Bad Times Are When Fortunes Are Made

Industrialist Andrew Carnegie once said “problems are only opportunities in work clothes”. And J. Paul Getty, the nation’s richest person during the 1950s and 1960s, held the belief that depressions were a great time to make acquisitions and to refine business operations – he, in fact, was only happy when times were bad. Throughout American history, most fortunes were built upon the bedrock of times of economic collapse, when values were lower, distractions few, and the fundamentals of business were easier to enact.

Good economic times make buying mobile home parks harder

Perhaps the most difficult time in American history to buy mobile home parks was the period from around 2002 to 2006. Cap rates were lower than interest rates in many cases, and lumbering giants like ARC bid deals into the stratosphere on flawed economics and diligence (ARC later collapsed). The nation was locked into a faulty mindset that “a rising tide raises all ships” and buyers felt that there would never be a reckoning with values advancing far faster than rents and income would justify. During this period sensible buyers were aghast at most offerings as well as the complete lack of common sense their fellow buyers were demonstrating. The lending mindset of zero down and no income documentation didn’t help much either.

Depressions create opportunity

That same tide of economic prosperity at some point recedes. And “when the tide goes out you get to see who’s been swimming naked” they say. Economic decline ushers in a new era of buying opportunity. Most Americans invest in a “herd” mentality where they want to follow what everyone else is doing, and this lack of individualism only leads to pointless returns and losses. In bad times, the key is to venture out where others are retreating. As Sam Zell – the largest owner of mobile home parks in the U.S. -- says “when everyone is looking left, look right”. And with the unrealistic environment of “the sky’s the future” punctured, smart buyers can get back to business.

The key is to know what you’re doing

If you want to prepare for making good buys during this window of opportunity you have to know what you’re doing. The only way you can garner the confidence to make investments when everyone in the media is saying that the world is ending is to believe in yourself. And that requires putting in the effort to actually know what is a deal from what is not, as well as what the drivers are to profitability and the pitfalls to avoid or mitigate the risk from. When you know enough to break down any deal into the subcategories of infrastructure, density, economics, age of homes and location (the I-D-E-A-L system), then you can make fast and correct decisions.

And to have a financing plan

The other key component to buying during economic recessions is to have a source of financing. Fortunately, the mobile home park industry has benefitted from being in the affordable housing sector, which is an “essential” industry and one that most lenders have not retreated from. Only CMBS “conduit” lenders have scaled back at this point. That leaves seller financing, bank financing, and Fannie Mae/Freddie Mac “agency” debt as the three key options. And all are still in busines and making loans. Better yet, of these three options, two are non-recourse.

Look no further than Sam Zell

Sam Zell has been called the “grave dancer” due to his knack in buying aggressively in recessions, riding the assets up as the economy rebounds. Zell is also the largest owner of mobile home parks in the U.S. with over 160,000 lots in his ELS portfolio. We also share in that philosophy, having been one of America’s most aggressive buyers of mobile home parks during the period following the 2007 Great Recession. We believe that there is historical precedent in the successful business strategy of buying during bad times and in industries that are not on the public’s radar screen.


If you think that the Covid-19 America is one of continual economic decline, then that might be the perfect opportunity to consider mobile home park investing. It’s a contrarian investment that offers high rates of return with a product that’s virtually recession-proof.

Frank Rolfe
Frank Rolfe has been an investor in mobile home parks for almost 30 years, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with around 20,000 lots spread out over 25 states. Along the way, Frank began writing about the industry, and his books, coupled with those of his partner Dave Reynolds, evolved into a course and boot camp on mobile home park investing that has become the leader in this niche of commercial real estate.