Budgeting for Profitable Manufactured Housing Communities: Tips for 2025

Budgeting for manufactured housing communities can be tricky as you need to predict your income and costs for the following year to ensure your investment does well. Effective budgeting not only helps you maximize profits but also ensures that your community remains well-maintained and attractive to residents. However, common mistakes like mis-managing utility expenses can lead to significant financial shortfalls and negatively impact your community’s quality of life. 

In this article, we'll cover key factors to consider when budgeting, including rental revenue, resident fees, contract revenue, and utility reimbursements. Utility billing, in particular, is a common budgeting pitfall that can significantly affect your community’s profitability. By understanding these areas and implementing our tips, you can create a budget that supports both your financial goals and your residents' satisfaction. 

Table of Contents

• Income Budget: 4 Main Factors

• Expense Budget: 5 Main Factors

• Utility Budgeting Checklist: 8 Steps for Success

• Utility Management: The Most Common Mistake in Budgeting

Income Budget: 4 Main Factors

When planning your income budget, it's crucial to consider all potential revenue sources. Here we will cover the four main factors to focus on: 

1. Rental Revenue 

Rental revenue is typically your biggest source of income, so it's important to regularly evaluate your current rental charges. In addition to knowing what you currently charge residents for rent, it's essential to determine whether you plan on increasing rent in the future. When considering a rent increase, you need to evaluate market conditions, decide on the method of increase (percentage or flat rate), and determine the timing for the increase. 

Here are some key steps to consider when evaluating and planning rental revenue: 

• Evaluate Current Rental Charges: Start by analyzing what you are currently charging your residents. This includes comparing your rates with similar properties in the area to ensure competitiveness. 

• Market Trends: Research and analyze market trends to decide if a rent increase is feasible for the upcoming year. Look at local economic conditions, demand for housing, and rental rates for comparable properties. 

• Method of Increase: Decide how you will increase rent. Will it be a percentage increase (e.g., 3% annually) or a flat rate increase (e.g., $50 per month)? Consider the impact of each method on your residents and your revenue. 

• Timing: Plan when you will implement the rent increase. Proper timing and notice are crucial to prevent resident turnover and maximize acceptance. Typically, providing a 60 to 90-day notice is standard practice. 

• Communication: Communicate the rent increase effectively to your residents. Clearly explain the reasons for the increase, such as rising maintenance costs, property improvements, or inflation. Transparency can help mitigate any negative reactions. 

• Legal Considerations: Ensure that your rent increase complies with local laws and regulations. Some areas have rent control ordinances or require specific notice periods for increases. 

Regularly evaluating and adjusting rental rates ensures that your revenue keeps pace with market conditions and operating costs, helping maintain the financial health of your community. 

Learn More About Scheduling Rent Increases

2. Resident Revenue 

In addition to rent, consider implementing additional charges for specific amenities and services to help maintain the community and enhance resident satisfaction. 

What do these charges look like? 

There are a few common fees you might want to consider: 

• Pet fees: Charge a one-time non-refundable deposit or monthly fee for residents with pets to cover potential damages and additional cleaning required after move-out. 

• Parking and Storage Space: If you have covered parking spaces or garages/storage space, you might consider charging a fee for covered parking spaces or a separate fee for residents who want a dedicated garage/storage space. 

• Common Areas/Community Spaces: For amenities like the community center, gym/fitness center, pool, snow removal, and landscaping, consider implementing a flat community fee that covers all of these services/spaces. These charges will help cover maintenance costs and improve the overall living experience. By grouping these costs into one flat fee, you simplify billing for residents and ensure consistent maintenance scheduling within the community. 

When evaluating your budget to ensure your investment remains profitable, consider if any of these fees can be added or increased. Ideally, you'll want to roll these added fees/increases with annual rent increases. 

