How much have insurance costs risen for commercial real estate?

Insurance has been one of the fastest-growing expense lines in commercial real estate. The Federal Reserve found real per-unit multifamily insurance costs rose more than 75% over roughly 2019–2024, and insurance now represents around 8% of apartment operating expenses — close to double its share five years earlier (per the Commercial Observer, citing Federal Reserve data). Mobile home parks face related pressure, especially in storm-exposed markets, though figures vary widely by location and coverage.

What is RUBS in a mobile home park?

RUBS stands for Ratio Utility Billing System — a method of allocating a property's utility costs (water, sewer, trash) back to residents based on a formula such as occupancy or home size, used where direct submetering isn't in place. In an MHP it can shift variable utility costs off the operator's expense line, improving net operating income. Where it's permitted and how it must be disclosed varies by state and locality, so the rules need confirming before underwriting any recovery.

Does buying a mobile home park trigger a property tax reassessment?

In many jurisdictions a sale can trigger a reassessment that resets the assessed value toward the purchase price, raising the property tax bill above the seller's trailing figure. The size and timing depend on local rules — some states reassess on transfer, others cap annual increases. Underwriting next year's taxes off the seller's old assessment is a common way MHP expenses get understated. Confirm the local reassessment mechanics before relying on trailing tax numbers.

Why do operating expenses matter so much in MHP underwriting?

Park value is driven by lot net operating income capitalized at the exit cap rate, so every dollar of unmodeled expense reduces NOI and is then magnified at sale when divided by the cap rate. In a period when rent growth faces regulatory scrutiny, the expense side is often where the controllable upside — and the hidden downside — actually lives. Expense outcomes vary by market, so ranges and stress tests are more defensible than point estimates.

The MHP Expense Lines That Quietly Sink Deals in 2026

Published June 13, 2026

Lot rent gets the attention. It's the headline number in every offering memorandum, the figure operators love to benchmark against "market," and the line most underwriters spend the most time on. But in 2026, the expense side is increasingly where mobile home park (MHP) deals are won or lost — and where the most common underwriting errors hide. Insurance has reset to a structurally higher level, a sale can trigger a property tax jump that the seller's financials never showed, and utility costs keep climbing while recovery mechanics differ park to park.

The reason expenses punch above their weight in MHP is structural. Park value is overwhelmingly a function of lot net operating income capitalized at the exit cap rate. Every dollar of expense the model misses is a dollar off NOI — and at, say, a 6% cap, that dollar is roughly $16 of lost value at exit. Underwrite the expense lines loosely and the error compounds straight through to the sale price. This post walks the three expense categories most likely to surprise a buyer in 2026, and how to handle each.

Insurance: The Line That Moved the Most

Across commercial real estate, insurance has gone from a minor line item to a defining one. The Federal Reserve found that real per-unit multifamily insurance costs jumped more than 75% over roughly 2019–2024, and insurance now accounts for around 8% of apartment operating expenses — nearly double its share five years earlier (per the Commercial Observer, citing Federal Reserve data). Of 94 metros analyzed in one Federal Reserve study, 29 reported more than 100% growth in real property insurance costs from 2019 to 2024, concentrated in Florida, Texas, Louisiana, and the Carolinas (per the National Apartment Association).

There is some relief at the margin. The broader property-and-casualty market appears to be stabilizing, with one industry tracker noting premium growth slowing from around 5.5% in 2025 toward roughly 3% in 2026 (per Inszone Insurance, via Clearhouse Lending). But "growth is slowing" is not "prices are falling" — premiums are decelerating off a much higher base, not retreating to pre-2020 levels.

For MHPs specifically, the exposure has its own contours. Parks in wind-, hail-, and flood-exposed regions face the steepest pressure, and communities with park-owned homes (POH) carry more insurable structure than tenant-owned-home (TOH) parks, where the homes belong to residents. The practical implication for underwriting: the trailing-twelve-month insurance figure in a seller's financials may understate the buyer's cost, particularly if the policy is mid-term or the seller carried thin coverage. Pulling multiple years of loss history and getting a fresh quote bound to the buyer's coverage is becoming standard diligence — buyers are increasingly requesting several years of insurance history rather than relying on the trailing twelve months alone (per InvestingInCRE).

Property Tax: The Reassessment Few Sellers Advertise

The second silent line is property tax. In many jurisdictions, a sale can trigger a reassessment that pushes the assessed value toward the transaction price — and the new owner's tax bill with it. A seller who has owned a park for 15 years may be paying tax on a long-stale assessed value. Inherit their trailing number into the model and year-one taxes can be understated by a wide margin.

The mechanics are entirely local. Some states reassess on transfer; others cap annual assessment growth regardless of sale; others sit somewhere in between. The defensible approach is to model the post-sale tax basis — typically by applying the local mill rate to a reassessed value anchored on the purchase price — rather than rolling forward the seller's figure. Where the rules are genuinely uncertain, a range plus a sensitivity beats a single confident number. Verify the reassessment trigger and timing with the county assessor before relying on trailing taxes.

