Underwriting MHP Infill: Yield on Cost, Lot by Lot

Published September 21, 2026

The average sales price of a new single-section manufactured home was roughly $90,700 in March 2026, per Census Bureau data retrieved through FRED. That figure is the home leaving the factory. It does not include transport, set, piers, skirting, steps, a pad, or the utility connection. Published operator commentary from Keel Team, a mobile home park (MHP) operator, puts the all-in installed cost for a new home materially higher — a range they describe as roughly $150,000 to $250,000 per lot, which will vary widely by market, distance from the plant, and the state of the lot.

Hold that against the income it produces. A vacant lot filled at $425 a month generates about $5,100 of gross lot rent a year. That is the economic case for the most celebrated value-add lever in the asset class, and it is why infill tends to reward being underwritten as a development decision, one lot at a time, rather than as an occupancy assumption applied across the rent roll.

Why the blanket occupancy ramp hides the deal

Consider a 100-lot park, 72 lots occupied at a $425 lot rent, 28 vacant. The offering memorandum says "stabilize to 90% over 24 months." That single line does a great deal of work. The figures that follow are illustrative and are not drawn from a specific transaction.

18 additional lots at $425 produce roughly $91,800 of gross annual revenue. Marginal expense on an occupied lot in a direct-bill, tenant-owned park is typically low — the roads, the office, and the manager are already paid for — so at an assumed 25%, that leaves about $3,825 of incremental Net Operating Income (NOI) per lot and roughly $68,850 across all 18. Capitalized at 6%, that is around $1.15M of value creation. Set against an assumed $35,000 a home, the pro forma spends $630,000 to create $1.15M.

The arithmetic is not wrong. It is simply not yet an underwriting. It says nothing about what a home actually costs in this submarket, when the capital leaves the account relative to when the rent arrives, or whether the local buyer pool can finance the home once it is standing there.

Yield on cost is the more honest infill metric

Strip the occupancy framing away and each vacant lot resembles a small development: capital goes in, and a stream of lot rent comes out. That invites the same question asked of any ground-up project — what yield is being built at, and how does it compare to the yield available for purchase?

At roughly $3,825 of incremental NOI per lot, and treating the cost tiers as illustrative planning ranges rather than quotes:

Stabilized parks have generally been trading in roughly the 5% to 7% cap rate range, per Matthews Real Estate Investment Services, though comps vary by tier and submarket. Marcus & Millichap's Institutional Property Advisors (IPA) puts the nationwide average higher, at around 8% from 2024 through the first half of 2025 — a figure that takes in more small and secondary-market parks. That comparison carries much of the story. At $45,000 all-in, the build is at roughly 8.5% against a 6% market — a development spread of some 250 bps, and the reason infill earned its reputation. At $65,000, the build is close to the cap rate that would be paid for the same income already in place, in exchange for running 18 small construction projects. At new-home cost, each filled lot may be worth less than it cost to fill. Against the roughly 8% average IPA reports, even the used-home tier leaves only a thin spread, which is why the relevant cap rate is the one for this park's tier and submarket, not a national figure.

Most pro formas never surface this because they never divide. Occupancy rises, NOI rises, and the capital sits in a separate line called "infill capex" that is rarely tied back to the income it bought.

The clock that rarely gets modeled

Timing is the second thing the ramp obscures. Per the same operator commentary, permitting alone can run four to six months before the first home lands, sourcing quality used homes tends to require a pipeline built before closing rather than a listing posted after, and parks projected to stabilize in 12 months have often taken 18, 24, even 30. These timelines differ substantially by county and should be confirmed locally.

Modeled with that in view, the same deal reads differently:

Nothing in the right-hand column is pessimistic. It is the same park with a permitting calendar, a realistic sourcing constraint, and the typical used-home cost from the table above in place of the pro forma's $35,000. It moves roughly $280,000 more capital out the door and delivers about $15,300 less annual NOI at the two-year mark — which tends to land on the equity, because infill capital is rarely inside the loan basis. It is usually out of pocket, and it earns nothing until a resident is living in the home.

That is the line item most often missed: not the cost of the home, but the months during which the cost has been incurred and the rent has not.

