When it comes to compelling locations to own a mobile home park in, college towns are at the top of the pack. But what makes college towns such successful settings for manufactured home communities? In this Mobile Home Park Mastery podcast we’re going to explore why having a college or university in a market gives it superior firepower when it comes to housing.
Episode 368: The Power Of College Towns Transcript
25 million Americans, roughly 8% of the entire U.S. Population, live in college towns. And we've been huge fans of them since we bought our first park that was located in one. This is Frank Rolf with the Mobile Home Park Mastery Podcast. We're going to talk about the power of college towns as a place to buy a mobile home park. Now, I have long written articles on and talked incessantly about recession resistant employment and why that is such a huge deal in a successful market, because as we all know, the economy is often challenged in America and recently challenged more than it has in a long, long time. And there are three types of employers that regardless of recessions and depressions and stagflation, that they just keep on hiring, they keep on paying their salaries and the bills, the checks keep clearing. Now, the three legs of recession resistant employment are government, healthcare and education. These are three areas that seemingly never cut back. We still go to the hospital when we get sick, the hospital's doors are still open even in recessions, and the government, although I know DOGE is tampering with it at this point, nevertheless, it never seems to shrink.
Hopefully it will, but we'll all see how that ends up in the end. And then finally, education, because even when times are tough, we still want to send our kids to college. So recession resistant employment is one of the key attributes of why college towns do really well, because they rarely have big layoffs and you can never move the factory over to another country. But there are other reasons why college towns perform in an exemplary manner. The second reason is that typically the hospital, for whatever market you're talking about, is also located in that college town. So now we've hit the second leg of beautiful and perfect recession resistant employment. Because the hospital is located near the college, because often the doctors go to medical school, the nurses go to nursing school, and this way it's all very nearby. So normally when you have a college town, you also have a large hospital. And also in a college town, you often have a more youthful population. It makes sense, right? I mean, you've got typically hundreds if not thousands of young people collectively going to college in that location and with that young group comes more of a cultural vibe.
You typically have more attractions like restaurants and clubs and the things that attract people of all ages, really a lot of seniors retiring. They also like to be nearby shows and fun places to eat. So this very fact, you have so many young people, vibrant people with lots of money to spend as students, it tends to create a cultural environment that's more attractive to customers of all ages and then it makes people more want to live there. Also, normally the college towns, where all the jobs seemingly always are formed in the county, and that's typically due to access to skilled workers. So let's say you have a factory, you need people who are a little above the norm as far as some kind of skill level. Often they'll locate near the college town because they figure they will have a non-stop source every year of new potential employees, and they will work that college aggressively with all kinds of internship programs and summer jobs to try and get those employees. So once again, when you have a college town, we have a magnet to other forms of employment and that typically makes the employment rate very, very high and the unemployment rate very, very low in those college towns.
Also, and this is an unusual statistic, college towns, although having these wonderful employment potentials, very recession resistant in education and often healthcare, they typically do not have higher median incomes than other towns that are not college towns. Now you might say, well, that kind of defeats your whole argument, right? Well, no, not really, because obviously the students are not employed, but importantly also is that a very large percentage of the jobs in a typical college are not high-paying. You have a lot of staff involved in a college. We own some mobile home parks near the University of Illinois in Urbana and you will find that in a college town, it's not just all professors, it's not just all students. You have lots of people who fill other roles such as groundskeeping and maintenance. And then even on the teaching side, you've got a lot of lower paid positions than your typical professor wearing the tweed jacket with a pipe. So as a result, colleges produce a lot of employees who are typical mobile home park customers. So it's not as though that the college by itself is a group of lofty, high-paying people that are never customers of a typical mobile home park, but instead, the college itself actually creates many, many jobs that are applicable to mobile home park customers.
And also, students typically make lousy mobile home park customers. This was a big takeaway when we first started investing in college towns because we thought that what we would have is a lot of students. But in fact, when you own a mobile home park in a college town, one thing you typically do not have are students. Now why is that? Why would a mobile home park, which seemingly has affordable housing, detached housing with a yard, a little less scary and probably more attractive to a young person than an old apartment complex from the '50s or the '60s? Why don't they not live there? Well, it's simple, because typically most mobile home park owners don't want to rent homes. And in a college format, the typical person going to college is there for roughly four years. They don't want to buy something for a lifetime. They need short-term rentals. And even on top of that, many of them don't know if they'll be coming back the next year. They want to keep their options open, they might want to transfer, they could even theoretically drop out of college. So as a result, the students don't mix well with mobile home park environments. On top of that, I think a lot of parents still harbor the stigma against the industry. They don't want to put their kid in a mobile home park because they don't think that sounds like a good place for them to be. They have the stigma that parks are filled with crime and bad people. So as a result, when you own a mobile home park in a college town, the only real affiliation you have with the college itself is on staff, people who work at the college doing the things that make the colleges work, the nuts and bolts jobs that make everything happen, air conditioning, heating, yard maintenance, you name it.
But the one thing you typically don't get are a lot of students. And really that's okay from a landlord's perspective, because students would never really be stakeholders, they wouldn't be long-term residents. And since the mobile home park business model really relies upon a resident who stays often a decade, the industry claims the average is 14 years. No one really knows scientifically, but it sounds about correct. So really, students are not what you're trying to house with a mobile home park in a college town, and really that's fine. But one big item you have in a college town that also makes it a long favorite of park buyers and having exemplary performance based on other locations is your ability to push rents. Now, I know that sounds terrible. People say all the time, oh no, don't talk about pushing rents, but like any business in America today, particularly in a high inflation environment, you need a product that people need enough and want enough or are willing to pay more so you can keep pace. There are a lot of products out there that have fallen by the wayside that can't keep up with inflation, but mobile home parks fortunately do not have that trait. And in a college town, what you typically have, based on everything I've described so far, is you've got a lot of activity, a lot of demand for housing and what that does is it typically keeps single-family home and apartment rents very high.
If you look at the typical college town versus non college town, one thing you will see is you'll see a lot of higher-end, more expensive housing. And in the world of affordable housing, to be truly affordable, you need the contrast with more expensive housing options and college towns typically deliver on this in a big way. Think of the college towns that you've been to or looked at parks in, and you went on best places and you looked at the median home price and the average apartments. You probably remember, wait a minute, those were some of the higher priced markets. Take Edwardsville, Illinois, for example, probably one of the nicest college towns in the State of Illinois. What do you notice about Edwardsville? Really expensive housing, more so than other markets surrounding that. And again, it's because of everything I described, more vibrant cultural areas, more recession resistant employment, more doctors, more professors, more high-paying jobs. And as a result, it makes all housing seem more scarce, more rare, more valuable and that's typically always been a very good setting for mobile home parks because it allows us to maintain and raise our rents in line with those market forces. The bottom line is that college towns are great places to own mobile home parks in. And when you see a mobile home park come on the market in a college town, that's definitely one you should take a look at. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.