Part of our pillar guide: Mobile Home Park Investing: The Complete Guide →
Multifamily apartments and manufactured housing communities are often lumped together under "residential real estate." They are not similar investments. The ownership structures are different, the operating models are different, the tenant economics are different, and the tax profiles are different.
This guide walks through every material difference between the two asset classes — not to argue that one is better than the other, but to help investors match the right asset class to their own objectives.
Chapter 1
The Structural Difference
The core difference between MHC and multifamily is what the owner actually owns. In multifamily, the owner owns the building — every unit, appliance, mechanical system, and interior finish. In an MHC, the owner typically owns only the land and infrastructure; each resident owns the home on their leased lot.
Multifamily Owner Owns
- The building structure
- Every individual unit
- All interior finishes
- All appliances and mechanical systems
- Common areas and amenities
- Land and landscaping
MHC Owner Owns
- The land
- Roads and infrastructure
- Utilities (water, sewer, electric)
- Shared common amenities
- The office and maintenance buildings
- NOT the individual homes
Chapter 2
Operating Expense Ratios
MHC operating expense ratios are typically 30–40% of revenue. Multifamily runs 45–55%. The 10-20 percentage point gap is permanent and structural — not a function of operator skill. It reflects what the owner actually has to maintain.
| Expense Category | Multifamily | MHC |
|---|---|---|
| Repairs & maintenance | High — units, appliances, systems | Low — infrastructure only |
| Turnover cost per unit | $2K–$5K (paint, flooring, cleaning) | Minimal — resident owns home |
| Property management | 4–5% of revenue | 4–6% of revenue |
| Utilities | Often owner-paid, variable | Often direct-billed to residents |
| Capital expenditures | High — ongoing unit turnovers, systems | Lower — periodic infrastructure |
| Property taxes | High (improvements valued) | Lower (mostly land value) |
| Typical OpEx Ratio | 45–55% | 30–40% |
Chapter 3
Tenant Turnover
Multifamily turnover typically runs 40–60% annually. Every turnover costs money (marketing, leasing commissions, turn costs, vacancy loss) and disrupts cash flow. MHC turnover is typically in the single digits — because moving a manufactured home is expensive, logistically difficult, and in most cases economically irrational for the resident.
This has a compounding effect on returns. Every percentage point of turnover reduction improves NOI, reduces capex volatility, and makes cash flow more predictable.
Chapter 4
Supply Dynamics
Multifamily supply responds aggressively to rising rents. When apartment rents go up, new development proliferates — adding hundreds of thousands of new units annually. This is healthy for housing supply but caps sustained rent growth.
MHC supply does not respond. Municipal opposition to new manufactured housing community development makes new entitlements nearly impossible in most markets. The U.S. adds fewer than 100 new communities annually to a base of approximately 43,000 — less than 0.25% growth.
See our detailed treatment of why MHCs are supply-constrained.
Chapter 5
Tax Treatment
Both asset classes qualify for depreciation, cost segregation, and bonus depreciation. But the magnitude of the benefit differs because of asset composition.
Multifamily acquisitions typically allocate 20–30% of purchase price to short-life assets (5, 7, or 15-year property) through a cost segregation study. MHC acquisitions typically allocate 30–50% — because infrastructure is a much larger share of the total asset value.
On a $10M acquisition with current 100% bonus depreciation, that difference translates to roughly $2M–$3M of additional first-year paper losses on an MHC versus a multifamily. For high-bracket investors, that is a material after-tax return difference. See our MHC Bonus Depreciation guide for a full breakdown.
Chapter 6
Side-by-Side Summary
| Factor | Multifamily | MHC |
|---|---|---|
| What owner owns | Entire building and all units | Land + infrastructure only |
| Typical OpEx ratio | 45–55% | 30–40% |
| Annual turnover | 40–60% | 5–10% (well-run) |
| Supply response to rent growth | High — new development | Very low — zoning-restricted |
| Cost seg short-life allocation | 20–30% | 30–50% |
| Capital expenditure intensity | High (unit turnovers) | Lower (infrastructure cycle) |
| Liquidity (investor entry/exit) | Higher — deeper capital markets | Lower — more specialized |
| Management complexity | Lower — standardized operations | Higher — specialized skill |
| Countercyclical demand | Moderate | Strong — affordable housing |
| Typical institutional cap rate | 4.5–6% | 5–7% |
Chapter 7
When Each Makes Sense
Multifamily Is Better When:
- •You want deeper liquidity and more institutional capital markets
- •You prefer simpler, more standardized operations
- •You are allocating within a diversified real estate portfolio
- •Your target market has supply-constrained multifamily dynamics
MHC Is Better When:
- •Maximum tax efficiency matters — bonus depreciation profile favors MHC
- •You want structurally constrained supply and low turnover
- •You want counter-cyclical demand exposure (affordable housing)
- •You are partnering with an experienced operator with an MHC playbook
FAQ
Frequently Asked Questions
Are mobile home parks better investments than apartments?
Neither is universally better. MHCs offer lower OpEx, stickier residents, and better tax treatment. Multifamily offers greater liquidity and simpler operations. The right choice depends on investor objectives.
What is the operating expense ratio for MHC vs. apartment?
MHC: typically 30–40% of revenue. Multifamily: typically 45–55%. The difference is structural — the MHC owner doesn't maintain the homes.
Why is tenant turnover lower in MHCs?
Residents own their homes. Moving a manufactured home costs $5K–$10K+. Turnover drops into the single digits in well-operated communities.
Is there more tax benefit in MHC or multifamily?
MHCs typically allocate 30–50% of purchase price to short-life assets versus 20–30% for multifamily — producing materially larger first-year bonus depreciation.
Continue Learning
Mobile Home Park Investing Guide
The complete guide to MHC investing — economics, operations, tax, and how to evaluate a deal.
MHC Returns Explained
NOI growth, cap rate dynamics, leverage, and worked examples of the typical MHC levered IRR.
MHC Bonus Depreciation
Why MHC asset composition creates one of the most favorable bonus depreciation profiles in real estate.
Dayan Capital MHC Investments
How we structure MHC investments for accredited investors — deal profile, return targets, and current opportunities.