Infill as a home-sales business

Here is what reconciles the arithmetic with the operators who make infill work: many of them are not renting the homes. They are selling them.

Place a home at $65,000 all-in and rent it, and that capital now sits in a depreciating asset producing a blended yield in the high single digits at best, along with the maintenance, turns, and capex profile that make park-owned homes a different asset from the lot beneath them. Place the same home and sell it to the resident — some cash down, the balance on an in-house note or through a chattel lender — and much of that capital may come back. What remains is a tenant-owned lot throwing off lot rent, which is the income the market has generally capitalized in that 5% to 7% band.

The home behaves more like inventory. The lot is the real estate. Underwriting that treats the home as a long-term hold tends to get both the yield and the expense ratio wrong.

Financing becomes an owner-side constraint here rather than only a resident-side one. Chattel loans — personal-property financing for the home itself — have commonly priced well above conventional mortgage rates, with materially lower approval rates, per the same operator commentary; terms change and should be verified directly with lenders. Where the buyer pool cannot clear that hurdle, homes may sit on lots already paid for, and capital recycling stalls. An infill underwriting that names a source of buyer financing before it names an absorption pace is doing more work than one that does not.

Where this thesis breaks

Three places, honestly.

The first is a park where used homes are genuinely available at the low end of the range. Per the same operator commentary, used homes can run roughly $15,000 to $35,000 moved in, before pad and utility work; where local sourcing supports that, the spread is real and the ramp is closer to right than wrong. A general caution about infill is not a reason to pass on a specific deal that pencils on verified local costs.

The second is infrastructure. Every figure above assumes the vacant lots are usable — pad, water and sewer laterals, and electrical service in place and to code. On a park with private water and sewer, or with lots that have sat empty for a decade, meaningful capital can go into the ground before a home is ever ordered, which shifts the yield-on-cost table a full tier. This is the kind of item an MHP due-diligence checklist is built to surface early.

The third is that lot rent is not static. Underwriting infill at $425 while the submarket supports materially more understates every yield above. That argues for underwriting the rent gap explicitly, on the occupied lots already in place, rather than folding it into the infill assumption — and in markets with rent regulation, that gap may not be available on the schedule assumed.

The Bottom Line

Infill may well deserve its reputation, though not in the form it usually takes in a pro forma. The blanket occupancy ramp gives way to three numbers that can be defended: the all-in cost to place one home in this specific submarket, the yield on cost that produces against the cap rate being paid, and the month the first home realistically lands. The question that remains is whether the program recycles capital through home sales or leaves it in the homes. Deals appear to get mispriced on this lever at least as often as on lot rent itself — less because operators are dishonest about occupancy, and more because an occupancy assumption only becomes an underwriting once someone divides the capital by the income.

UWmatic is an AI-powered underwriting platform built for multifamily and mobile home park investors. Model infill lot by lot with its own capital timing, separate park-owned home economics from lot rent, and stress the absorption pace against equity returns — then export a lender- and investor-ready package. Try the free underwriting calculator →

Related Reading:

• Mobile Home Parks in 2026: Where the Opportunities Are
• Park-Owned Homes: The Expense and Capex Reality
• MHP Expense Underwriting: Insurance and Taxes in 2026

This analysis reflects current market interpretations as of the publication date and may evolve as new data becomes available. The new manufactured home price cited is the U.S. Census Bureau's average sales price for new single-section manufactured homes (March 2026), retrieved via FRED. Cap rate ranges are attributed to Matthews Real Estate Investment Services and to Marcus & Millichap's Institutional Property Advisors (IPA) 2H 2025 Manufactured Housing National Report. All-in installed cost ranges, chattel financing terms, permitting timelines, and absorption commentary are attributed to published operator commentary from Keel Team and are not primary-source data; they vary widely by submarket and are subject to revision. The 100-lot park figures are illustrative and are not drawn from a specific transaction. Home costs, permitting timelines, utility requirements, and financing availability differ materially by state and county — verify current figures directly with dealers, local permitting authorities, and lenders. Nothing in this post is investment advice; readers should conduct their own diligence and consult qualified professionals before making investment decisions.