Adding Value to Manufactured Housing Communities through Capital Improvements and Renovations

Manufactured housing communities “MHCs” are an often overlooked asset class.  Many investors think “trailer park” when hearing about a MHC because most parks have been neglected because of deferred improvements and underinvestment.  Examples of the most common renovation needs include repaving roadways, outdated utilities, signage, and community amenities nonexistent. While these conditions reduce tenant satisfaction and limit rent growth, they also represent a significant opportunity for investors. With strategic renovations and capital improvements, operators can dramatically enhance the quality of life for residents, raise occupancy, and increase revenue by rent growth, often with less capital than needed for similar upgrades in traditional multifamily properties.  When investing in MHCs it is important to prepare for renovations, although this may be an expensive endeavor it allows for increased rent payments and a higher value of the property over time.

Renovations that Drive Returns

Investors often focus on operational efficiencies, but physical renovations often drive higher returns.  Physical renovations often reduce maintenance costs while allowing justified rent increases on tenants.  Renovated communities often experience higher occupancy rates and lower turnover which directly boosts net operating income (NOI). Additionally, capital improvements on shared amenities help appreciate home values for residents within the community. 

Tenants in these MHCs are more accepting of tangible renovations that improve the quality and price of their home, while reducing safety risks and maintenance needs.  These strategic renovations offer opportunities for higher rents, long term performance of the asset, tax benefits, and higher quality of life for tenants.

Tax Benefits of Capital Improvements

Capital Improvements of a MHC may cost a significant amount for investors and appears to be a large paper loss when first investing in a property.  But these capital expenditures are one of the most compelling advantages of investing in manufactured housing communities, particularly when paired with capital improvements. Unlike many other real estate asset classes, MHCs are heavily composed of land improvements (roads, driveways, utility systems, lighting, fencing, landscaping, etc.), which have shorter depreciable lives and therefore create more aggressive tax deductions for owners.

Specific tax benefits that investors can take advantage include:

• Cost Segregation Unlocks Accelerated Depreciation
  • When an MHC is acquired or improved, a cost segregation study can be performed to identify and classify components of the property into shorter-lived categories, typically 5, 7, or 15 years instead of the standard 27.5 or 39 years used for buildings. In MHCs, often 60% to 80% of the property’s value can be categorized as land improvements (roads, underground utilities, site grading), which are depreciated over just 15 years. This allows investors to front-load depreciation deductions, significantly reducing taxable income in the early years of ownership.
• Bonus Depreciation Supercharges Tax Deductions
  • Bonus depreciation allows investors to immediately expense a large percentage (60% in 2025) of qualifying capital improvements in the first year they are placed into service. This creates substantial “paper losses”, non-cash expenses that offset passive income.
• Capital Improvements = More Depreciation + Better Basis
  • Every dollar spent on qualified capital improvements such as paving roads, installing lighting, replacing water lines, or upgrading landscaping—adds to the property’s depreciable basis, which further enhances your ability to claim deductions through both standard and bonus depreciation. These investments improve the asset’s physical quality and long-term value while simultaneously increasing tax benefits.

Revitalizing Community Living: Comfort Capital’s Transformation of Flamingo MHC

At Comfort Capital, we believe that improving a community means more than just updating infrastructure, it’s about creating a place people are proud to call home. That’s exactly what we set out to do at Flamingo Manufactured Housing Community. One of our first major projects was the clubhouse renovation. What was once a dated, underused space is now a bright, modern hub where residents can relax, connect, and host events. We added new furniture, fresh finishes, and upgraded lighting, making it a true centerpiece of the community. We also turned our attention to the pool area, giving it a full refresh with updated decking, new lounge furniture, and enhanced landscaping, creating a welcoming space for residents to enjoy year-round.

To make the community even more family-friendly, we installed a brand-new playground, giving kids a safe and fun place to play close to home. These upgrades might seem simple, but they make a big difference in how people experience daily life. Residents have responded incredibly positively, staying longer, engaging more, and taking greater pride in their homes. With these improvements, we were also able to modestly raise rents in a way that reflects the added value without sacrificing affordability. It’s a great example of how thoughtful investment and community care go hand in hand, benefiting both residents and investors alike.