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Park-Owned vs. Tenant-Owned Homes in MHP Underwriting

When you buy a mobile home park (MHP), you're buying one of two fundamentally different businesses, even when the address on the deed is the same. A park where every home is owned by its resident — a tenant-owned, or TOH, park — is a pure land-lease business: you collect lot rent, the resident handles their own home. A park where the homes are owned by the park itself (POH) is closer to a rental-housing business with a land-lease layered on top: you collect lot rent and home rent, but you also own and maintain the homes.

Most real parks are some mix of the two. The underwriting changes meaningfully with the ratio, and treating a POH-heavy park like a TOH park can get an investor into trouble. This article walks through what actually shifts — financing, operations, tax, and exit value — when the home-ownership structure changes.

The Two Models in Plain Terms

Tenant-owned (TOH). The resident owns the home and pays the park a monthly lot rent for the right to keep it there, with utilities and amenities included or sub-metered. The park's expenses are mostly land-related: property taxes, road maintenance, water and sewer infrastructure, common-area upkeep, and management. There is no home-maintenance line item, because the home isn't the park's.

Park-owned (POH). The park owns the home itself, and the resident pays a combined rent covering both the lot and the home. The park is now responsible for the home's roof, plumbing, HVAC, appliances, flooring, and make-ready when a tenant turns over. That is meaningful work — and meaningful cost.

A real park might be 100% TOH, 100% POH, or anywhere in between. Conversion (buying out POH and converting to TOH, or vice versa) is a recognized value-add lever.

Financing: Where the Models Diverge First

Lenders tend to be explicit about how they treat the two streams.

Lot income is treated as real estate income — durable, low-volatility, and backed by the high cost of moving a home off a lot. Agency programs (Fannie Mae's and Freddie Mac's manufactured-housing community programs) and many regional banks will fully underwrite lot income at a land-style cap rate.

Park-owned home income is treated more cautiously. The homes are personal property, not real estate, and they depreciate. Agency lenders often cap POH income at a small percentage of total NOI in their sizing, or exclude it entirely. The loan available against a POH-heavy park is therefore typically smaller relative to the same NOI than against a TOH park. These details vary by program and are subject to change — verify current terms directly with the lender.

The practical effect: a TOH-heavy park often finances cleanly with agency debt at attractive terms, while a POH-heavy park may end up in regional bank or specialty-lender territory, with different sizing, higher rates, or a personal-property carveout. That shows up directly in the levered IRR.

Operations: Who Owns the Headaches

The TOH model is operationally light. The team manages lot collections, common-area maintenance, infrastructure, and resident relations. There is no make-ready when a home sells, and capital expenditure is concentrated on the land — roads, utility lines, water and sewer.

The POH model is operationally heavy. In addition to all of the above, the owner is running a small rental-housing business inside the park: turnover, repairs, appliance replacement, code compliance per home, marketing rentals, screening tenants. Vacancy on a POH unit costs both lot rent and home rent, and a vacant home generates zero income while still costing taxes and insurance.

Underwriting consequences:

• Operating expense ratios tend to run higher in POH-heavy parks, sometimes materially, once home repairs and turnover are honestly included. Actual ratios vary by market, vintage, and management.
• Reserves and capex are better modeled per home than as a flat percentage. Roof, HVAC, and appliance cycles are predictable; underwriting without a per-home reserve understates expenses.
• Vacancy assumptions should be split. Lot vacancy and home vacancy are not the same. A park can have full lot occupancy and meaningful home vacancy at the same time.

Tax Treatment: A Real Difference

POH offers something TOH does not: a depreciable home asset. Under the One Big Beautiful Bill Act (OBBBA), 100% bonus depreciation was restored for qualifying property acquired and placed in service after January 19, 2025 (per the OBBBA and IRS guidance) — so the homes themselves, as short-lived personal property, can produce substantial first-year deductions when acquired. That is a tax-side feature POH-heavy parks carry that pure land-lease parks do not.

The tradeoff: depreciation recapture at exit reverses some of the benefit, and the deduction is a timing benefit, not a permanent one. Tax outcomes depend on individual circumstances — consult a qualified tax professional. But for a sponsor optimizing after-tax IRR, a meaningful POH count can be a deliberate part of the strategy rather than an inherited liability. See bonus depreciation for the mechanics and MHP and bonus depreciation in 2026 for the MHP-specific angle.

Exit Value: The Math Diverges

The separated-stream exit framework applies cleanly:

• Lot income is capitalized at a land-style cap rate at exit.
• Park-owned homes are added at a flat per-home value, not capitalized like real estate.

The result: two parks with identical total NOI but different POH ratios will have meaningfully different exit values. The TOH-heavy park, with more of its NOI sitting in capitalizable lot income, will tend to sell for more total dollars at the same cap rate. This isn't a quirk — it reflects the market pricing the durability of each income stream. The full walkthrough is in How MHP Exit Value Is Calculated.

The Conversion Lever

One recognized value-add play is converting POH to TOH over a hold period. Mechanically, the park sells each POH to its resident (often with seller financing), the resident becomes a homeowner, and revenue shifts from "lot + home rent" to "lot rent only" — often at a higher lot rent than before, because the home is no longer bundled.

The conversion can accomplish several things at once: reduce operating expense and capex burden, simplify financing, increase the share of income that capitalizes at the durable lot cap rate, and produce a one-time gain on the home sales. Underwriting a thoughtful POH-to-TOH conversion is a legitimate path to a stronger exit — but it requires a realistic timeline, a believable per-home buyout price, and the operational capacity to execute.

A Framework for Each Structure

When underwriting a TOH-heavy park:

• Use a land-style expense ratio and a lender-aligned cap rate.
• Treat lot rent as the primary value driver and underwrite it carefully, including any rent-control exposure.
• Expect agency-quality financing if the asset and market support it.

When underwriting a POH-heavy park:

• Split the model into a lot-rent business and a home-rental business, with separate expense, vacancy, and capex assumptions.
• Underwrite POH income at the level of conservatism the most likely lender will use.
• Value POH flat at exit, not capitalized.
• Consider a POH-to-TOH conversion path explicitly if the resident base supports it.

The Bottom Line

POH and TOH aren't variations on the same business — they're two different businesses bundled in one property. Financing tolerates them differently, operations cost different amounts, tax treatment differs, and exit values differ. Identify the structure clearly, underwrite each stream to its own logic, and the model is more likely to hold up regardless of which type of park is on the table.

Related UWmatic Resources

• Free MHP rent-cap impact calculator — model lot income separately from POH and see the exit impact
• How MHP Exit Value Is Calculated
• Mobile Home Park Underwriting Guide
• The MHP Due-Diligence Checklist
• Bonus Depreciation Explained · MHP and Bonus Depreciation in 2026
• MHP Rent Control Underwriting: The 2026 Regulatory Wave

This explainer reflects current market interpretations as of the publication date and may evolve as new data and guidance become available. Tax provisions are summarized at a high level and depend on individual circumstances; consult a qualified professional. Nothing here is investment or tax advice; readers should conduct their own diligence before making investment decisions.