Why mobile home parks?
general overview
America is experiencing an affordable housing crisis. Renters are cost-burden to historically high levels, according to a Harvard University housing report. One solution is to preserve and improve existing mobile home parks (aka trailer parks). There are several attractive qualities that make these a great investment while providing relief to hardworking Americans looking for an affordable option to live.
Nearly 30% of the U.S. population has a household income of $25,000 per year or less. In addition, there are nearly 10,000 baby boomers retiring per day with social security checks averaging only $14,400 per year.
strong demand
supply cap
Counties aren't zoning new MHPs. It isn't uncommon to hear from county officials that a new MHP hasn't been zoned in over 15 years.
This zoning obstacle creates a high barrier to entry to new supply eroding away the competitive advantage of the asset class. At the current time, the only financially viable way to own a mobile home park is by purchasing an existing one.
In mobile home parks, there are two types of tenant. One owns the mobile home and rents the land from the MHP owner, while the other rents a mobile home from the owner. Mobile homes cost thousands to move making it very difficult for a tenant to move communities if they own their home.
tenant barrier to exit
low operating costs
Expenses typically run between 35% - 45% of rental revenue. Utilities (water, sewage, electricity & trash) can be passed through to tenants. Tenants are responsible for their home maintenance and there are a few amenities and structures to maintain. There are few capital concerns since the ideal MHP is essentially an operational parking lot.