Mobile Home Park Mastery: Episode 200

Our 200th Episode Celebration Special

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It’s hard to believe that it’s been over four years since we started the Mobile Home Park Mastery podcast. If you linked all those episodes end to end it would last almost 35 hours. So to celebrate our Bicentennial we’ve selected the five top most-viewed episodes and we’re going to discuss how those topics have changed over the course of these broadcasts. And we want to take this opportunity to thank everyone who has enjoyed our thoughts and commentary on the mobile home park industry. We look forward to sharing the next 200 episodes with you!

Episode 200: Our 200th Episode Celebration Special Transcript

I never dreamed we'd get to 200 podcasts. In fact I never really thought much of podcasts at all to begin with. This is Frank Rolfe, the Mobile Home Park Mastery podcast. We're talking about the fact that with this podcast we have hit our 200th anniversary.

It's been a very, very long path. You have no idea how much time it takes for me to come up with the topics and write the podcast before I can record them. Those 200 podcasts linked end to end are about 2,000 minutes roughly in length. But it took me about 200 hours to prepare them. Was it worth the effort? I think so. I found from doing the podcast I really enjoy this. I really like telling people my opinions in what I see going on in the mobile home park industry. Based on the feedback, people like to hear it. So we're going to continue on. We're going to go another 200 podcasts and beyond. But I thought it'd be interesting on this bicentennial podcast to go over the top five topics, the most listened to podcasts we have done so far to date, to revisit them and see what has changed since we talked about them the last time.

The first most popular podcast was titled Why Invest in Mobile Home Parks. Of course the reasons I gave you back then are pretty much the same today. Obviously we love that giant moat, as Warren Buffett would call it, the fact you can't build any new mobile home parks and you haven't for half a century. The fact that customers really can't afford to ever move their homes because it costs about $5,000 to move one so our customer base is very, very stable. We love the fact that we fit all the mega trends of affordable housing, 10,000 baby boomers retiring per day. Now, the new concepts are the general flight of people from urban markets to suburban and exurban where most of the mobile home parks are located at. But I would tell you there's even more reasons today to buy mobile home parks than ever before.

As we all know, back in 2020 the nation fell victim to something called the COVID-19 pandemic and it proved the weakness in a lot of different real estate formats. Our friends in the office sector, the lodging sector, the retail sector, they've all been ruined. People are unlikely to ever forget what happened. I don’t' think you'll ever see lenders as excited about making that loan on that shopping center, knowing that if we should ever have another major pandemic the center will lose all of its tenants once again. So mobile home parks are really now in my opinion a race into the top. It's strange how we got there, certainly never planned, no one saw it on the horizon. But we all learned from the pandemic that you want to be in essential businesses. Housing is essential. But on top of that, you want to be in a central business that are affordable no matter what really happens in the American economy, which mobile home parks is the least expensive form of detached housing de finitely met that bill.

The next most listened to podcast we had was the Mathematics of Mobile Home Parks. So what's that changed much? Well it has in some ways. In the roughly four years we've been doing this podcast, we have seen CAP rates go down a tad. Of course, they're not down to dangerous levels, but what you're seeing is that buyers are harnessing and embracing the thought of raising rents more than they ever have before. Because the very topic I've been writing about for about a decade now has finally been hammered home to almost everyone, which is that mobile home park lot rents are ridiculously, stupidly low. Over $1,000 a month lower typically in most markets than apartments, even though we have the better product. We have a detached dwelling, no one knocking on your walls, on your ceiling. Parking by your front door, having your own hard, being a home owner, having a sense of community from people that stick around, that aren't transient. There's no reason that mobile home and mobile home parks should be lower in cost than apartments, and certainly not $1,000 a month. Our average lot rent in America is about $280 a month. If you inflation adjust it from when these parks were built back in the 50s and 60s, it should be $500. Everyone now realizes it's going to $500.

Throughout America, it's not just the large urban markets that are seeing rents now in the $500 plus category. It's creeping up that way everywhere, and rightly it should, and it will continue. A lot of park buyers now that they've realized their rents are crazy low and going to go up substantially, they're willing to pay a lower CAP rate because they're valuing these parks not on day one CAP rate, but on day 90 CAP rate, what happens after they do that first rent raise, or maybe the second, or maybe the third. Also, CAP rates reflect interest rates which have remained the lowest in American history. I don't see a lot changing in the math of mobile home parks. Your cost line items still are roughly the same. The only rate you can really count is the real property rent, which is lot rent never home rent. But I think you're seeing people finally coming to terms with the fact this industry, as far as rents go, has more rent growth potential than any other.

