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. Here are some important factors to consider when budgeting for next year’s income and expense categories:
Income Budget: 4 Main Factors
1. Rental Revenue
What are you currently charging your residents for rent?
Will you increase your rent in the future?
How will you increase your rent? Will it be a percentage or flat rate increase?
When will you increase your rent?
2. Resident Revenue
Are you charging fees for:
Gym / Fitness Center
Can any of those fees be added or increased?
3. Contract Revenue
Do you have any active contracts that provide revenue from other vendors such as:
Trash disposal companies
4. Utility Reimbursements
Review our utility checklist below to see if you qualify for reimbursements from your submetered, prorated, and Ratio Utility Billing System (RUBS) utilities.
Expense Budget: 5 Main Factors
1. Repairs and Maintenance
Are there any projected expenses for improvements to common areas or amenities? Consider things like:
Gym / Fitness Center
Are there any property management costs that you are anticipating?
Will there be any major repairs or maintenance needed for utilities such as gas, electric, sewer, water, stormwater/drainage, or trash?
Will there be any increase or decrease in staffing?
Have there been any increases to workers’ comp or insurance?
Are there any tax increases that you should be considering?
Are there any tax benefits that you should be considering such as the depreciation of assets?
Are there plans to renegotiate your property taxes?
Are you keeping track of all your utilities:
Stormwater / Drainage
Do you need to pay renewal costs for your sewer treatment plants, operating permits, or sales licenses?
Will there be any additional office expenses such as office supplies?
Will you budget for any marketing costs for campaigns you will run?
Have you covered all insurance costs?
Do you need to consider vacancy costs for any residents who are planning to leave or at risk of leaving soon?
Utility Budgeting Checklist: 8 Steps for Success
1. Gather all past invoices for gas, electric, sewer, water, and trash.
2. Gather all monthly reimbursements from residents for utilities.
3. Call all your utility providers to learn about specific upcoming rates.
4. Review the last 24 months for each utility to find patterns.
5. Schedule a percentage increase in rent for next year based on any changes you have anticipated for your income and expense categories.
6. Budget any major improvements or repairs to utilities.
7. Think about installing automated meter reading technology (if not in place).
8. Consider submetering any utility that is currently included in the rent.
Utility Management Is the Most Common Mistake in Budgeting
In our experience, the most common mistake that can significantly affect the profitability of your manufactured housing community investment is incorrectly forecasting utility income and expenses.
Utility expenses can change quickly. You may be undercharging or overcharging your residents if you don’t spend hours crunching numbers and staying up to date on the latest rates across all your utilities.
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 solves these problems by automatically tracking your submeter systems’ performance, identifying any unusual reads, and calculating the ratio of monthly submetered utility revenue to monthly master meter bill expenses.
ManageAmerica’s full suite of utility billing features also:
Provides your residents with fully integrated bills, including rent, fixed recurring charges, and required utility charge details.
Delivers your fully integrated bills electronically, by mail, or in person and helps you get paid on time by offering your residents a wide variety of payment methods including check, credit card, and ManageAmerica’s integrated Electronic Payment Solutions.
Maximizes your utility revenue with monthly utility rate recertifications. Our utility experts monitor and implement all rate changes so that you never miss an increase. Utility rates are always kept up-to-date so that you avoid over-billing or under-billing your residents.
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.