How third-party management fees actually compare between apartments and manufactured housing communities

Question

Apartment management typically runs 4 to 5 percent of collected revenue, covering leasing, maintenance coordination, and the general scope of operations. Manufactured housing communities, particularly lot-rent-only parks in the 180 to 240 pad range, don't translate cleanly onto that same percentage model. Revenue per pad runs a fraction of an apartment's rent, so 4 percent of a $400 monthly lot rent works out to about $16 a pad, which doesn't support real staffing. At the same time, interior maintenance exposure is minimal compared to apartments, and resident turnover in parks is typically far lower, which changes the cost structure enough that a percentage-of-revenue fee often isn't how this sector prices management at all. Many park management agreements instead use a per-pad flat fee, sometimes blended with a smaller percentage component, precisely because the revenue-per-unit economics don't support a pure percentage model at this price point. Scope is the other variable that needs to be defined explicitly going in: utility billing and collections on home notes are handled differently across operators, and whether that sits with the manager or the owner should be spelled out in the management agreement rather than assumed.

Rena Guide · Accepted Answer

Both structures exist and the sector uses them differently than apartments do. Percentage-of-collected-revenue fees in manufactured housing commonly run higher than apartments, often in the 5 to 8 percent range, precisely because the revenue base per unit is small. Per-pad flat fees also show up, and figures in the $20 to $35 per occupied pad per month range are typical in the market, sometimes with a floor so a small park isn't unmanageable. Larger portfolios negotiate down. These are market ranges rather than fixed rates and the specific number depends on scope and location.

On scope, the base fee in a lot-rent-only community usually covers rent collection, lease enforcement, community rules, vendor coordination for roads and common areas, and lot inspections. Utility billing is frequently carved out as a separate item because submetering, reading, and billing is real recurring labor, and in some states the way you can bill residents for water is regulated, so the owner needs to confirm the rules that apply where the park sits.

Collections on resident home notes is a different business. That's consumer loan servicing, it carries licensing exposure in many states, and most park managers either don't do it or do it through a licensed servicer. Don't fold it into a property management scope without someone qualified looking at it.

The scope item that surprises apartment managers most is home removal. When an abandoned home has to come off a pad, you're dealing with title, lien releases, and demolition, and the process for taking possession of an abandoned manufactured home is set by state statute and can take months. Price that as a project fee rather than absorbing it, because you'll do it more often than you expect.

karen_whitfield · Answer

Abandonment is the whole job on older parks. I've watched a pad sit dead for fourteen months because nobody could clear a lien from a lender that no longer existed.

ryanmck27 · Answer

Does a park manager need a real estate license? I'm going through licensing now and the property management exemption rules read differently for manufactured housing communities in a couple of the states I've looked at, especially once you're selling homes on site.

raj_mehta14 · Answer

@ryanmck27 the selling homes part is the piece to worry about. In most states that is a dealer question rather than a broker question, so potentially two separate licenses.

dmitri_248 · Answer

@tonyv88 get the management agreement to name who holds the utility compliance obligation. A common pattern in park agreements is that the manager signs up to "operate the utility systems in accordance with applicable requirements" while the owner has deferred the plant maintenance for a decade. You do not want your name on that with a 30 day termination clause and no indemnity.

sonia_alvarez · Answer

One more thing to check: if the owner has agency debt, the lender may hold approval rights over the property manager and require its own form of management agreement. That can override whatever you negotiate.

hannah_west29 · Answer

Run the per-pad number against your actual cost. 180 pads at $28 is $5,040 a month, 240 at $28 is $6,720, call it $11,760 combined. If the parks are within driving distance of each other, one full-time community manager plus part-time maintenance is maybe $6,500 a month loaded, and the rest stays against overhead and margin. Percentage of revenue at 6 percent on $400 lot rent gives $24 a pad, which is less. That is why per pad is the right quote on these two.

stephen_ok9 · Answer

@hannah_west29 the percentage version gets better for the manager as lot rents rise though, which is the whole thesis in these deals. If the owner is underwriting $400 to $550 over three years, 6 percent grows with them and the flat fee doesn't unless you index it.

dpatel_re · Answer

Index it to collected revenue with a per pad floor and you have both. What should be disclosed before quoting is the current delinquency rate, because a park at 12 percent delinquent is a collections operation and a park at 2 percent is a mowing contract, and the fee should not be the same.

How third-party management fees actually compare between apartments and manufactured housing communities

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