Why Manufactured Housing Communities
The “tenant owned” model (the tenant owns the home, and the operator owns the land) allows for lower operating costs than apartments or other multi-family assets because you do not have the added cost of fixing the structure. In turn, you have higher yields and higher cash on cash returns.
With very few new manufactured housing communities being built annually and a significant number of parks being redeveloped for other use, there is a net decrease of parks each year. The contracting supply and increasing demand for affordable housing will move the price of this asset class up.
Institutional players own less than 3% of the total market. This means the market is highly fragmented. Operators can buy in scale with significant upside, consolidating smaller operations that are poorly managed. Manufactured housing communities are the only remaining multi-family asset with little to no consolidation.
Manufactured Housing has a very poor stigma country wide and this allows the asset class to deliver higher yields than other multi-family assets even though the returns are just as safe.