Mobile Homes

World’s Largest Landlord Enters the Mobile Home Park Arena

Expertise: Personal Development, Commercial Real Estate, Real Estate News & Commentary, Landlording & Rental Properties
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I really blew it.

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I hope you didn’t… but I’m guessing you did, too.

How? Well, as a young guy, I had a chance to invest in mobile home parks. But with a long, sneering look down my nose, I went a different direction.

And I missed one of the most significant investment opportunities in my life. For a lot of years.

While I was chasing other opportunities, some of the world's smartest investors were quietly building a fortune in the mobile home park niche. And last month, we learned that America's largest landlord has joined their ranks.

I’m grateful that I joined this party when I did. Is this something you should take a look at, too?

Who are the big players?

You probably know that America’s most successful real estate investor is the largest player in the mobile home park arena. Sam Zell was formerly the largest owner of office space in the U.S. and the largest owner of apartment buildings in the U.S.

Zell has sold off most of those assets and his company, Equity Residential, is focused on owning and operating mobile home parks. Zell and the company currently own and operate more than 156,000 mobile home park lots and counting. (This is quite a bit larger than my city!)

Zell started off by acquiring a small park with less than 50 units, which should encourage many new investors.

You may also know that Warren Buffett and Berkshire Hathaway are deeply involved in the manufactured housing world. With their 2003 acquisition of Clayton Homes for $1.7 billion, Buffett positioned his firm to build about 25% of the mobile homes manufactured in the U.S.

Berkshire and Clayton also provide some of the most innovative financing options for parks and individuals. Berkshire’s 21st Mortgage provides individual buyers of new and used mobile homes a great financing option.

The 21st program finances the acquisition, move, and complete setup of a new or used home in a park. The park operator is responsible for selling the home to an individual buyer and later taking possession of it if they default. The importance of this program to the industry cannot be overstated.

Berkshire Hathaway also partnered with Leucadia in 2009 to form Berkadia Mortgage. Berkadia is an aggressive lender in the mobile home park arena and has arranged many of the loans on deals Wellings Capital has invested in over the past several years.

There are also various large real estate investment trusts, life insurance companies, and other institutional players in the mobile home park sector. The Carlyle Group and Apollo Group Management are among them.

Did you hear the news?

In September, the news broke that the world’s largest landlord has entered the mobile home park business in a big way.

During the Great Recession, The Blackstone Group became America's largest landlord by purchasing tens of thousands of discounted single-family homes. Their investment has paid off in spades.

Now, seeing an opportunity fueled by the systemic affordable housing crisis and the potential economic fallout from COVID-19, Blackstone has rushed into the mobile home park sector.

Bloomberg reports that Blackstone is in hot pursuit of a $550 million portfolio of roughly 40 mobile home parks. This will add to a portfolio that already includes the $200 million acquisition of seven parks earlier this year and 14 communities sold by Tricon Capital in 2018.

Even with these significant acquisitions, Blackstone still owns less than 1% of this sector that boasts about 45,000 or so assets.

What’s all the fuss about?

Bloomberg reports that $800 million worth of mobile home parks traded hands in the second quarter this year. That is a 23% increase over the volume sold in 2019. This is significant in light of the fact that total commercial trades slumped by 68% to $45 billion in the second quarter. According to The Real Deal Real Estate News, not a single other property type saw an increase in volume.

The Real Deal also reports that valuations of these assets were up 26% year-over-year in the second quarter. Institutional investors accounted for a stunning 28% of the deals according to JLL, which is the highest share since the firm started tracking 10 years ago.

Mobile Home Park Investing Gaining Popularity

Mobile home parks have been the neglected stepchild of the commercial real estate world for decades. But that's all changed now.

Green Street recently said manufactured housing is the darling of the commercial real estate world. Individual investors and institutional players have poured into this asset class.

But perhaps more importantly, in 2020, we have another situation contributing to this rise in popularity. The pandemic and other long-term trends have caused investors to avoid asset classes like retail, malls, hotel, entertainment, and offices.

At the same time, an increasing number of investors are avoiding the casinos of Wall Street. A growing number of investors are taking their investments out of the control of money managers and into their own hands through self-directed vehicles like IRAs and solo 401(k) plans.

