MHP Economic Occupancy: Occupied Lots That Don't Pay

Published October 25, 2026

A mobile home park (MHP) rent roll showing 92 of 100 lots occupied is not a park collecting 92 lots of rent. On an illustrative 100-lot community at $425 per month, the difference between a 3% collection-loss plug and a lot-by-lot read of what is actually collectible ran close to $29,000 of Net Operating Income (NOI) — roughly $450,000 to $490,000 of value at a 6.0% to 6.5% cap rate. The homes are all there. Several of them simply do not pay.

The spread is visible even at portfolio scale. Per Capright's September 2026 manufactured housing update, which compiles disclosures from the public manufactured housing real estate investment trusts (REITs), first-half 2026 same-property occupancy ranged from roughly 97.8% at Sun Communities to about 85.4% at Flagship Communities as of June 30, 2026. Those are different strategies and different vintages of community, not a single market statistic — but a 12-point band across institutional owners is a reminder that "occupancy" is a defined term with more than one definition behind it.

MHP Economic Occupancy Is a Collections Number, Not a Site Count

Physical occupancy answers one question: does a lot have a home on it. Economic occupancy answers a different one: what share of gross potential lot rent reached the operating account. Underwriting that treats the first as a proxy for the second inherits every non-paying tenancy on the rent roll at full value.

The conventional model takes physical occupancy from the site map, multiplies by market lot rent, and subtracts a vacancy and credit-loss allowance somewhere in the 2% to 5% range. That plug does real work when the only thing it is absorbing is ordinary, transient delinquency. It does not work when the rent roll contains lots that are structurally incapable of paying in the year being modeled, because those are not a percentage of rent — they are a count of lots, and they persist until a legal process ends.

For the mechanics underneath this, see mobile home park underwriting and NOI. The distinction matters most on smaller parks, where a handful of lots is a large share of the total. Actual spreads between physical and economic occupancy vary widely by park, state, and management quality.

The Four Lot Types That Look Occupied and Collect Nothing

Four categories account for most of the gap, and each behaves differently.

• Abandoned or surrendered homes. The resident is gone, the home remains, and the park cannot rent, sell, or remove it until title clears. These lots read as occupied on every site map and in most offering memoranda.
• Tenancies in the delinquency pipeline. Residents 60 or more days behind, with or without a filing. Some cure; recovery rates on this group are a park-specific statistic, not a market one.
• Non-revenue lots by design. A manager or maintenance home, a model home held for sales, an office or storage site. These are legitimate operating choices that nonetheless produce no lot rent, and they are frequently carried at market rent in a seller's pro forma.
• Seasonal and partial-year sites. Recreational vehicle (RV) or transient sites that bill for part of the year but appear in an annualized rent roll at a full-year rate.

None of these is exotic, and none is visible in a trailing 12-month (T-12) statement that reports a single net rental revenue line. The aged delinquency report and the write-off register are where they surface. Composition differs substantially by park.

Why an Abandoned Home Can Hold a Lot for a Quarter or Longer

The reason abandoned-home lots are a count rather than a percentage is that state process sets the clock, and the clock is rarely short.

Guidance published by the Illinois Department of Public Health for park owners describes a sequence that is representative of the structure, if not the specifics: a title search through the Illinois Secretary of State, an itemized invoice served on the owner and any lienholder by certified mail with a 60-day window to pay, a newspaper legal notice stating that the home will be sold or disposed of in a further 30 days, and only then an application to take or transfer title. That is roughly 90 days of mandated notice before a sale can occur, with lienholder rights running in parallel and a lower-threshold track for accrued charges under a stated dollar amount.

Florida's framework sits in Chapter 723 of the Florida Statutes, where §§723.061 and 723.062 govern eviction grounds and process and §§723.084 and 723.085 address storage charges and the rights of lienholders on homes in rental parks. The procedural detail differs from Illinois, and other states differ again. These statutes change, and local practice around service and court calendars changes faster, so the operative timeline for any specific park is worth confirming with counsel licensed in that state rather than assumed from a national average.

The underwriting consequence is narrow: an abandoned-home lot is modeled as producing nothing until the later of title clearing and a realistic re-rent, plus the legal, lien payoff, and rehabilitation or removal cost needed to make the lot rentable again. Where the home has value, that cost may be partly recovered on resale — a question closer to the park-owned home expense load than to lot-rent underwriting.

A Worked Example: What a 100-Lot Park Actually Collects

Illustrative figures, not a specific deal. A 100-lot, tenant-owned home (TOH) community with eight genuinely vacant lots and 92 lots carrying a home, lot rent of $425 per month, direct-billed utilities, and a stabilized market.

Gross potential lot rent on the 92 occupied lots is roughly $469,200 a year. A model applying a 3% collection-loss plug books about $455,100.

