To tell it to you straight, the happenings in mobile home parks are actually quite bland, boring and not exactly sexy, but my-oh-my, the abundant opportunities that exist for investors are oh-so-sexy! Here’s a few reasons why…
Supply and Demand for Affordable Housing: Recent reports indicate 45 million Americans live below the poverty line and 50% of Americans earn less than $30,000 annually. The current official poverty rate is 12.3%, based on the U.S. Census Bureau’s 2017 estimates. That year, an estimated 39.7 million Americans lived in poverty according to the official measure. According to supplemental poverty measure, the poverty rate was 13.9%. It doesn’t matter which information is more accurate, the undeniable fact here is there are a massive need for affordable housing (https://poverty.ucdavis.edu/faq/what-current-poverty-rate-united-states). Whether the economy is up or down, there will always be a need for affordable housing. And don’t forget the need to house the massive influx of retiring baby boomers. These statistics combined with the limited supply of only 45,000 known mobile home parks in America, creates a unique and unbeatable demand for affordable housing.
There are more people who need to live in affordable housing than there are affordable houses. This means if you buy a mobile home park in an affordable housing market, your phone should ring off the hook with an abundant selection of applicants to choose from. For any landlord, this is like endless ice cream. With an annual 1% decline in available mobile home parks (due to more parks being closed-down than being built) and with an increase in low income Americans, and an influx of baby boomers, there is an undoubtable need for mobile home parks in America.
Due to this demand, the recent attraction to mobile home parks has dramatically expanded all the way up through major corporations and even the government. Although some cities would rather see hotels and glamorous office buildings than a mobile home park, there is no denying that the need for mobile home parks is extremely high and that will not be changing anytime soon.
Institutional Programs and Warren Buffet: Warren Buffett has recently become one of the biggest drivers behind the mobile home industry. As you know, Warren Buffett is Chairman and CEO of Berkshire Hathaway Inc. and back in 2003, Berkshire Hathaway bought Clayton, the largest mobile home manufacturing company in America, for $1.7 billion. It’s fair to say that Warren Buffett makes pretty calculated investment decisions, and if he’s placing large amounts of capital into something, there is probably something to it. This alone should be enough to validate worthiness of the mobile home industry, although the story gets even better.
There were some unfavorable changes for park owners in mobile home financing laws after the 2007 financial meltdown. As Mr. Buffett looked to create solutions where massive opportunity exists, Clayton Homes later partnered with 21st Mortgage to change the industry with a new program for mobile home park owners. Since then, other companies have followed suit to capitalize off this genius strategy where specific mobile home financing companies team up with mobile home manufacturers to provide financing for new and even used mobile homes, where financing is passed on to the qualified tenant who ends up moving into the home. Park owner’s still have some responsibility in the process, although significantly less than previous options available.
Although Buffets move was not the first attempt at achieving something similar, it was a well-refined program proving to be more robust than earlier attempts. As a result of these new programs, park owners gain massive relief. Now as mobile home park owners, there are alternative options from buying a new mobile home, coming out of pocket $30,000+ per lot, and dealing with being the lender to the home buyer. These new programs allow mobile home park owners to focus on more important things, like choosing your favorite perennial to plant at your park’s entrance or deciding what to do with the abundant cash flow coming into your bank account each month.
Fannie Mae and Freddie Mac and Mobile Home Park Financing: Fannie and Freddie—both publicly owned, government-sponsored enterprises that purchase mortgages—have programs for mobile home park financing. That’s right, they have programs for mobile home parks. Typically known as America’s largest guarantor of home loans, Fannie and Freddie jumped on board with the mobile home park movement. The program criteria stipulate nicer mobile home parks (4 to 5 star rated parks), although this standard is another great indicator that mobile home parks are becoming an easier and more attractive asset to finance.
Section 8 Vouchers Now Buy Mobile Homes: Section 8 can be used toward mobile home rents, but now Section 8 also can be used toward mobile home purchases. This now separates the mobile home park industry from multi-family apartments. You can’t buy an apartment as it’s not for sale, but you can buy a mobile home in a mobile home park and become a homeowner while renting the land only. And now mobile homes can be purchased using Section 8 vouchers. This is so new that the exact workings are still in discussion. The government bill passed creating another way for tenants to buy mobile homes and for park owners to sell homes.
To learn more about the ins and outs of mobile home park investing, how to avoid pitfalls and maximize profits, all from the comfort of your own home: Get your hands on the “A to Z of MHP’s – everything YOU need to know about mobile home park investing – Home Study Course!” https://bryce-s-school-cb49.thinkific.com/courses/a-to-z-of-mhp-s-home-study-course
For live workshops, other home study courses, or FREE educational resources like podcasts, webinars or videos: http://www.propertyworkzusa.com/educational-resources/
Join me live, at an upcoming event near you: http://www.propertyworkzusa.com/upcoming-events/
Get your hands on my new book “10,000 Miles to the American Dream”:
“Your Australian Real Estate Mate”
Real Estate Investor | Best Selling Author | Syndicator | Educator