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

The typical expense ratio for a well-operated manufactured housing community ranges from 35-45% of effective gross income. This compares favorably to traditional multifamily apartments (45-55%) due to the tenant-owned home model. Here's how 2025 ratios break down by community type:

• All-ages, tenant-paid utilities: 30-35% expense ratio
• All-ages, master-metered utilities: 40-50% expense ratio
• 55+ age-restricted: 35-40% expense ratio
• Communities with significant rental homes: 45-55% expense ratio

Major Expense Categories

Property Management (8-12% of revenue)

Third-party management fees typically range from 5-8% for larger communities (150+ sites) and 8-12% for smaller properties. Self-managed communities should budget equivalent costs for on-site personnel. In 2025, competition for experienced community managers has pushed compensation 15-20% higher than 2023 levels.

Utilities (0-20% depending on structure)

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 have increased 8-12% annually in many markets. In 2025, smart sub-metering systems have gained traction, allowing operators to ratio-bill utilities while maintaining master meters.

Property Taxes (8-15% of revenue)

Real estate taxes represent one of the largest and least controllable expenses. Rates vary significantly by state and municipality. Texas and Oklahoma communities often face 2-3% effective rates on assessed value, while communities in states with assessment caps may see lower effective rates. Upon acquisition, many communities face reassessment—prudent buyers should model 15-25% tax increases in underwriting.

Insurance (4-8% of revenue)

Property and liability insurance costs have increased substantially since 2020, particularly for communities in hurricane, tornado, or flood zones. The 2025 market has stabilized somewhat, with increases moderating to 5-10% annually. 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 (5-8% of revenue)

Routine maintenance covers road repair, common area upkeep, irrigation, and infrastructure repairs. Communities with private water systems or aging infrastructure face higher costs. Budget 5-8% for routine maintenance, plus capital reserves for major projects.

Capital Expenditure Reserves

Beyond operating expenses, prudent operators establish reserves for capital improvements. Industry best practice suggests reserving $150-250 per site annually for infrastructure replacement and improvements. Common capital projects include:

• Road resurfacing: $50,000-150,000 depending on community size
• Water/sewer line replacement: $500-1,500 per linear foot
• Electrical infrastructure upgrades: $2,000-5,000 per site
• 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.