Why Invest in Mobile Home Parks
Undeniably, there are a multitude of real estate asset types in which one can invest and all product types can be very lucrative.
For St Paul Group, one of the most important criteria in evaluating an investment is consistency and stability. Because Mobile Home Parks are a very misunderstood asset type it is often perceived as risky investments. In fact, manufactured home communities are one of the stable investments in the real estate world and are less subject to the ever changing market cycles in our economy. While not sexy, manufactured home communities can be a highly profitable and ideal for risk averse investors when operated properly.
Demand for Affordable Housing
Demand dictates the viability for any business service or product. The need for affordable housing has been and likely will always be in need during our lifetimes. With the widening gaps between our economic classes, there will be many more people in need of affordable housing. Virtually every municipality in America is struggling to meet the demands for affordable housing.
There is consistent demand for low-income housing in every economic environment. Manufactured housing communities fill this need by providing an affordable form of home ownership. Even during a recession, the demand for mobile homes remains high. In fact, each of our communities have enjoyed increased occupancy in recent years. Because rents are correlated to minimum wages, the risk of a decrease in average monthly rent is very low.
Low Expense Ratio
Residents in our communities own and maintain the individual homes. They only lease the land on which their homes reside. Because of this model, the parks have relatively low expenses compared to multi-family assets like apartments where the owner maintains the buildings. Thus, our cost to maintain a park is typically about 20% less than the costs to run an apartment complex.
High Barrier to Entry
There are approximately 55,000 manufactured home communities in the United States, and the barriers of entry to develop new communities are very high because most cities are reluctant to approve new manufactured housing developments, forcing builders to focus on other forms of construction. This results in a consistently short supply and high demand for manufactured housing.
Due to transportation and disassembly costs, manufactured home owners try to move their properties as little as possible. Additionally, the better maintained the park is, the longer a tenant stays. It is not uncommon for a tenant to stay in a community for 10 years or more. By contrast, the average turnover time in an apartment building is less than a year. In fact, studies have been performed which indicate that manufactured home residents are no more likely to move than residents in a single family neighborhood.
St Paul Group is highly specialized investing company for manufactured housing community within the United States. If you would like to learn more about our investments, contact us.