Why Investors Love Mobile Home Parks

Once stereotyped as “trailer parks”, mobile home parks are now one of the most sought after real estate investments.

Initially built during in the Great Depression, trailer parks were the only affordable housing option many Americans could afford. Historically, trailer parks were associated with the worst aspects of hard times and continued to be a target for negative public perception for decades.

That stereotype has changed and mobile home parks have now become the favored real estate investment for the some of America’s largest firms. In this article, we will explore why.

Real Estate

Historically, real estate has been attractive to investors due to low correlation with other investments and as a hedge against inflation. Also, as a tangible asset, real estate can be leveraged and produce passive income, along with favorable tax advantages.

While most real estate assets have similar qualities, mobile home parks are a unique asset that can provide even greater benefits to investors, while being a safe haven through a market correction and times of recession.

Intrinsic Qualities of MHPs

The unique characteristics of mobile home parks (MHPs) cause them to be uncorrelated with the markets, the economy, and the performance of other real estate, making them one of the few investments that can truly weather a recession.

Because of their intrinsic qualities, mobile home parks can provide a dividend to investors during the most difficult times and shield them from any loss they would’ve been exposed to with other investments.

The top characteristics investors love about mobile home parks:

• Capital Preservation – Due to stable cash flow and ability to weather a recession, MHPs are considered a defensive, low-risk strategy and a top choice for capital preservation.
• Tax Benefits – MHPs are highly tax efficient and produce substantially more tax benefit than other real estate.
• Consistent Income Growth – MHPs are largely free of the volatility that plagues other real estate, and therefore more predictable, with stable cash flow.
  
• Perpetual High Demand – The demand for affordable housing is higher than ever. MHPs offer the only truly affordable solution, in all phases of the economic cycle.
• Shrinking Supply – Due to redevelopment of older parks and zoning restrictions that prevent new parks from being built, there is a declining supply of MHPs.
  
• Institutional Audience at Exit – The largest MHP firms in the nation compete to grow their portfolio, knowing the window to acquire quality assets is closing.
  

Summary

Mobile home parks are easy to love for all their intrinsic qualities, but the primary reason why investors seek exposure to this asset is because of their ability to preserve capital though all phases of the business cycle. An investment in a mobile home parks is a top recession resilient strategy for those who have the foresight to invest before times get tough.

This content is the perspective of the author and is not intended to be relied upon as a forecast, recommendation or investment advice, and is not an offer or solicitation to buy any securities or to adopt any investment strategy. The information and opinions contained in this content are derived from experience, historic data, and other sources deemed to be reliable, are as of the date of this content, and may change as subsequent conditions vary.