And there is a continually growing pool of international investors who want access to U.S. investments.

So the result is a large wave of cash crashing on a decreasing shoreline of opportunities. Mobile home parks are an obvious winning target for many. BiggerPockets’ Brandon Turner is in deep. And so is my company.

mobile-home-newbies

Your spot is still saved, for now.

Before and after writing a book about multifamily investing in 2016, our team spent years banging our heads against a hard-to-move wall trying to acquire sensibly priced apartment complexes.

According to research by Kris Bennett formerly of 10 Federal, 93% of multifamilies above 50 units are owned by companies. Most of these firms have wrung the value out of their assets and there is little upside left. Especially in this overheated market.

But industry expert Frank Rolfe, who was on the BiggerPockets Real Estate Podcast in 2019, says that about 90% of the 45,000 U.S. mobile home parks are still owned by mom-and-pops. Many of them are older and ready to hang it up.

And this is your opportunity.

Most mom-and-pop-run mobile home parks have significant upside. We recently invested in a $7.1 million park in Kentucky that has about $3 million in upside just through passing utilities back to tenants. Like all of the other regional parks do.

This is a path to create great value for investors without harming anyone. Tenant-paid utilities are standard practice nationally and a way to help the environment—tenants waste less when they pay the bill directly.

This $3 million gain represents a nearly 100% increase in investor equity. And that happens without raising the rent, and before filling 50 vacant lots. And before sharing in revenue from cable and internet.

One of the most gratifying things about professionally operating a mobile home park is this: Most mom-and-pop parks are poorly run, poorly policed, and not a great place to live. A professional operator can provide a beautiful, safe place to live. This is a place where kids will grow up, so it’s incumbent upon owners to do this well.

This is your chance to do well by doing good.

Have you been investing in mobile home parks? Thinking about doing it now?

Share your mobile home investing ideas and experiences in the comments.

