If you believe the U.S. economy is in great shape then you must not be in your 60’s. That’s because you’d have to be in your 60’s to have been an adult during the era of Jimmy Carter and “stagflation”.How did that era work out? Well, here’s a preview: inflation goes up, the stock market crashes, bonds plunge, and single-family home values plummet. Those who lived in the era of Carter are permanently scarred by what they saw and are better investors because of it. I am one of those people. And that is why I’m 100% bullish on the mobile home park industry at this moment in American history.
There are many ways to profit from this vast niche of affordable housing, with options to meet every budget. Here’s a macro overview:
- Buy a Mobile Home Park. This is the classic way to invest in this segment of affordable housing. It works well because you can buy cheap from the original moms and pops, get solid loans from banks (or seller carry), and then push the heck out of rents and fill all vacant lots. It’s like buying an excellent sailboat with all the sails flopping in the wind and then yanking the ropes and making the boat take off. Since mobile home parks have low, month-to-month rents you can raise them in-line with inflation and the value is based on income and not speculation.
- Assign a Mobile Home Park. Another classic way to make money, although not involving ownership but instead spotting opportunities, tying them up under contract, and then selling your position to another operator who then closes on the deal. It’s been a part of the industry for decades and we, ourselves, have been huge buyers of these assignments, as have many industry veterans.
- Master Lease a Mobile Home Park. In this unique construction, you find a property that has great “bones” but is poorly operated, and you take over control with a Master Lease which also gives you the ability to buy the park at a pre-set price years into the future (typically 3 to 5 years). You basically get to test out your theories before you risk any money in ownership.
- Buy and Sell Mobile Homes. Often called “Lonnie dealing”, this is the function of buying the homes in mobile home parks and not the parks themselves. In certain markets that have high demand for housing and resultingly high home values, you can buy homes in mobile home parks, renovate them, and sell them at a high profit. The entry point for buying these homes is very low, often around $2,000 or so. Many use this as a stepping stone to park ownership.
- Buy and Rent Mobile Homes. A derivation of the buy and sell method, this has become more popular in light of the SAFE Act and Dodd-Frank, as well as creating an income stream as opposed to a one-time transaction.
Why you should consider these investment options
In the next stage of the economy, there will be some serious setbacks for the normal investments that most Americans engage in. Interest rates will cause a reckoning of corporations and their debt, and the horrendously high valuations of companies that have little or no earnings – such as Tesla – will hit the radar screen and the same herd that pushed stocks higher will start running the opposite direction. With CDs and Treasuries already paying nearly nothing, and bonds and stocks deflating, the only options that will create wealth are those that have strong dividends and are valued based on their existence. Mobile home parks are one of these few investments that will gain value in “stagflation” and pay out significant distributions.
Go long on the “affordable” sectors
Mobile home parks are contrarian – they tend to do better when the economy does worse. That’s because they are based on the demand for cheap housing, which grows in stature as the economy declines. Experts already estimate that 50% of Americans can’t currently afford their housing, which means that affordable housing is a hugely in-demand commodity. But whether it’s mobile home parks or WalMart, the growth industries of the future will revolve around providing basic necessities at a low cost.
Conclusion
Older people have the advantage of historical wisdom. These folks, such as Charlie Munger, have already been issuing warnings of a huge economic storm about to hit the U.S. Do your own research on these cycles and take action immediately, as time is running out.