We see 2025 as another good year for mobile home park owners for a number of reasons. And apparently, we’re not alone. In this recent article from Multi Housing News, the mobile home park industry got very positive marks in their opinion. We share these same views, which revolve around three key aspects:
Strong demand for affordable housing
The average single-family home in America is around $400,000 and the average apartment is more than $2,000 per month. Against that backdrop you have the average mobile home park rent of around $300 per month. That one fact makes mobile home park telephones ring off the hook with anxious customers who can’t find anything even remotely in their price range. The affordable housing crisis in the U.S. is at its highest level in history. And there is literally no solution to it as incomes are growing nowhere near as fast as housing costs. This is not a blip but a permanent fixture.
Restricted supply
Mobile home parks have the most stable income base in America. That’s why they have the lowest default rate of all real estate sectors. And what contributes to this super-human strength is the simple fact that they have not allowed virtually any new mobile home parks to be built since the 1970s. The main staple of economics is “supply and demand” and when you shut down the supply side the end result is incredibly high occupancy and rent growth. Once again, as every city in America hates “trailer parks” this supply limitation will never end.
The timing of lower interest rates
Something that all of us investors from the Great Recession era learned is that the best time to buy mobile home parks is when interest rates are poised to descend. That’s what happened in 2008 and the net result was that even average parks skyrocketed in value as declining interest rates also triggered declining cap rates. Even on properties that saw meager increases in net income, the perception of that income grows in value when rates drop. And everybody knows – and the Fed supports – the simple fact that interest rates are about to come down. And when the inevitable recession occurs (which we think will be in 2025) the rates should plummet.
This quote says it all
Th article ends on a terrific quote:
“Investors will continue bifurcating into two camps with regard to manufactured housing: those who get it and those who don’t,” Weisfield said. “Those who get it are highly thesis-driven. They look at all overall housing supply and demand. They look at how much manufactured housing residents love the product. They look at manufactured housing rents on a continuum with apartment rents, and they therefore see MHCs as rare assets that rightfully command premium prices.”
We couldn’t agree more.
Conclusion
We think that mobile home parks have a strong future in 2025 and beyond. And we are not alone in that thought. If you “get it” then consider learning much more about how to correctly invest in this asset class. We offer both a virtual Boot Camp and in-person Masterclass in 2025 and would love to tell you more about them.