Many buyers get excited when they see big gross income numbers.
Example:
“This park grosses $800,000!”
That means NOTHING without knowing:
- Expenses
- Labor
- Debt service
- Seasonality
- Owner perks
- Utilities
- Maintenance
- Taxes
- Add-backs
✔ NOI (Net Operating Income) is what matters.
NOI = Gross Revenue – Operating Expenses (before debt, depreciation, interest, taxes)
This is the number EVERYTHING is built around:
- Park value
- Bank financing
- Buyer expectations
- Price justification
❗Rule for buyers:
Do not evaluate a park on gross revenue alone. Ever.
Some parks gross $1M and net $150K.
Some gross $300K and net $200K.
NOI tells the truth.
