Net operating income is the most important number in mobile home park investing. It drives valuation. It determines what a lender will finance. It tells a buyer how much they should pay. And it’s the number every operator watches closest.
But here’s the problem: most MHP operators are working with an NOI figure that doesn’t mean what they think it means.
Not because they’re doing something wrong. Because the accounting behind that number is usually built on a generic foundation that doesn’t account for how mobile home parks actually generate income and incur expenses.
A number that looks clean on the surface can still mislead — if the underlying accounting isn’t built right.
What NOI Is Supposed to Tell You
Net operating income is simple in theory: effective gross income minus operating expenses. It tells you how much the property earns from its operations before debt service, depreciation, and taxes.
At a 6% cap rate, every $10,000 of annual NOI represents roughly $167,000 of property value. That means a $1,000 error in your monthly NOI — something that seems minor — translates to a $200,000 difference in what your park is worth.
That’s why the accounting behind NOI matters so much. Not because accountants care about precision for its own sake. Because the numbers have real consequences.
Where the Number Goes Wrong
There are three places where MHP operators most commonly end up with an NOI that doesn’t tell the full story.
1. Utility income and utility expense are combined or hidden.
Many parks bill tenants for water, sewer, trash, or electric — either through RUBS allocation, submetering, or a flat monthly charge. That billing is income. The utility bills the park pays are expenses. Both should appear at full value on the P&L, side by side.
What I typically find instead is one of two things: the income is netted against the expense so both numbers disappear, or the utility income is lumped into a catch-all account where it can’t be analyzed separately.
The result is an NOI that looks reasonable but hides a utility recovery problem. I’ve seen parks subsidizing tenants by $12,000 to $18,000 per year without the owner realizing it, because the numbers were structured to make the loss invisible.
2. Capital expenses are being run through operating expenses.
When a road is repaved, a water line is replaced, or electrical infrastructure is upgraded, those costs should be capitalized — not expensed. They’re not operating costs. They extend the useful life of an asset.
When they’re coded to repairs and maintenance instead, NOI drops sharply during the period the work is done. A lender reviewing a trailing 12-month spread notices an expense spike with no explanation. A buyer models it as recurring. Both are drawing the wrong conclusions from a number that doesn’t reflect actual operations.
3. The income categories aren’t specific enough to be useful.
When pad rent, fee income, and utility income are all combined into a single rental income line, your P&L can’t answer the most important questions about your park’s performance.
What’s your actual pad rent income? What percentage of gross rent is coming from fees versus base rent? Is your utility recovery improving or declining? A single combined income line makes all these questions impossible to answer quickly — which means they often go unasked.
What a Clean NOI Actually Looks Like
Here’s a simplified version of what the waterfall should look like when the accounting is built correctly:
Line
Example Amount
Gross potential rent (all pads at market rate)
$48,000
Less: vacancy and credit loss
($2,400)
Plus: utility income (water, sewer, trash)
$6,800
Plus: fee income (pet, late, storage)
$1,400
Effective gross income (EGI)
$53,800
Less: operating expenses
($22,000)
Net operating income (NOI)
$31,800
When your income is broken out this way, you can see exactly where your revenue is coming from and where it isn’t. You can see whether pad rent is growing. You can see whether utility income is keeping pace with utility expense. You can see whether vacancy is trending in the right direction.
More importantly, when a lender or buyer looks at this, they see a park whose financials they can actually underwrite. That confidence has real value — in the terms you can negotiate and in the price you can justify.
The Practical Question
Before your next refinance, your next acquisition, or your next investor conversation, it’s worth asking one question about your current books:
If someone who didn’t know your park looked at these financials, would they reach the same conclusions you would?
If the answer is yes, your accounting is doing its job. If the answer is no — or if you’re not sure — that’s the gap worth closing.
Clean books don’t just make compliance easier. They make your park worth more, your financing terms better, and your decisions more grounded in what’s actually happening rather than what the numbers suggest.
About the Author
Vy Hua is a Mobile Home Park accounting specialist and the founder of E.K.I Consulting Services, Inc., based in Orange County, CA. She works exclusively with MHP owners, operators, and acquisition teams on accounting infrastructure — from chart of accounts setup and Rent Manager configuration to monthly close and lender reporting. She is the author of The Complete MHP Accounting Playbook.
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Book: The Complete MHP Accounting Playbook
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