Understanding MHC Operating Expenses: 2025 Benchmarks

Understanding the expense structure of manufactured housing communities is essential for both investors evaluating acquisitions and operators seeking to optimize performance. Here's a comprehensive breakdown of 2025 expense benchmarks across different community types.

See our MHC valuation guide and value-add operator analysis. Cost and housing data is available from the U.S. Census Bureau.

Overall Expense Ratios

Expense ratios depend on home ownership mix, utilities, infrastructure, and local costs. Underwrite actual property expenses rather than a sector-wide benchmark:

• All-ages, tenant-paid utilities: Resident billing changes utility exposure
• All-ages, master-metered utilities: Owner-paid utilities require careful budgeting
• 55+ age-restricted: Service requirements affect expenses
• Communities with significant rental homes: Home maintenance adds expense exposure

Major Expense Categories

Property Management

Management fees and staffing costs depend on community size and service requirements. Self-managed communities should also budget for on-site personnel and verify current compensation costs.

Utilities

Utility expense varies dramatically based on billing structure. Direct-billed communities where residents pay their own utilities have near-zero utility expense. Master-metered communities face significant exposure—water/sewer costs in particular require current local billing and rate information. In 2025, smart sub-metering systems have gained traction, allowing operators to ratio-bill utilities while maintaining master meters.

Property Taxes

Real estate taxes represent one of the largest and least controllable expenses. Rates vary significantly by state and municipality. Assessments and local tax rules must be reviewed for each property. Upon acquisition, communities may face reassessment; buyers should model the resulting tax exposure.

Insurance

Property and liability insurance costs have increased substantially since 2020, particularly for communities in hurricane, tornado, or flood zones. Current insurance quotes are necessary to evaluate coverage and premium costs. MHCs benefit from insuring only infrastructure and common areas—residents carry their own home insurance—resulting in lower premium costs than apartment communities.

Repairs & Maintenance

Routine maintenance covers road repair, common area upkeep, irrigation, and infrastructure repairs. Communities with private water systems or aging infrastructure face higher costs. Budget from property condition and contractor estimates, with separate capital reserves for major projects.

Capital Expenditure Reserves

Beyond operating expenses, prudent operators establish reserves for capital improvements. Reserve needs should reflect infrastructure condition and planned improvements. Common capital projects include:

• Road resurfacing: Cost depends on scope and community size
• Water/sewer line replacement: Cost depends on system condition and scope
• Electrical infrastructure upgrades: Cost depends on capacity and site requirements
• Clubhouse/amenity improvements: Varies widely

Optimizing Expense Performance

The most effective operators focus on controllable expenses while accepting that some costs (taxes, insurance) have limited flexibility. Key optimization strategies include utility sub-metering, preventive maintenance programs, competitive bidding for contracted services, and technology adoption for billing and management efficiency. Communities that implement these practices consistently outperform on NOI growth.