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mobile home investing

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4 Reasons Why Mobile Home Parks are Recession-Resistant Investments

Mobile home parks (MHPs) are frequently associated with a variety of unfavorable perceptions and the idea that they are unattractive places to live.

Many people do not realize that some of the richest people in the world have been investing in MHPs for years. One reason is that this asset class can produce exceptional returns even in the worst economic circumstances.

Here are five reasons why mobile home park investments are recession- and inflation-resistant.

1. Mobile home parks are the most affordable housing.

During a recession, it is natural for individuals to seek out the most affordable ways to live. Mobile home parks experience increased demand during economic downturns because they are the most affordable housing option.

According to the U.S. Department of Housing and Urban Development, manufactured homes can cost half as much per square foot to construct as site-built homes. Census data. A manufactured home costs approximately $70,600 on average, compared to $286,000 for a single-family site-built home, excluding land costs.

In many parts of the country, the monthly rent for a manufactured home with land in a land-lease community averages between $844 and $935.

2. Residents own their homes and rarely move.

Affordability attracts residents, but ownership of a mobile home ensures their long-term presence. This resident ownership is the most distinctive characteristic of MHPs and a little-known reason for their stability throughout all market cycles.

Residents pay monthly rent for the lot on which their home sits, but because they own their homes, they are also responsible for all ongoing repairs and maintenance.

As homeowners, residents have ownership pride and a vested interest in staying at the MHP, resulting in their rare relocation. It is not uncommon for residents to reside in the same park for an average of 15 years, and some residents live their entire lives in the same park.

 3. Multiple Income Streams

In multifamily buildings, rent is the only source of income. When you own a mobile home park, there are multiple ways to generate income. You can generate income by renting out space in your park. You can also purchase multiple mobile home units and rent them out. Additionally, you can rent out additional garage spaces and even issue master leases if you so choose.

4. Supply is Restricted and Declining

It is very difficult to construct new mobile home parks in desirable locations. As the majority of MHPs were built in the 1960s and 1970s, most cities’ zoning regulations prohibit the construction of new parks. Additionally, MHPs are frequently targeted by developers who want to convert them into more expensive housing options, such as multifamily apartments.

Estimates indicate that the national supply of Mobile Home Parks is decreasing annually, which, when combined with rising demand, creates an extremely favorable investment structure for the long term.

Tony O. Lawson

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