Demand / Supply Imbalance
Demand for quality affordable housing often outstrips supply of mobile home park investment properties. Affordable housing is in high demand from young families, middle-aged people in transition, and seniors on a fixed income. Approximately 26% of American households earn $25,000 per year or less (1), which allows for roughly $500 per month in total housing costs.
The average apartment rent is over $1,000 per month and is smaller than a typical mobile home. Our mobile home park investments offer tenants a superior combination of quality and price than comparably-priced site-built homes or apartments in that area and provide families with a sense of community.
While demand for quality, affordable housing increases, the supply of mobile home parks is diminishing. It is estimated that approximately 1% of mobile home parks are redeveloped every year into higher and “better” uses. Furthermore, we do not expect any new mobile home park developments adding to supply as use restrictions and local economic environments have made it difficult to acquire appropriate zoning for new parks, thereby eliminating new competition for current mobile home park investments.
Reduced Operating Expenses
30-40% operating margin vs. ~50-60% for apartments. Mobile home park tenants own the home. Mobile home park investors own the land. There are no on-going home expenses for tenant owned homes. Land is much easier to maintain then the home. Land does not need much ongoing maintenance. The goals is to keep the grounds looking clean.
An apartment building has 10 times as many items to maintain on an ongoing basis than a mobile home park investment. Appliances, windows, HVAC, building facade, building systems, gyms, pools, clubhouses, carpets, toilets, etc. Add these costs to the never-ending expenses relating to 40%+ tenant turnover and you can see why mobile home park investing generates excess cash flow relative to other real estate assets.
The value of roads, clubhouses and other common area improvements can be maintained with periodic capital expenditures averaging $125/site annually.