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What the Great Reshuffling means for mobile home parks

written by Chad Freeman:

A growing number of investors are discovering the benefits of mobile home parks.  Their performance outperforms just about any other type of real estate.  As “the great reshuffling” continues, this trend will accelerate.  Across America, a major shift is taking place as people flee major cities and urban areas in favor of smaller towns and suburbs.     

CBS just aired a special on “the great reshuffling”. Here’s the link:

                  www.cbsnews.com

The pandemic drives demand for space and shifts the real estate market.

As a result of the Coronavirus and government-mandated lockdowns, people want more space.  The great thing about mobile homes is that you get to own your own house, have a yard, park right outside your front door, and you don’t have to share any walls, ceilings or floors with loud neighbors.  Many of our homeowners are former tenants of apartment buildings.  

The pandemic has caused many Americans to stop traveling and work from home via zoom meetings, which has impacted office space, lodging, and restaurants.  In addition, the decline in retail space was accelerated as more and more people ordered online.  As people flee the cities, self storage has also been hit hard.

While other real estate sectors continue to decline, mobile home parks have been growing in value.  The majority of mobile home parks are located in the suburbs or exurbs.  The demand for affordable housing has risen dramatically as the price of single family homes continues to skyrocket. According to the National Association of Realtors, the median U.S. existing house price for all home types (single-family, townhomes, condominiums, and co-ops) was $284,600 in May 2020, that number increased to $295,300 in June.  In comparison, a brand-new mobile home costs approximately $40,000-$50,000.  Our current portfolio is experiencing such high demand that we do almost no advertising when we need to sell a mobile home and our telephone system is ringing off the hook.  New mobile homes are in such high demand that most manufacturers have a year-long waiting list to receive a new order.   

 

The mobile home park industry is finally starting to get the recognition it deserves

Many investors have scoffed at the mobile home park industry for years and the news media has unfairly portrayed it as a low class high crime industry.  Mobile home parks began their journey as a place for well off Americans traveling the country before  there was a solid delineation between a mobile home and an RV.  The mobile home park industry is finally starting to get some of respect it deserves as it has outperformed all other real estate sectors during the pandemic.  Banks agree and are now selling debt on mobile home parks at a lower rate than the “golden child” high class apartment complexes.  “The Great Reshuffling” will continue to help mobile home parks to become more attractive to investors, lenders and appraisers.  

 

Evection moratorium 

The government showed how dangerous the rental market could become after ignoring the court ruling that the CDC moratorium on evictions is unconstitutional.  In parallel, the industry of mobile homes parks has grown stronger.  Our business model consists of simply owning and leasing land to homeowners.  As a result, home owners have a vested interest in our business and the industry was not harmed by this government sanction.  If you also read the future agendas by HUD and specifically Marcia Fudge online, you’ll find that it’s not unthinkable for the government to disregard rental owners’ property rights in the future while forcing them to accept more devastating and illegal infringements of their rights.  

 

Conclusion:

As a result of changing demographics, shifts in other sectors of the real estate market, as well as government intervention, the demand for affordable housing is growing like never before.  The mobile home park industry has proven to be a solid investment amongst many risky, once “safe” forms of real estate.  In addition, mobile homes offer a superior product to the competition, and our business helps low-income Americans live in nice communities and own their homes.

 

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