By Andrew Keel

Managing manufactured housing communities can be tough work. Creating accurate key performance indicators (KPIs) can streamline your management processes and give you peace of mind as your portfolio grows. When growing my portfolio of nearly 3,000 lots, at times it felt like I was building the boat as I was sailing it. If I had implemented these KPIs sooner, I could have saved myself some significant headaches. This article will share with you what I think are the most important metrics you should monitor to feel confident about your manufactured housing community management.

Occupancy

Occupancy metrics are our most important, we instill this to our entire team daily in every meeting. If my staff have multiple “to-do’s” that pop up and they don’t know what to tackle first, we always want them to prioritize the “occupancy” related tasks first. When evaluating occupancy, our metrics can be broken down into these five KPIs:

• Heads in beds; total number of occupied units vs. total number of lots in the park
• Number of days vacant – on homes for sale and homes under renovation
• Number of showings completed
• Number of applications received
• Number of homes sold vs. number of homes available 

We dive deep into each failing or “red” metric on our dashboard to discover the root issue with our operations. For example, a high number of showings and a low number of applications received could indicate condition issues with the home we are trying to sell.

Collections

We know that no matter what occupancy looks like, we will likely collect 90-95% of our anticipated revenue each month with relative ease. 95% is a great start, but that still means that we are chasing 5-10% of our tenants each month. To address our tenants with overdue rent, we use a “full-court press” approach, this includes reaching out via most methods possible. Our top KPIs for evaluating collections include:

• Percentage of amount billed we’ve collected
• Number of tenants that paid vs. the total number of tenants in the park
• Total tenants 60+ days delinquent
• Total “cash-for-keys” offers made

We compare each of these metrics with the numbers from previous years during this same time of the month in order to track trends and ensure we are moving in the right direction. We also track the total collection attempts, and the forms of these attempted communications to more effectively strategize future scenarios.

Water and Sewer Recapture

I’ve learned the hard way not to mess around when it comes to your water/sewer expense recapture. We monitor ‘slippage’ by daily tracking of Metron farnier master meters and Metron submeters under each home. We aim for a 90% utility recapture rate, however some months are worse than others, usually based on the weather. In order to avoid pouring money down the drain, we track utility slippage constantly via these KPIs:

• Daily meter readings (Master meters and submeters) 
• Monthly financial review of the utility income and expenses
• Number of water leaks per year

We watch the usage numbers and compare them to the averages month over month to ensure large spikes don’t throw us off budget. When a spike occurs, we are usually notified within minutes so the leak can be identified quickly to avoid large slippage costs.

Property Condition

Property conditions are extremely important for the tenant experience. Poorly maintained manufactured housing communities will not only drive good tenants out, they will also make the property less valuable. Identifying, tracking, and resolving rule violations can be a daunting task for a part time on site manager. Monthly drive-through videos are a great approach so off site personnel can escalate action items as they see fit. Our KPIs for maintaining property condition are:

• Number of new violations per lot
• Number of violations fixed from the prior month, per lot
• Annual number of violations per lot

We have found that the constant offenders are better off living somewhere else. Keeping track of these above metrics tells our operations manager the story of who is a good fit for our community and who is not. We also randomly inspect each property every 2-3 months as this has been the best way to hold our onsite management accountable. 

Budget and Actual

How do your projected values compare to your operating realities? Are your numbers different? Why? Here are a few KPIs we track for every project to help us stay on track with the returns we’ve projected before purchase:

Pro forma projections vs. the operational realities on each…

• Revenue
• Expenses
• Net Operating Income (NOI)
• CAPEX (capital improvements)
• Investor distribution amounts

Tracking our budget vs. actual differences is likely a large part in why our underwriting today for new projects is usually more accurate than it was when we first started buying mobile home parks over 7 years ago. Experience compounds and what gets measured, gets done.

I hope these KPIs give you a starting point to developing your own dashboard with your most important metrics. Knowing is the first step towards fixing. Red metrics are present in every organization, the key is being able to identify them and resolve them in a timely manner. Accountability is critical, we spend 80% of our time on the failing red metrics and 20% of our time on what’s green. KPIs allow you to track your team and create accountability standards based on results rather than ‘to-do’ lists. Peace of mind is invaluable and having the right KPIs in place can get you one step closer.

Andrew Keel is the CEO of Keel Team Mobile Home Park Investments. He currently owns and self-manages just under 40 communities across 16 states. His business model includes buying value-add communities, fixing the deferred maintenance and holding them long-term with agency financing. Please visit KeelTeam.com for more information.

By Anthony Pino

The national manufactured housing sector has been on an upswing for the past several years, and properties in the Northeast have posted similarly strong performance. While the bulk of the supply growth for the industry occurs in rapidly growing population centers in the South and the Southwest, the sector continues to expand in the Northeast, and the region is posting healthy operations performance.

There are some signs of slowing at the national level that emerged during the first half of this year, which should set the stage for relative outperformance in the Northeast region, which has been less reliant on rapid growth than in other parts of the country.

Elevated Occupancy Levels Highlight Strength of Demand, Stability of Operations

The first measurement of property performance that most operators and investors look at is the occupancy rate, and current totals showcase a very strong market. The national occupancy rate ended the first half of 2023 at 94.4 percent, ten basis points higher than one year earlier. The rate has been trending higher for the past several years, first breaking through the 90 percent threshold in 2017. Occupancy at the national level has increased in ten of the past eleven years, rising from about 85 percent from 2010-2012 to nearly 95 percent today.

In the Northeast region, long-term occupancy trends have been far more stable. The rate ended the second quarter at 94.3 percent, and the rate has held steady between 94 percent and 95 percent for the past five years.

Top states for occupancy in the Northeast region include Maryland and Virginia, where occupancy levels are 98.7 percent and 97.7 percent, respectively. Pennsylvania has the largest inventory of units in the Northeast, and the current occupancy rate in the state is 93.7 percent. Our team worked on the sale of three communities in Pennsylvania during 2023 that were all 95% occupied or higher. These communities ranged in size from 75-202 pads and were owned by long-term operators. During the tenure of their ownership occupancy did not dip below 90%, and always had a waitlist of prospective tenants. In all three cases, the buyers were looking to expand and add additional density to the communities as the affordable housing need in Pennsylvania is dire. This trend is set to continue as occupancy in Pennsylvania has increased by 30 basis points in the past 12 months, setting the stage for additional increases in the year to come.

Shipments of New Units Down Following Rapid Increases in Recent Years

The cost of all forms of housing has pushed higher over the past several years, increasing demand for less costly alternatives, including manufactured housing communities. One result of these trends has been a surge in the shipment volume of manufactured housing units. In 2022, more than 112,000 manufactured housing units were shipped within the United States, up more than 80 percent from one decade earlier.

To this point in 2023, shipment volumes have come down from their cyclical peak. During the first half of this year, 44,000 manufactured housing units were shipped, 29 percent lower than the total during the same period in the previous year.

The Northeast region typically accounts for some of the lowest inventory growth in the country. During the first half, shipments to the Northeast region reached approximately 4,000 units, down from 4,900 units one year earlier. Pennsylvania and New York combined to total more than 1,700 units, followed by Virginia (525 units), West Virginia and Maine (375 units each).

There are many different factors to consider when looking to invest in a manufactured housing community. There are great opportunities across the United States that will appeal to investors for different reasons. The Mid-Atlantic through the Northeast remains an excellent opportunity to explore investments in the manufactured housing space.

MHInsider is the leader in manufactured housing news and is a product of MHVillage, the top website to sell, rent, or buy a manufactured home.