After graduating with an engineering degree and then an MBA from Ohio State, Paul entered the management development track at Ford Motor Company in Detroit. After five years, he departed to start a...
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    Taylor L. Real Estate Syndicator from Richmond, VA
    Replied 3 months ago
    Interesting to see this much capital changing asset classes. I think we'll see that continue to happen, as office and retail become less and less appealing over time. We keep hearing about how many mom & pop owned MHPs are out there, but with this flood of capital how many remain in an appealing size? There are many mobile home parks that are just a handful of homes next to a house that the property owner lives in, for example. What percentage of the supply do those make up?
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    Taylor, Great question. Several years ago, the last WWI veteran died. There will be a day when the last mom-and-pop MHPs are gone. But that will be a long time away. Yes, they are being snatched up quickly. And yes, the largest ones in the best locations are going fast. But with a pool of about 40,000 parks out there, I think there will be opportunities for years to come. Because of the fragmented nature of this business, I doubt that anyone has great stats on how many parks are small and unappealing to any operator. That is one of the things I love about this business. There is still room for a newer player to come in and find deals that are not even listed on Google. I am part of a deal right now that is in a great location, with virtually no competition, with about 200 lots... and it is listed online as an RV park. It wouldn't even come up in some Google searches for MHPs. Their advertisting budget was about $100 last year. And the park is valued for several million dollars. That's what I'm talking about. Will that opportunity be there in 5 or 10 years? Doubtful. But it is today.
    Brian Green
    Replied 3 months ago
    I’ve seen a couple local mobile home parks in my city. How would I find out the mom and pop that owns it?
    Michael Colebank Rental Property Investor from Flemington WV
    Replied 3 months ago
    Hi Brian, it should be available on your county assessors website.
    Charnita Wheeler
    Replied 3 months ago
    I just seen a couple trailer parks in my area how would I find out about at
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    As mentioned above, you can check the city or county assessor's website. Good luck!
    Jean A Yeiser
    Replied 3 months ago
    I am a senior in my 70's . I owned a home and sold it because I am alone an unable to take care . Their are hundreds of mobile home parks in FLORIDA for SENIORS . Their could be some good investments in SR mobile home parks in other states . I have searched the internet for SR MOBILE HOME PARKS IN KY It seems to be none existant . BABY BOOMERS being a large percentage of population , it would seem possible for a good investment in SR MOBILE HOME PARKS IN OTHER STATES BESIDES FLORIDA . Has any one thought to check .
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    Jean, I think that would be a great investment in any state, especially in a place where people are moving in general and especially these days. The only strategy I can think of to make this work would be to re-tenant an existing MHP. Too hard to build from the ground-up. But this would be very hard, too.
    Roberta Eastman Rental Property Investor from Orcutt, CA
    Replied 3 months ago
    I have mobile home park land, with utilities. City willing to help get the utilities back up and running. City water & sewer. Because it was left to be run down, all homes had to be taken out. In order to get it back into a mobile home park, much capital is needed. Which as a real estate investor, specializing in SFH lease options, I don't feel like I have the energy to take it on, on my own. With other investors capital, and without it being 50 homes there would be no way to sell it as an exit strategy. We would have to seller finance. 21st Mortgage determined they were not a valid option for this mobile home development project. Im still on a journey to find the solution for our mobile home development park. I know it could be great! Im also a student of Frank Rolfe. Whom I can say there is no one out there that provides more value than Frank, in his teachings. Mobile home parks are a great opportunity to not only help yourself income wise, its a way to help others own a home and step into home ownership, when they otherwise would not be able to do so. Hope this helps Roberta Eastman
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    Roberta. That sounds like a tough situation... with incredible upside. I was in Alaska recently and stumbled across a guy trying to sell dozens of used mobile homes. Maybe you could find a situation like that... by finding older mobile homes in bulk. Perhaps from a nearby park that is shutting down. Best of luck!
    Maja Sly
    Replied 3 months ago
    This article is so timely. As a real estate broker, investor and builder I’ve seen the opportunity in the market for years, but didn’t act on it. I know the market because I grew up in a mobile home park and have nothing but fond memories as it was not at all what most think. It’s affordable housing and the culture is much different than low-income apartments. Today, I’m super excited as I’ve just acquired my first home and will be redoing a small park in South Georgia. The cost of entry into the market is ideal for investors and the rent roll is 50% more than traditional stick built home. Can’t wait to bring affordable housing to a new area.
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    Maja, That's awesome! I'm so glad you are pursuing this path. You have unique insight into this asset class from your background. And it is wonderful to hear you say you had a great experience there. Some think differently, but my goal in being an investor in this industry is to see it be a win-win for all parties. Keep me informed on your progress!
    NA NA Rental Property Investor from Panama City Beach Fl and Athens, Gaa
    Replied 3 months ago
    Sounds very interesting. I am also an investor in Georgia and Florida, and lived in Albany,GA until fairly recently.
