For some time, manufactured housing or mobile homes have been branded with some stigma. From the stereotypes that accompany terms such as “trailer parks,” manufactured housing has often had a bad reputation. However, in recent years, many investors have found manufactured housing to be an excellent investment opportunity. In fact, as written in a recent article for the Wall Street Journal by Ryan Dezember, it’s been “one of the best performing investments since last decade’s housing crash.”
There are numerous factors, it seems, that make such assets valuable. Occupancy rates run high in most well managed communities. Despite the name, trailer park or mobile home park, moving these residences is difficult and expensive. Older homes might even fall apart if hoisted on the back of a truck. And, as we see in Multi-Family and Senior Housing Housing, it’s another way to slice your allocation pie with a demographic knife.
Over the course of the next two decades, the number of baby-boomers who are retired is projected to increase dramatically. There is already a high demand for attractive senior housing options which won’t fully mature for another 20 years, and manufactured housing provides a great opportunity for investors and retirees alike. Manufactured homes are often more affordable than alternative options, and because they are commonly arranged in groups, they present opportunities for retirees to live among other aging individuals, satisfying the need for kinship and community, and opportunities for Operators to cross sell services in their communities thus adding to the bottom line for investors.
In addition to the elderly demographic, manufactured housing also appeals to millennials and younger families. With the cost of buying a home gradually becoming less affordable, young adults have begun to seek out alternative paths. Manufactured housing presents an affordable, convenient option. Lots that feature manufactured homes are also developing into micro-neighborhoods by featuring fitness centers, parks, and more, making manufactured homes more appealing beyond the affordability.
When individuals move into a manufactured home, they are typically aiming to remain in the same location for some time. This means that investors who get involved in manufactured housing deals can ensure that their income is consistent and sufficient over time.
Manufactured housing communities that border urban areas can also be redeveloped should the neighboring city wish to expand. This means that investors can comfortably invest in manufactured housing knowing that they have options should the opportunity arise, allowing them to profit off their investment in different ways. Naturally, this practice has been met with some hesitance and criticism when it comes to residents; in many regions, zoning ordinances have been altered to require landowners to give sufficient notice to residents prior to redevelopment in order to protect their rights and livelihood.
While manufactured housing might have been snubbed by some investors, there is a long list well-healed funds racking up impressive gains and signalling an appetite for me including, Sun Communities Inc, Sam Zell’s Equity LifeStyle Properties, and Inland Real Estate Investment Corporation, who all believe the changing tides of societal demands are making these communities a worthwhile investment. As with all real estate investments, manufactured housing is still subject to market fluctuation, but it seems unlikely that the demand for affordable housing will go away anytime soon.