advance!



They have learned that the home rent amount usually goes back into rehabbing/fixing issues with the home.


@tmperrault Gotcha! Thanks for the response. That is helpful.



Hi Marc,

I just want to add, Okeechobee isn’t a great market. I live in FL and you can always find parks for sale in that area…if you check how long they’ve been listed for it’s usually a very long time. That’s definitely not a good sign. The metro population there is under 50k and bottom line it’s basically in the middle of nowhere.

I’m not saying don’t go for it, but when it comes time to sell, your buyer pool will be limited.


Hi @Dominic730,

Thank you for taking the time to respond to my question. I’m located in the Delray myself and I was hesitant of Okeechobee for the reason you pointed out. I looked on bestplaces.net and the metro area was like 40k and the median home price and income are on the edge of acceptable too. The question that keeps going through my head is how difficult will it be to get tenants…

I’m heading up there tomorrow to take a look in person so I hope I will get a feel for the area.

The other concern I have is that there are a number of park owned homes and the current owner has seemed to have neglected the property (a few are vacant). Therefore, there is a good bit of work that needs to be done to get it in acceptable condition.




The median home price and income aren’t too bad. But 40k population for a metro area is waayyy too low for myself and probably most investors here as well as most lenders. Many investors see a metro population of 100k+ as the minimum, some are even more stringent.

With a weak market like that it’s definitely safe to assume you could have issues getting tenants. But even worse than that is exit strategy in my opinion. Eventually you’ll want to sell and there really aren’t very many people looking for a small park in a tertiary market with a very small metro population. There’s a lot of risks you’d basically have to ignore in order to feel good about this deal.


Beg to differ on MSA size. Understand F&D preach 100k+, but I’m in several smaller metros that have incredibly high demand. Smaller MSA does not necessarily equal “weak market”. There are also several pros to smaller markets - I’m typically able to get the mayor, city administrator or any other public official on the phone immediately.


@mhp all the pros that go along with a small market go right out the window as soon as it’s time to sell/refinance in my opinion. I understand that small doesn’t necessarily = bad. But it almost certainly doesn’t = great. If it was my first park I would try to find a better deal.

And the 100k number is used by F&D but almost every lender I’ve spoken to have similar criteria. Lenders don’t like risky deals. A small metro presents higher risk than a large metro in almost every case.

I’m not trying to scare you away at all Marc, but if you were a relative of mine, this is the advice that I would be giving to you.


I agree every market is different in certain ways. I will buy a small park in a small market if the park is full and the area seems stable. I wouldn’t consider a larger park in a small market because it typically just can’t support it. Your strategy matters also. If you plan to buy and hold through retirement (as I do) the back end sale isn’t as important. If the cap rate and income are very strong I wouldn’t be afraid of smaller markets.


Test ads should drive decision making, not some random number pulled out of thin air. I’ve also never had a lender mention 100k.


Very familiar with the area. Have made 3 separate offers and have done DD. The median home value is too low and the fact that most of the area is 8-15 feet above SEA level were killers–some parks still have damage from the last hurricane. The ONLY reason we could find for being there was fishing and if farming sugar cane!!! Glad to help if more specific property given!!


@carl Thank you for your response. I would love to connect and discuss more with you. What is the best way to get in touch?


@mhp can you please share the criteria that the lenders you’ve spoken to gave?


They don’t give me criteria. I pitch the merits of the deal to 4-5 banks and end up getting 2-3 term sheets typically.


MardD422 as mentioned above name the area or park since you have it under contract. The conversation could be helpful for others with simuiliar questions. Most of the area qualifies for investment development tax reduction. The area was one of first to suffer from the 2008-9 downturn and was one of the last to recover—local banks are very careful making loans in the area ( looking for lots of experience and equity in buyers). Some of the parks as mentioned have been for sale a LONG time for a reason!!!


Where would you advertise/place test ads pls? Thankyou.

  1. Craigslist
  2. Local classifieds
  3. Bandit signs (be careful with this, many municipalities are not fond of this practice)

Run the ad over a 10 day period and include the following information:

  • Where park is located (roughly, never give the exact address)
  • School district OR city
  • Number of Bed/Bath [3BR/2Bath]
  • Lot Rent
  • Phone Number (use a burner phone app for this)

From there you would want to gauge the number of responses and determine whether or not there is sufficient demand for your product.

The actual number itself varies and depends on market. F&D opt for 20-30 calls over the 10 period, but for some that may seem too few. It’s not exact science by any means but rather a benchmark that can vary depending on various factors.

Hope that helps.


Shah, this is so helpful. I really appreciate your help.