3. Contract Revenue 

Review any contracts you have with vendors that provide additional revenue: 

• Cable companies 

• Trash disposal companies 

• Vending machines 

• Washing machines 

Ensure these contracts are up-to-date and negotiate better terms if possible. Exploring new vendor partnerships can also be a valuable way to increase income. 

4. Utility Reimbursements 

Efficient utility management is crucial to maintain a profitable community. The final two sections of this blog cover successful tips for utility budgeting and common mistakes you can avoid. Review our utility checklist below to see if you qualify for reimbursements from your submetered, prorated, and Ratio Utility Billing System utilities. 

Expense Budget: 5 Main Factors

When planning your expense budget, it's important to account for all potential costs to ensure your community remains well-maintained and financially healthy. Here are the five main factors to consider: 

1. Repairs and Maintenance 

Maintaining and improving common areas and amenities is essential for resident satisfaction and retention. The flat community fee can help cover many associated maintenance costs, but you should also budget for specific improvements and unexpected repairs: 

• Projected expenses: Consider potential costs for landscaping, driveways, roads, parking, storage space, gym/fitness center, and the community center. 

• Property management costs: Include any anticipated costs related to property management services. 

• Emergency fund: Allocate a portion of your budget to an emergency fund to cover unexpected major repairs or maintenance for utilities such as gas, electric, sewer, water, stormwater/drainage, or trash. 

2. Wages 

Staffing costs can significantly impact your budget. Here are some best practices to consider: 

• Evaluate staffing needs: Regularly assess your community's staffing requirements. For example, if you anticipate expanding services or amenities, you may need additional staff. 

• Competitive wages: Offer competitive wages to attract and retain skilled employees. To ensure you're offering the right compensation, compare your wages with industry standards and adjust as necessary. 

• Increases in costs: Plan for potential increases in workers’ compensation or insurance costs. Review your insurance policies annually and adjust your budget accordingly. 

3. Taxes 

Taxes are another crucial consideration for your expense budget. Here are some specific examples and best practices: 

• Tax increases: Stay informed about potential tax increases that could affect your community. For example, keep track of local government announcements regarding property tax hikes. 

• Tax benefits: Explore tax benefits such as the depreciation of assets, which can provide financial relief. Consult with a tax advisor to identify eligible deductions and credits. 

• Renegotiating property taxes: If possible, consider renegotiating your property taxes to ensure they are as favorable as possible. For example, you might conduct a property tax appeal if you believe your property has been over-assessed. 

4. Other Additional Expenses

To effectively manage your community, consider the following additional expenses: 

• Renewal costs: Ensure you budget for renewal costs for sewer treatment plants, operating permits, or sales licenses. 

• Office expenses: Include costs for office supplies, equipment, and technology upgrades that enhance productivity. 

• Marketing costs: Allocate funds for marketing campaigns, both online and offline, to attract new residents and maintain community visibility. Effective marketing can reduce vacancy rates and increase revenue. 

• Insurance costs: Comprehensive insurance coverage is essential to protect your investment from unforeseen events. Regularly review your policies to ensure adequate coverage. 

• Vacancy costs: Budget for potential vacancy costs, including lost rent and the cost of turning over units for new residents. Proactive measures, such as maintaining a waiting list and providing excellent customer service, can minimize vacancies. 

• Budgeting for software: Allocate funds for new property management software tools that can streamline operations and improve efficiency. For instance, consider software that offers features like integrated billing, inventory & maintenance tracking, and resident communication. 

5. Utilities 

Effective utility management is essential for controlling expenses and maximizing revenue. Make sure to keep track of all utilities, including gas, electric, sewer, water, trash, and stormwater/drainage.  

Here are some strategies to help with this: 

• Tracking tools and resources: Property management software like ManageAmerica offers comprehensive utility management features that can help you monitor usage, track costs, and identify discrepancies. 

• Regular reviews: Regularly review utility bills and consumption patterns to identify potential issues or areas for improvement. 

• Meter reading Apps: Consider installing meter reading technology to provide accurate, real-time data on utility usage. 

