Posted by David S on January 25, 2001 at 17:18:12:
I think you are being naive here. In my experience, mobile home parks, much like an apartment complex, have much higher operating costs.
I don’t use a rule of thumb, but if I were to choose one, 50% to a minimum of 35% would be more likely to offer some form of reality. Even that’s not a good rule.
Operating costs can eat your lunch.
David S
Estimating M.H. Expenses - Posted by Marc in PDX
Posted by Marc in PDX on January 17, 2001 at 12:27:10:
Anyone have any rules of thumb about the expense-to-income ratios for various size parks? I mean, it stands to reason that a 20-unit park would have a higher % of expenses than a 100-unit. So what should I figure for 0-20 unit, 20-40 unit, etc.? Here’s what I’m leaning towards now:
0-20 unit: 30% of Gross Operating Income
20-40 unit: 25%
40-100 unit: 20%
What do you think?
Marc
Re: Estimating M.H. Expenses - Posted by ray@lcorn
Posted by ray@lcorn on February 02, 2001 at 16:45:30:
Marc,
David is right on the money. The “industry standard” operating expense ratio is generally accepted as around 35%, regardless of size. The heaviest expense, utilities, is variable with the number of residents. And as David said, that is a minumum. The presence of rental homes, leaking water lines, deferred maintenance items, collection problems, high tax and insurance expense, all can combine to push the expenses to the high end of the scale. I have seen parks with heavy numbers of rentals carry 50Z% expense ratios… even owned one.
Having said that, the most popular play right now to create upside in an exisitng park is to submeter the utilities. Expense ratios can fall to the 20-25% level with a good system in place. But be careful when running numbers based on assumptions. Much research is needed to get to the real numbers, and no two parks are the same.
ray