    Frank Mangano
    Replied 3 months ago
    I’m 57 years old, in my teen years my brothers and I helped my father build a park. I lived in it while I was recuperating from an accident and learned the operations in all that extra time. I got my first park by leasing 10 lots back to the seller and filled it up and used it to buy another, and another etc.. I now have 10 mobile home park and one RV park. They range in size from 30 to 240 units. I dominate and control the market in Slidell Louisiana right outside of New Orleans. I was way ahead of Sam and Warren. These parks print money and are recession and pandemic proof. It’s a close call between them and my children as for which I love more, at least that’s what I tell the multiple buyers calling me and trying to buy them on almost a daily basis. Some do the research and offer me between 40 and 50 million dollars for these parks. I wouldn’t sell them for anything above a 4% cap. BTW, If there’s anyone who knows more about Mobile Home Parks than me, I would love to meet them
    Justin Cherrington
    Replied 3 months ago
    Frank, I'm looking at purchasing a small park in Oregon 15 units. Are you open to mentoring a younger investor?
    Elizabeth Zaliagiris
    Replied 3 months ago
    Please share your knowledge. Did you buy the lots of develop them? If you developed them, do you subdivide the land into plots, put in utilities, place a mobile home on each, and rent? Is there a certain mobile home you recommend to put on the land? What is the upkeep? How do you determine the rent charged? How do you screen your renters? Are there substantially more headaches with mobile home parks? Does there need to be specific zoning? I am a female in Claremont, NC. What are your thoughts on me using a piece of land I own to put in mobile homes?
    Christopher Smith Investor from brentwood, california
    Replied 3 months ago
    Warren Buffett also says don't invest in something you don't truly understand and that quality always trump's quantity long term. Additionally, Warren appears not to be involved in the actual operation of these properties, but rather the manufacturing and financing of then, huge, huge difference. I invested very heavily during the housing crises (2010 to 2013) about the time Warren was stepping up his activity in the area. I went north not south by acquiring the best middle class SFR properties (some nearly new) in the best neighborhoods at incredible discounts and wouldn't change that strategy one iota. There maybe impressive profits to be had in trailer park operations but I would assume their are some very impressive risks as well and if you're a novice you're potentially asking for a lot of trouble and grief. So look carefully at what Warren is really involved in, and follow his advice (all of it, not selective parts of it). If you really understand this business in-depth, and you really have the cojones to take it on well good for you then. Just don't jump into the shark pool unless you are a shark, or you will end up a tuna fish sandwich.
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    Christopher. I agree wholeheartedly! I have repeatedly steered investors to get training on whatever asset class they enter, or to be very careful in whoever they choose to invest with passively. Thanks for the comments.
    Michael Rasch Investor
    Replied 3 months ago
    I love MHP, simple reason is that people do know how to take care of their places when the rest of the environment is kept clean and orderly. Back in 1985 got the opportunity to buy into a private group partnership where the yield was about 23% ROI. I got out in 1992 ( I was dumb ). it was a simple business model, keep everything clean. Person dies, tell the estate to remove the home or lowball the home, then rent it after repairs, and keep it going. hire a night watchman and if legal, add a control gate. Simple. I'm thinking everyone is doing it now LOL.
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    Michael, Wow you really were in early. I had a chance to ivnest in the 90s and missed it. It's not too late to be in now, though. Thanks for commenting.
    David A.
    Replied 3 months ago
    What a bright future America is headed to with living in a trailer park being the increasing reality for many across the nation. Some American dream. At least you profit off their misfortune by being a trailer park landlord.
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    David, Amazingly residents of well-run parks are happy to be there. Gary Rivlin, a reporter for the NY Times, set out to expose the industry in 2014. He had already exposed the payday loan business and done stroies showing the evils of other institutions. He moved into a park that was managed by a professional, and to his surprise, everyone he met there was glad to be there. And complimented the owners. Here is an excerpt... But the most striking aspect of their business is how happy their tenants seem to be. A few months after completing Rolfe’s course, I traveled to St. Louis to spend some time in a couple of parks that he and Reynolds own. (They let me choose where I wanted to stay.) To a person, the residents I met declared themselves satisfied with their landlords. A few, like Linda Wright, a former Walmart employee who has lived in the Jeffco Estates trailer park in Arnold, Mo., for the past 47 years, gushed about their ownership. Wright, who was the park manager when Rolfe and Reynolds took over early last spring, said the rutted roads in the park flooded every time it rained. Drug use was rampant, as were fights; the flashing lights from police cars routinely lit up the nights. When Rolfe and Reynolds bought the park, they repaved the streets and fixed the drainage system. They removed the most dilapidated trailers. And despite Wright’s being a thorn in the side of the previous owners, the new owners kept her on as a manager, drawn, Rolfe said, by Wright’s my-way-or-the-highway aggressiveness. “You get with the program in my park,” Wright, a slight, white-haired woman, told me with her arms crossed. “Or you’re out.” Full article: https://www.nytimes.com/2014/03/16/magazine/the-cold-hard-lessons-of-mobile-home-u.html
    Ben Sawyer
    Replied 3 months ago