• Submetering: Implement submetering for utilities currently included in the rent to ensure residents pay for their actual usage, which can promote conservation and recover utility dollars. 

ManageAmerica’s property management software is a valuable tool that helps customers recover utility dollars by accurately tracking and billing utilities. It ensures that utility costs are managed efficiently, contributing to the overall profitability of your community. 

Check out our 4 Tips for Easy Utility Billing

Utility Budgeting Checklist: 8 Steps for Success

Effective utility management is crucial for maintaining profitability in your manufactured housing community. By following a structured approach to utility budgeting, you can avoid common pitfalls, ensure accurate billing, and optimize your revenue.

Here are eight actionable steps to help you succeed: 

1. Gather all past invoices for gas, electric, sewer, water, and trash. 

   • Collecting past invoices allows you to analyze historical usage and costs, which is essential for accurate forecasting and identifying any unusual spikes or trends. 

2. Gather all monthly reimbursements from residents for utilities. 

   • Review these reimbursements to ensure they match your records and identify any discrepancies that need to be addressed. 

3. Call all your utility providers to learn about specific upcoming rate adjustments. 

   • Staying informed about rate changes helps you anticipate and budget for potential increases, preventing unexpected expenses. 

4. Review the last 24 months for each utility to find patterns. 

   • Analyzing usage patterns over the past two years can reveal seasonal fluctuations and help you predict future consumption more accurately. 

5. Schedule a percentage increase in rent for next year based on any changes you have anticipated for your income and expense categories. 

   • Adjusting rent based on anticipated utility cost changes ensures that you cover expenses without impacting your profitability. 

6. Budget any major improvements or repairs to utilities. 

   • Plan for significant upgrades or repairs to avoid unexpected costs and improve efficiency, which can reduce long-term utility expenses. 

7. Think about installing automated meter reading technology (if not in place). 

   • Automated meter reading provides real-time data on utility usage, reducing errors, and allowing for more accurate billing and monitoring. 

8. Consider submetering any utility that is currently included in the rent. 

   • Submetering ensures residents are billed for their actual usage, promoting conservation and helping recover utility costs more effectively. 

Utility Management: The Most Common Mistake in Budgeting

 

One of the most common and costly mistakes in budgeting we see for manufactured housing communities is incorrectly forecasting utility income and expenses. Utility expenses are constantly fluctuating and if you’re not spending hours crunching numbers and staying up to date on the latest rates across all your utilities, you may be undercharging or overcharging your residents. 

In addition to keeping track of the latest utility rates, you also need to monitor your master meter bills and compare those bills with the charges that you send to all your residents. If your master meter reading and the total cost of utility bills for your residents do not match, you may need to investigate for leaks and will likely have to cover the difference, which can significantly affect your expenses.  

ManageAmerica’s property management software offers a comprehensive suite of utility management features designed to solve these problems: 

• Automated Tracking: Automatically tracks your submeter systems’ performance, identifies unusual reads, and calculates the ratio of monthly submetered utility revenue to monthly master meter bill expenses. 

• Integrated Billing: Provides your residents with fully integrated bills, including rent, fixed recurring charges, and required utility charge details. Bills can be delivered electronically, by mail, or in person. 

• Flexible Payment Options: Helps ensure timely payments by offering residents a variety of payment methods, including check, credit card, and ManageAmerica’s integrated Electronic Payment Solutions. 

• Rate Recertifications: Maximizes your utility revenue with monthly utility rate recertifications. ManageAmerica’s utility experts monitor and implement all rate changes, ensuring that utility rates are always up-to-date and avoiding over-billing or under-billing your residents. 

By leveraging these tools, you can effectively manage your utility expenses, recover utility dollars, and ensure your community remains financially healthy. 

Utility Billing is just one of ManageAmerica’s specialties. Contact us today to learn how we can simplify and streamline all aspects of the resident life cycle for your manufactured housing community.