Rows are rounded to the nearest $100, so the column does not foot exactly; unrounded, the difference is about $29,140. That $29,100 is close to a pure NOI difference, since none of these lots carries an offsetting expense reduction. At a 6.0% to 6.5% cap rate it is roughly $450,000 to $490,000 of value. Assuming an illustrative 35% expense ratio on the collected lot rent, the park's NOI is about $277,000, which supports roughly $4.3M to $4.6M of value at the same cap rates — call it a tenth of the purchase price sitting inside a single modeling convention.

The sensitivity that matters most is the cure rate on the delinquent group. Moving it from 50% to 25% adds about $5,100 of annual shortfall and another $78,000 to $85,000 of value at the same cap rates. The line item most often missed is the opposite direction: the three abandoned lots carry a one-time cost — title work, lien payoff, cleanout or demolition — that is capital rather than an operating deduction, and at an illustrative $3,000 to $12,000 per home it does not show up anywhere in the NOI math above. These inputs are illustrative; actual counts, cure rates, and clearing costs vary considerably by park, state, and the condition of the homes.

Where This Analysis Breaks

Several situations make this the wrong lens.

Well-run parks where the plug is roughly right. On a stabilized, professionally managed TOH community with a short delinquency tail and no abandoned units, a 2% to 3% allowance may land within a few thousand dollars of the lot-by-lot build. The exercise is still worth running, but it confirms the number rather than correcting it.

Double-counting against infill. Vacant lots belong in the infill yield-on-cost analysis, not here. An abandoned-home lot that is cleared and then filled has been counted once as a collections shortfall and should not also be counted as a new infill lot at full cost and full rent.

Mistaking a cleanable problem for a permanent one. A park with a deep delinquency tail under absentee management may be a genuine operational value-add. The error is not seeing the upside; it is booking the cured rent roll at closing instead of underwriting a ramp with legal costs, turnover, and the re-leasing lag attached.

Lender treatment can be stricter or looser than the equity model. Agency and bridge underwriters apply their own economic-occupancy tests and may exclude non-revenue lots entirely while treating recent delinquency differently. A model that disagrees with the lender in either direction produces a proceeds surprise, which interacts with the sizing constraints covered in agency debt sized by the Debt Service Coverage Ratio (DSCR) floor.

Rent-growth assumptions can mask the gap. A pro forma that grows lot rent at the rates the public operators reported for the first half of 2026 — roughly 4.9% to 6.6% across Sun Communities, Equity LifeStyle Properties, UMH Properties, and Flagship Communities, per Capright's September 2026 compilation — can outrun a collections problem on paper for a year or two. The underlying lots still do not pay. The vetting discipline is the same one described for rent-growth assumptions in regulated markets.

What to Pin Down in Diligence

• The aged delinquency report for at least 12 months, by lot, not a summary total.
• The write-off register, which is where cured-versus-written-off actually resolves.
• Bank deposits reconciled to the rent roll month by month, since the rent roll records what was charged and the deposits record what arrived.
• A lot-status schedule flagging every home with no current tenancy, every manager or model lot, and every seasonal site.
• The abandonment status of each non-tenanted home — notice dates, lienholder correspondence, title search results, and the governing statute.
• Eviction filing and resolution dates from local court records, which give the park's realized timeline rather than the statutory minimum.
• Utility consumption by lot, which is an independent check on whether a nominally occupied lot is actually inhabited.

The broader item list sits in the MHP due-diligence checklist, and the ownership distinction that drives much of this is covered in park-owned versus tenant-owned homes.

The Bottom Line

MHP economic occupancy is measurable, and the measurement is unglamorous: count the lots that cannot pay in the next 12 months, model them at what they can actually produce, and reserve the one-time cost of making them rentable. Headline occupancy across the public manufactured housing REITs spanned roughly 12 points in the first half of 2026 per Capright's compilation, which suggests the term is doing different work in different portfolios — and a single park's site map is a weaker signal still. The same compilation puts disclosed rent increases at roughly 4.9% to 6.6%; at about 6% on this example's $469,200 of gross potential lot rent, a year of rent growth is worth roughly $28,000 — about the same size as the $29,100 collections gap. On a park like this one, collections matter about as much to NOI as rent growth does, so a pro forma that underwrites the rent increase carefully while plugging collection loss is doing half the work. Figures here are illustrative and vary by park.

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This analysis reflects current market interpretations as of the publication date and may evolve as new data becomes available. Figures cited are drawn from public sources including Capright's September 2026 manufactured housing market update compiling first-half 2026 disclosures from Sun Communities, Equity LifeStyle Properties, UMH Properties, and Flagship Communities, guidance published by the Illinois Department of Public Health on abandoned manufactured homes, and Chapter 723 of the Florida Statutes, and are subject to revision. Abandonment, eviction, and lienholder statutes differ by state and change over time — verify current rules and realized timelines directly with counsel licensed in the relevant state. Nothing in this post is investment advice; readers should conduct their own diligence and consult qualified professionals before making investment decisions.