Why are we investing in Mobile Home Parks?
Our Story

I often get asked why in the world I invest in mobile home parks

Here is our story:

I used to max out my 401k each year and was wholly invested in the stock market. I would spend hours choosing the right combination of value funds and growth funds to come up with the proper allocation splits that made me feel as if I made a good investment decision.

But one day, it just hit me. I didn’t know the fund managers, when they were buying and selling stocks or why they were buying and selling them. I didn’t know if the various mutual funds I owned actually owned the same stocks on the back end. And that’s when I started to look at different ways I could invest my money. 

The average US savings rate is .04% which is significantly lower than the inflation rate, so keeping my money in a savings account clearly wasn’t the right idea. 

Obviously, the stock market is very volatile. As we all know, the single-family housing market can be volatile as well. In 2010 during the great recession, 4% of residential loans backed by the government (Freddie/Fannie) were delinquent. That’s a staggering amount. By comparison, multifamily loans were only .4% delinquent.

Mobile home parks specifically are in high demand since they are affordable low-income housing. In case of a recession, affordable homes are actually in higher demand than during times of economic prosperity.

We also have a major shortage in the US regarding the number of affordable homes available compared to the number of families who need them. 

The value of hard assets compared to stocks is also appealing. Mobile home parks are valued based on the land and the improvements to that land like sewers, roads, and water lines. The value of the land simply will not go to 0 as a stock can.  

The returns on mobile home parks, in general, are phenomenal; it is very reasonable to expect 10% or higher cash on cash returns. The interest you receive on lending your money is truly phenomenal and doesn’t even account for the tax benefits such as depreciation. Often real estate investments result in a paper loss for tax purposes while still generating positive cash flow. Of course, everybody’s situation is different, so talk to your CPA about this!

Maybe like you, I’m the one who makes the financial decisions for our family, and when I was looking at the options years ago, it really just clicked to me that real estate was the right place to be. It just made sense for my family, and what we were we were looking for.

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