Home News Corporate landlords like Blackstone are gobbling up mobile home parks and rapidly driving up rents — here’s why the space is so attractive to them

Corporate landlords like Blackstone are gobbling up mobile home parks and rapidly driving up rents — here’s why the space is so attractive to them

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Corporate landlords like Blackstone are devouring mobile home parks and driving up rents.

The search for yield has forced private equity firms and professional investors into new segments of the real estate market.

In recent years, sophisticated investors have been buying multifamily and single-family homes. Now, corporate landlords are targeting the most cost-effective segment of the real estate market, the mobile home his park.

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most affordable housing available

Manufactured or mobile homes are considered America’s most affordable unsubsidized housing options. This is because the owner only owns his unit which is prefabricated and does not own the land under the house. Land is usually rented from trailer park landlords.

Average monthly rent for mobile homes in 2021 was $593. That’s well below the average one-bedroom condo rent of $1,450. Mobile park rentals often include utilities and insurance.

Rents typically increase by 4% to 6% each year, and renters have the flexibility to move housing units to another park. These factors make manufactured homes very attractive to low-income households.

As of 2020, approximately 22 million Americans live in mobile homes. That’s her 6.7% of the total population, or her 1 in 15 nationwide. However, the economic inefficiencies that make these manufactured homes affordable make them attractive. professional investor.

Investing in a mobile home park

Factors such as below-market rents and disrepair make mobile home parks attractive to investors looking for added value. A typical mobile home parking lot costs $10,000, which means his 80 lots are worth an average of $800,000.

Simply put, admission to these parks is much lower than apartments and condominiums across the country.

Professional investors can also significantly increase rents to improve property valuations. Attracting high-income tenants and improving park amenities and infrastructure are also value-add strategies that make this asset class attractive.

The fact that a typical mobile home moving cost is between $3,000 and $10,000 also means most tenants can’t afford to move. This gives landlords immense pricing power.

Meanwhile, the yield will be much higher. According to his real estate partners Dave Reynolds and his Frank Rolfe, the capitalization ratio (ratio of net operating income to market value) could be as high as 9% for him.

Mobile Park’s largest landlord is real estate veteran Sam Zell. Zell’s Equity LifeStyle Properties (ELS) owns 165,000 units of his across the country, and assets are a key component of his $5.4 billion fortune.

In recent years, large investors such as Singapore’s sovereign wealth fund GIC and private equity firms such as The Carlyle Group, Brookfield, Blackstone and Apollo have also added exposure to this asset class.

Warren Buffett is also involved. His company’s subsidiary, He Clayton Homes, is the largest mobile home manufacturer in the United States, and also operates two of his largest mobile home lenders, 21st Mortgage Corp. and Vanderbilt Mortgage.

you can invest

Individual investors looking for exposure to mobile home parks should plenty of optionsAcquiring a park is probably the easiest way to access this asset class. However, listed stocks and real estate investment trusts also offer exposure.

Sam Zell’s Equity LifeStyle Properties is listed on the New York Stock Exchange under the ticker ELS. Sun Communities Inc. (SUI) owns his 146,000 units in the United States and Canada, and Legacy Housing Corp. (LEGH) builds, sells and finances manufacturing homes.

Individuals and institutional investors may benefit more from this segment as economic inefficiencies are eliminated.

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This article is for informational purposes only and should not be construed as advice. It is provided without warranty of any kind.

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