Utilities: The Lever That Cuts Both Ways

Utilities are the expense line where MHP operators have the most control — and where the recovery assumption can quietly inflate a pro forma. Water and sewer costs have been climbing in many markets (one 2026 operating guide cites mid-to-high single-digit annual increases as common, per Rod Khleif's NOI guide — directional, since local rates vary), and a master-metered park absorbs that as a pure expense.

The two principal recovery levers are submetering (individually metering each lot and billing actual usage) and RUBS — a Ratio Utility Billing System that allocates the park's bill back to residents by formula where direct submetering isn't in place. Both can shift variable utility cost off the operator's line and lift NOI. Two cautions belong in the underwriting:

Recovery is not automatic. Whether submetering or RUBS is permitted, how it must be disclosed, and what notice residents are owed varies by state and locality. A pro forma that books full utility recovery in year one — before confirming it's allowed and operationally in place — is assuming the upside rather than underwriting it.
Capital and timing. Submetering a park is a capital project with a lead time. The NOI benefit lags the spend, and that timing belongs in the cash flow, not just the stabilized year.

Handled conservatively, utility recovery is a legitimate value-add lever. Handled loosely, it's one of the easier ways to make a marginal park look like it pencils when it doesn't.

A Worked Example: How Expense Slippage Hits Value

A 100-lot TOH community, all lots occupied, market lot rent of $475/month. Gross potential lot income is $570,000/year. Assume 5% economic vacancy and credit loss, for effective gross income of roughly $541,500.

Suppose the seller's trailing financials imply a 35% expense ratio — about $189,500 of expenses, for an NOI near $352,000. At a 6.0% exit cap, that supports a value around $5.87M.

Now layer in three realistic adjustments the seller's numbers didn't capture: a fresh insurance quote $20,000 higher than the trailing figure; a post-sale tax reassessment adding $25,000; and the realization that a budgeted RUBS recovery can't be implemented in year one, costing $15,000 of assumed offset. That's $60,000 of additional net expense, taking NOI to roughly $292,000 — an expense ratio closer to 46%.

At the same 6.0% cap, that NOI supports a value near $4.87M — about $1.0M below the figure built on the seller's trailing expenses. The lot rent never changed. The entire swing came from three expense lines. That gap is the difference between a disciplined offer and an overpay, and it's why expense diligence increasingly drives MHP pricing. (Expense volatility is now influencing valuations directly, with buyers pricing in expense risk rather than treating it as a management afterthought, per InvestingInCRE.)

An Expense-Side Diligence Checklist for 2026

Before trusting a seller's expense load:

Bind a fresh insurance quote to the buyer's intended coverage, and pull multiple years of loss history — don't inherit the trailing-twelve premium, especially in storm-exposed markets.
Model post-sale property taxes off the local reassessment mechanics and the purchase price, not the seller's stale assessment.
Treat utility recovery as earned, not assumed. Confirm submetering or RUBS is permitted locally, and phase the NOI benefit behind the capital and notice timing.
Separate POH from TOH exposure. Park-owned homes add insurable structure, maintenance, and home-related risk that a TOH park doesn't carry.
Stress the expense ratio. Run the deal at a higher expense load and see whether it still clears DSCR and return thresholds. If it only works at the seller's expense ratio, that's a finding.

The Bottom Line

In a year when lot-rent growth faces more regulatory scrutiny than it has in a decade, the expense side is where much of the controllable story in MHP underwriting actually sits — both the upside (utility recovery, operational tightening) and the hidden downside (insurance resets, tax reassessment). The parks that get mispriced in 2026 are rarely the ones with an aggressive rent assumption alone; they're the ones underwritten on a seller's trailing expense load that doesn't survive a change of ownership. Pull fresh quotes, model the post-sale basis, earn the recovery rather than assume it, and stress the ratio. The expense lines are less glamorous than lot rent — and in this market, they're where the deal is often decided.

UWmatic is an AI-powered underwriting platform built for multifamily and mobile home park investors. Parse a park's T-12, model post-sale insurance and tax resets, phase utility recovery behind its capital timing, and stress the expense ratio against your return gates — then export a lender- and LP-ready package. Try the free underwriting calculator →

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This analysis reflects current market interpretations as of the publication date and may evolve as new data becomes available. Figures cited are drawn from public sources including Federal Reserve multifamily insurance data (via the Commercial Observer and the National Apartment Association), property-and-casualty premium commentary (Inszone Insurance via Clearhouse Lending), and CRE valuation commentary (InvestingInCRE), and are subject to revision. Insurance, tax, and utility-recovery rules vary widely by jurisdiction — verify current figures and local rules directly with insurers, county assessors, and relevant regulators. Nothing in this post is investment advice; readers should conduct their own diligence and consult qualified professionals before making investment decisions.

The MHP Expense Lines That Quietly Sink Deals in 2026