Why Invest In Manufactured Home Communities

Undeniably, there are a multitude of real estate asset types which one can invest in. We know people who each have had extremely successful careers in one or more of these areas.

For St. Paul Group, one of the most important criteria in evaluating an investment is consistency and stability. Because this is a very misunderstood asset type it is often perceived as risky investments. In fact, manufactured home communities are some of the stable investments in the real estate world and are less subject to the ever changing market cycles in our economy. While not sexy, manufactured home communities can be a highly profitable and risk tolerant investment when operated properly.

Demand for Affordable Housing

Demand dictates the viability for any business service or product. The need for affordable housing has been and likely will always be in need during our lifetimes. With the bifurcation of our economic class, there will be many more people in need of affordable housing. Virtually every municipality in America is struggling to meet the demands of affordable housing.

Recession Resistant

There is consistent demand for low-income housing in every economic environment. Manufactured housing communities fill this need by providing an affordable form of home ownership. Even during a recession, the demand for mobile homes remains high. In fact, each of our communities has enjoyed increased occupancy in recent years.

Low Expense Ratio

The business model in our manufactured housing communities is that residents own and maintain their individual homes. They lease the land/lots on which their homes reside. Because of this model, the park has a relatively lower expense ratio than comparable multi-family assets like apartment buildings. It is typically accepted that the average operating expenses for a mobile home park are usually around 35-40% of the gross income as compared to apartments which have in the 50-60% expense ratio.

High Barrier to Entry

There are approximately 55,000 manufactured home communities in the United States, and the requirements for building new communities are very stringent. Additionally, most cities that offer manufactured housing are reluctant to approve new manufactured housing developments, forcing builders to focus on other forms of construction. This results in a consistently high demand for manufactured housing.

Low Turnover

Due to transportation and disassembly costs, manufactured home owners try to move their properties as little as possible. Additionally, the better maintained the housing park is the longer a tenant stays. It is not uncommon for a tenant to stay in a community for 10 years or more. By contrast, the average turnover time in an apartment building is between 6 and 9 months. In fact, studies have been performed which indicate that manufactured home residents are no more likely to move than residents in a single family neighborhood.

Learn More

St.Paul Group LLC is highly specialized investing company for manufactured housing community within the United States. If you would like to learn more about our investments, contact us.