If you’ve seen reports saying the average cap rate is “6%” and thought, “That doesn’t line up with what I’m seeing,” you’re not wrong.
Cap rates are one of the most talked-about metrics in commercial real estate—but when applied too broadly, they can create more confusion than clarity. This is especially true in niche sectors like RV and mobile home parks, where asset quality, location, and demand can vary dramatically.
Let’s break down what you really need to know.
What Is a Cap Rate, and Why Does It Matter?
The capitalization rate (cap rate) is a tool investors use to estimate the return on a real estate investment, based on the property’s income and purchase price.
A higher cap rate often signals a riskier or less desirable property with more upside potential, while a lower cap rate usually indicates a higher-quality asset in a strong location that commands a premium price.
But here’s the catch: there is no one-size-fits-all cap rate. The idea of an “average cap rate” is only helpful as a starting point.
Cap Rates in the RV & Mobile Home Park Market
In the RV and mobile home park sector, the range of cap rates is wide—and for good reason. Different property types, tenant bases, and markets create different risk profiles.
Here’s a general breakdown of current cap rate ranges in the space:
- High-quality, institutional-grade MH parks in strong growth markets:
5%–6% cap rates
These parks often have paved roads, full utility infrastructure, and long-term tenants in a high-demand location. - Well-maintained RV or MH parks in stable secondary markets:
6.25%–7.25% cap rates
These properties may have some upside through rent increases, added amenities, or improved operations.
- Older or value-add parks in tertiary or rural areas:
7.5%–9%+ cap rates
These may include gravel pads, aging infrastructure, or lower tenant quality—but they often present compelling upside for hands-on investors. - Turnaround or distressed assets:
9%–12%+ cap rates
High potential, high risk. These parks usually need capital investment, operational overhaul, or re-tenanting to stabilize.
Why National Averages Don't Tell the Full Story
Nationally published cap rate averages are often too generalized to be helpful to an individual park owner. They blend together all types of properties across all market tiers and fail to account for:
- Local demand and population growth
- Pad type and utility infrastructure
- Amenity packages and digital presence
- Stabilization vs. turnaround
- Permanent homes vs. transient guests
- Zoning and land use flexibility
This is why relying on “the average” can mislead owners into overpricing or underpricing their assets—or worse, making a poor investment decision.
The Spread Between Quality and Risk is Widening
In today’s higher interest rate environment, buyers are more cautious, and the cost of debt has risen significantly. As a result, the difference in cap rates between premium parks and value-add properties has widened.
A clean, well-run MH community in a high-growth area might still trade near 5%–6%, while an RV park with operational challenges might trade above 9%. Understanding where your park falls in that range is critical if you’re thinking about selling, refinancing, or buying.
What This Means for Owners and Investors Today
🏷️If You’re Selling
You should either sell now or plan to hold for another 12–18 months—or longer.
As debt becomes more expensive, buyers are demanding higher returns (higher cap rates), which puts downward pressure on prices. If you’re not prepared to meet the market today, you’ll likely need to wait until economic conditions stabilize before re-entering with stronger pricing expectations.
📈 If You’re Holding
Know where your property sits on the cap rate spectrum.
Is your park best-in-class for the market? Or does it need repositioning or investment to be competitive? Knowing this helps you make better decisions around refinancing, capital improvements, or future disposition timing.
🛒 If You’re Buying
Don’t fixate on the average—buy based on fundamentals.
Look for mispriced deals based on local growth, infrastructure quality, rental upside, or seller distress. Just because a park is marketed at a 7.5% cap rate doesn’t make it a deal—dig deeper into the numbers and the story.
Final Thought: Dig Deeper Than the Headlines
“Average cap rates” can be a helpful benchmark for gauging the market—but they’re not a substitute for real insight.
If you’re an RV or mobile home park owner, the most valuable thing you can do is look beyond the surface. Understand what’s driving demand in your specific market, how buyers are underwriting deals, and what real investors are paying today.
In this market, use a shovel, not a rake—the deeper you dig, the more opportunities you’ll find.
If you’d like a free valuation or just want to understand where your park fits in today’s market, ⏬
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