    It's the conservative American way! Find the best opportunity to extract as much money as you can from the under-educated, low income, low opportunity, no-other-option population. Keep them dumb, unhealthy, and paycheck to paycheck. That's a win-win, right? Affordable housing by definition means there is an opportunity to extract a little more, to the point of unaffordability. Gotta widen that wealth gap at every opportunity!
    Talley Haines
    Replied 3 months ago
    Hey Ben, what is the liberal way?
    Justin Cherrington
    Replied 3 months ago
    Paul, I've been working to put a deal together on a small 15 unit MHP. Sellers want 650K for it, gross rents are $7400 monthly, taxes 4,000 per year and garbage 350/month, and no water sewer bills because its on its own well and septic. The rents are far below market but the homes in the park are late 70's and in very rough condition. I ha very 2 concerns, 1.) How can I live with myself doubling the rent on these elderly people already living in poverty, and 2.) As I am able to get old renters out, how am I going to attract new renters to put their nice new homes next to old dumpy ones?
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    Justin, Thanks or writing. I would never recommend doing a deal where you have to double the rents on elderly poor people. You won't be hapy you did it and you will have a hard time living with yourself. I would run away from the deal unless it works well with modest rent increases. There are enough deals out there. Or you could try to get a better price on this one and not raise the rents more than a "normal" amount. I agree with Gail below.
    Justin Cherrington
    Replied 3 months ago
    Also, any banks that you would recommend to finance these properties. Every bank I've called won't touch them.
    Gail Travers
    Replied 3 months ago
    Justin - as someone who lives in a mobile home park that was purchased by a private equity firm, Sunrise Capital Investors, who jacked up rent the minute they closed on the purchase, I can't imagine how you would live with yourself after screwing over a bunch of elderly, poor people who want to live out their lives in peace. It is a world of pain for everybody.
    Paul Moore Investor from Lynchburg, VA
    Replied 3 months ago
    Thanks Gail. For once we agree! :-) Rob, again, I would not recommend raising rents above a "typical" amount. Just because you can doesn't mean you should.
    Rob NA
    Replied 3 months ago
    When was the last rent increase prior to that? We do all pay taxes that go toward providing Social Security, Medicare, and housing assistance for elderly and poor people. I'm not sure why the expectation that nobody can ever (ever) raise rent on mobile home dwellers. It seems to be a stereotype that all are poor, desperate, and pitiable. In reality, many earn good livings or have incomes more than sufficient to pay the rents, which are frequently a small fraction of what they would otherwise pay for a single-family home or apartment.
    Miranda Paton
    Replied 3 months ago
    Well.... no one said a landlord can "Never" raise rents. Rather, they were warning here about a deal that required *doubling* the rents on people living in sub-standard housing (70s trailer) because that's all they can afford. And last time I checked, all of that tax-payer generosity you speak of hadn't made Social Security an adequate safety net. So the plan of funneling tax payers' money into a landlord's pocket might not work, either.
    Gail Travers
    Replied 3 months ago
    Rent increases were tied to tax increases and other factors and generally occurred every one to two years. The rent increased incrementally, not in one big grab to squeeze as much as one can from a captive audience. No one ever said that rent increases weren't expected or didn't occur.
    Gail Travers
    Replied 3 months ago
    Maybe those who find this "asset class" such a slam dunk ought to consider the message they are peddling. I read and watch the messages on this website and others as well as keep track of the news and advice put by people like Frank Rolfe and Sam Zell. This encouragement of purchasing mobile home parks and immediately raising rent and pushing as much responsibility of the park onto the residents is universal. It encourages predatory behavior. Many people find this investing for passive income repugnant and contributing to both homelessness and a threat to elderly, poor, veterans, disabled, and families as well as all people in this country who have homes in these parks. As Frank Rolfe famously said, there is a lot of money to made off the poor. I know some investors consider themselves the savior of affordable housing but this is simply not true. Buyers beware: residents of mobile home parks are organizing to fight for their homes and to fight politically to prevent investors from raising rents beyond any reasonable amount. In NYS, for example, laws were passed last year to keep rent increases to no more than 3% a year...because it is predatory. Period. I know this will be rebutted with stories of how wonderful parks have improved since they have been purchased. This is not my experience or the experience of anyone I know both in this area and across the country. Also, I know I will be asked why I am even on this site and why I don't just get over it - this is capitalism - deal with it. The reason is this: capitalism does not require bringing people to their knees just to enrich others. You can invest and have integrity, too. You can invest, make money and provide a needed service without contributing to the pain of others.
    Keshia O. New to Real Estate from Irving, TX
    Replied 2 months ago
    Well said Gail. I completely agree. Some of the comments here have been very troubling. This topic can get very complicated but from all I've read recently on this topic there is more than enough room to provide people with a nice affordable place to live decently while still making a profit. Those two things do not have to be mutually exclusive.
    Gail Travers
    Replied 3 months ago
    The Rivlin article is old news. The research has been done. Read the study Manufactured Insecurity written by Dr. Esther Sullivan. You will learn about the real price this country is paying for greed - corporate and otherwise.