SEIZING THE DECADE-LONG WINDOW FOR MOBILE HOME PARK INVESTMENTS By Frank Rolfe

SEIZING THE DECADE-LONG WINDOW FOR MOBILE HOME PARK INVESTMENTS

Mobile home park investments present a unique opportunity that many ask about—how long will this favorable market last? From our perspective, this golden era of purchasing mobile home parks likely has about 10 more years in its lifespan. That is, of course, contingent on a number of factors that none of us really know but can make educated guesses on.

The Significance of Mom-and-Pop Owners

The allure of mobile home park investments, particularly when it comes to favorable pricing, can be attributed to one major factor: the mom-and-pop sellers. Hailing from America's "Greatest Generation," these individuals have been property owners for decades, often foregoing modern revenue-boosting strategies like rent hikes or sub-metering utilities. Their long-term ownership means they can often offer deals that are inclusive of the ability to push rents, fill vacant lots and homes, cut costs – which can often substantially boost net income and values in a short period of time.

The Advantage of Seller Financing

Beyond favorable pricing, mom-and-pop sellers frequently opt for seller financing, and why wouldn't they? In today's interest rate landscape, the approximate 6% interest we offer sellers surpasses what they'd earn from a CD or Treasury Bill of the same duration. Plus, the loan is backed by a property they're intimately familiar with, as opposed to a faceless corporate bond or guarantee. To top it off, they enjoy better tax benefits through earning interest rather than handing over a lump sum to Uncle Sam. The benefits of seller financing include lower down-payments, non-recourse status, and the ability to completely bypass the traditional banking industry and their additional costs and fees.

Stability of the Assets

When you buy a mobile home park from the original mom and pop you are receiving an asset that has a successful track-record of often 50+ years in business. You know exactly what your occupancy and rents are from a long-standing audience of customers. You also have the ability to vet all of the expenses. The bottom line is that you have a superior due diligence opportunity.

But Time Is of the Essence

Unfortunately, the clock is ticking for the “Greatest Generation”, our nation's most esteemed demographic. As they age, they increasingly face health challenges or simply wish to retire from the rigors of managing a mobile home park. With each passing day, the number of potential sellers grows smaller. Realistically, the available pool will be depleted within the next 10 years – and with it many of the best factors in buying mobile home parks.

Industry Trends: The Unconsolidated Market

Another factor contributing to this limited-time opportunity is the lack of consolidation in the mobile home park industry. Compared to the self-storage sector—which is much younger but three times more consolidated—the mobile home park niche remains relatively fragmented. Given that new mobile home parks are seldom built, once existing ones are bought up, they're off the market for good. There are around 44,000 mobile home parks in the U.S. and that’s about all that there will ever be.

Summary

We're in the twilight years of what can only be described as the golden age for acquiring mobile home parks—an era six decades in the making and now winding down. Opportunities are transferring from the venerable “Greatest Generation” to a new wave of savvy investors. If you miss out on this decade-long window, don't expect a second chance as these investment opportunities are not coming back. If you're eyeing the mobile home park sector, now's the time to make your move. Don't let this decade-long window close without taking advantage of the unique opportunities it offers. Otherwise you may regret it.

By Frank Rolfe

Frank Rolfe has been an investor in mobile home parks for almost 30 years, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with around 20,000 lots spread out over 25 states. Along the way, Frank began writing about the industry, and his books, coupled with those of his partner Dave Reynolds, evolved into a course and boot camp on mobile home park investing that has become the leader in this niche of commercial real estate.