The third most listened to podcast was about industry Consolidation. People are very fascinated with this. It started about five years now ago, which you had three $1 billion plus sales in one year. Now, what did it all mean? Well, when groups like GIC bought Yes Communities, that's a sovereign nation fund of Singapore, what they were really saying is we really believe in this industry. It wasn't speculation, it was income based. What had happened was finally for the first time large private equity groups like Carlisle, they had seen mobile home parks on the radar screen and they became more and more excited about it. Now it hasn't been a tidal wave of consolidation, but it's definitely been a fairly big issue and pretty big timely item. The reason I think most people are interested in it is it's not only an affirmation of value when you have something and then suddenly everyone in the world is interested in it, and is willing to pay perhaps more than you would pay, it makes you feel kind of smart you were involved in it before anyone figured it out. Also, what you have is a lot of private equity groups have realized, particularly post pandemic, that most of the other real estate sectors aren't that great. So you're still going to see a lot more industry consolidation going forward. Now right now it's very small. Of the 44,000 mobile home parks in the US, maybe 4,000 of those have been consolidated. So about 90% are still fair game. But I think you'll see that ramping up in the years ahead. We just don't know when.

Now, of course there's some negative optics to be in a mobile home park that we all know. Elizabeth Warren tried to hammer that to embarrass those private equity groups back when she was running for president. She saw it as a PR opportunity to send a letter to all of them, and the media, demanding that they be nicer people and stop raising rents, and stop trying to make money. It's a narrative that didn't go very well  with most people, and obviously didn't work for her very well in the polls, but nevertheless that kind of strange socialist versus capitalist cage fight narrative has definitely dampened consolidation over what it would be in other real estate sectors that don't share that kind of negative stereotype. But nevertheless it's waiting in the wings. What will trigger it? There's been some discussion that at least maybe one of these private equity groups who have substantial mobile home park holdings will at some point go public. I think that would be a huge driver. I think the addition of one more public read in our space, right now there's only three - ELS, Sun, and UMH - but the concept of a fourth and the media that would bring would probably trigger a lot more consolidation.

Now consolidation is great if you already own a mobile home park. That just makes your values go up. The good news though for people getting in, those private equity groups are not going to be buying the kind of park you're looking at buying probably. They buy only really the big stuff, more the glamour stuff. So it really shouldn't impact your ability to buy. But what it showed you is give you greater affirmation of what happens when you want to sell.

Fourth most listened to podcast we've done was The History of Mobile Home Parks. The only thing I can tell you on that which has changed over the past four years is we are definitely currently making history. The rise of the mobile home park in stature following the pandemic is truly remarkable, and something I never thought I would see. I never imagined that we would close most American restaurants and stores, and do all the other odd things that occurred, but it has now weakened so structurally these other asset classes that it has elevated us to a level of prominence I never thought possible. So even when I started doing podcasting four years ago, and I talked about the history of how we started as a luxury industry that then became more of an affordable product, I never dreamed that all our competition would all get summarily thrown off a cliff thanks to the pandemic. So really right now you really have history in the making in our industry. I think people will look back on this era and really consider that the new golden age of mobile home parks. There will be more fortunes made in our industry starting now than there ever were in the past.

Finally, the most talked about, the most listened to podcast in fifth position, The Future of Mobile Home Parks. This is again a topic that most people find very interesting, because I just don't think that the current mobile home product is the best that it can be. Yes, I agree with them, I don't think so either. I've looked at the prototypes built by Frank Lloyd Wright, Raymond Loewy, other famous industrial designers and architects of the past, and I also see the things on the cover of Dwell Magazine and I see the things on HGTV, and I say man those look so much better than modern mobile homes. Can't we get there? I think the answer is eventually that we will. I don't know when. Perhaps as lot rents increase and the industry gains in stature, manufacturers and others will look at the product from a fresh perspective. The interiors are just fine, it's just the exteriors that bug me. But I also even wonder beyond that is the very way mobile homes built really the future? One day will we see instead these 3D printed homes like they currently have in other European countries, see those on our lots? Will we see things that greatly resemble tiny homes with those same materials and attention to detail start arising in mobile home parks? It'll take years and years to happen. We'll have to see a significant shift in our customer base. We'll have to see a customer base that's more fluid that can afford those higher price points and cover those kinds of mortgages. But I definitely believe that the mobile home park will still exist 100, 200, 300 years from now.

I'm not convinced, however, that it will look the same as it does currently. If you look back at old postcards, which I buy a lot of them on Etsy and eBay, of mobile home parks back in the 50s and the 60s, they look nothing like the parks today. In every case, the parks today look so much better. Those glamour postcard shots that they shot of those properties back then, look at those things. At their all time best they weren't even a fraction as attractive as the current mobile home parks are. But I still think they can be better. I still have to imagine they'll look back 100 years from now at our post cards, our photographs, and say, "Man, our stuff today is so much more attractive." And I think that's great for the industry.

I think it also leads to the final thought I would give you, which is the one thing I've seen more than anything else over the last four years change, and that's the stigma on the industry. It's starting to erode. It already had eroded in a lot of your northern states. But just the public sentiment towards mobile home parks I see changing. Fortunately we're spared all the negative TV shows like Trailer Park Boys and Myrtle Manor, the movie 8 Mile. Those are now in the past. Many young people have never seen those items. And unless America's comedy team wants to go back to doing nasty shows and movies portraying mobile home parks in a very unseemly and unfair light, I don't think you're going to see people with that much negativity again. As a result, I think we can have a much happier, healthier industry, free from that stigma which is great for all of our residents so they can have a much higher quality of life. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Thank you for joining us for these last 200 episodes, and we look forward to bringing you hundreds more in the future.