Author Topic: Mobile Homes  (Read 2026 times)

Williams406

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Re: Mobile Homes
« Reply #10 on: February 19, 2020, 06:09:38 PM »
cap rates have come down a lot on mobile home parks over the past 3-5 years like most other assets. Ick factor does keep people away, but high-enough cash on cash returns has attracted new owners. I like the asset class. It is typically the cheapest housing available to people in a given area, which means your tenants are living on life's economic margins in many cases. Will be interesting to see what happens to economics if we get a downturn.


Cardboard

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Re: Mobile Homes
« Reply #11 on: February 19, 2020, 07:14:36 PM »
You are totally correct Gregmal. As usual... You can make great money with these things in places like Florida where snowbirds like to spend the winter without having to pay for a full size home.

Money is often asked upfront and rent runs quite high vs size/cost of property. Often they pay for 12 months while they only stay for max 6 as they have to return or like in Canada in order not to lose their health insurance.





Packer16

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Re: Mobile Homes
« Reply #12 on: February 19, 2020, 09:12:24 PM »
There are 3 publicly traded mobile home REITs (ELS, SUI & UMH).  These are all trading a pretty high AFFO multiples and their favorable economics is reflected in the AFFO multiples.

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cherzeca

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Re: Mobile Homes
« Reply #13 on: February 19, 2020, 09:16:53 PM »
my 2 cents. had a relative who did quite well buying apartment complexes in areas and of a type where people were saving to buy their own homes.  coral gables Florida for example.  he seemed to understand the demographic/tenant pool, and this resulted in a creditworthy tenant population (and rents rising at least with inflation) I just dont know if mobile housing is a step to somewhere or a dead end, and if a dead end, then you have credit issues. I just think you have to know the tenant population very well in an asset class like this

Spekulatius

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Re: Mobile Homes
« Reply #14 on: February 20, 2020, 04:10:40 AM »
I listened to a podcast a while ago, but forgot the source. The risk is that if you buy into a dumpy Park, the tenants may just leave and leave dumpy trailers behind that may be costly to remove and discard.

Tenant selection is always critical when renting, but the further down in quality and creditworthiness you go, the more important it gets. A good friend of ours also rents lower end and section 8 housing in a town nearby at double digit cap rates. he has done this for a long time and tried lots of different things (pool halls etc) and has good results with south East Asian immigrants (Vietnamese, Cambodia)  which have sort of a local community there and while they often have no credit, they have cash.

He does put a lot of work into this, so it is really a second job for him and after doing this a long time, he is scaling back. I wanted to pick his brain a bit more, but I think a lot of his ‘excess’ returns just come from hard work and somewhat  painfully gained experience.
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DeepSouth

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Re: Mobile Homes
« Reply #15 on: February 20, 2020, 07:45:34 AM »
Similar to macro cell towers, junkyards, and landfills, mobile home parks have very high barriers to entry from NIMBY zoning creating strong long term pricing power. As lower cost residencies, they offer some counter cyclical benefits. They are also very low opex and capex assets creating very high FCF conversion.

cherzeca

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