Was doing some research on the viability of mobile park homes for CRE investment, and was curious to see if anyone else has operating experience within this asset class. My big takeaways/supporting thesis for the strategy:
- Low competition from institutional buyers
- Outsized tax benefits from depreciation in comparison to other commercial properties like retail, multi as a far greater amount of depreciable value is allocated towards improvements (15 year) vs structure (39 year)
- High cap rates (most of what I see from brokers are +9%)
- Aging U.S population in the Sun Belt, more recession resistant
- Very low operating costs
Curious to hear other's thoughts. Would only considering larger parks with 40+ lots. Do I have something here?
I'm pretty sure there are 2-5 big players that own and then operate under other entities the MHC. As well as I'm pretty sure Bershire Hathaway bought the largest MHC developer.
But I've looked at a couple of borrowers on the smaller family-owned shops looking to borrow and the profitability is there and profit margins are awesome. However many did take a hit during the pandemic as it became far harder to evict/foreclose on the actual units. As well as recently I know insurance skyrocketed when FEMA flood insurance stopped covering large swaths of them.
The money is there as is the headache, they are not fully recession proof as the ones that are rentals on both the slab/park and the unit are low income driven not senior driven, therefor usually people that are effected the longest and greatest by a recession. So focus on owning the slab only and the elderly snowbirds buy the actual home.
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