Once upon a time, a mobile home dealer named Jim Clayton, frustrated by look-alike mobile homes, decided he could do better and opened a little factory to produce innovative mobile homes. Or tried to, before learning how difficult that task would prove to be. Clayton became very successful, but his homes look just like the competition. Innovation is hard.

Six years ago, the transmission went out in my aging GMC Yukon. It had about a billion miles on it and The Blue Book Value was around $2.75. It made no sense to fix it as it was not worth the cost. So I moved on and found another used GMC Yukon. After six hard years and multiple crossings of the continent, the head gasket blew on my second GMC Yukon.

Many Americans were surprised when it was announced that Mark Cuban’s crypto bet that he’d been hawking for months had collapsed. But the bigger question would tie to one of Mark Cuban’s recent quoteas to what makes an investment have inherent value:

There’s one unique type of deal that is only perhaps found in the mobile home park sector: the “zero down”. We’ve done 12 of these over the past 25 years, but have also done deals with 2.5%, 5%, 10% as well as other low-down payment amounts. In fact, there’s a general assumption that “zero down” and other “low down” constructions can cure all ills with any mobile home park purchases. But is that really true? Let’s examine the facts.

There’s nothing more American than baseball, hot dogs, apple pie … and mobile homes? It’s true. There is no more “American” form of housing than the good old trailer park. How did that happen and why are so few people aware of this fact?

So what can you do to find a good investment “storm shelter” for this high-odds occurrence? One good option is buying a mobile home park.

In 1996 I ventured into the mobile home park business with my first buy being a dilapidated old mobile home park built in 1951 called Glenhaven. I knew nothing about what I was buying or how it operated.

The Wall Street Journal recently released an article touting a grassroots movement for rent control. It cites that U.S. rents are up 18% on average in some markets as the catalyst to a new world order in which rents are set by state government. So how realistic is the concept of rent control in the markets that have not embraced it over the past 100 years? There’s a lot more math to this issue than what the Wall Street Journal released to readers.

As an economics major from Stanford, the fist lesson learned is that markets move in cycles. But even an Uber driver summed up the main lesson in a recent cab ride:

There are around 44,000 mobile home parks in the U.S., with roughly 40,000 of those still owned by the original moms and pops. It is the challenge – and opportunity – of the current generation to bring these selectively back to life. Some qualify for investment and others don’t, but the trick is understanding what makes money and what’s hopeless and following established guidelines for making them successful again. The photo above is from the 1955 book titled “How to Build and Operate a Mobile Home Park” and, as virtually all mobile home parks in the U.S. were built between 1950 and 1970, the photo above represents the “before” shot for many of these investment projects. So how do you create the successful colorized “after” photos?

The sudden rise in inflation to levels not seen in 40 years has changed the playing field for successful investments. Americans have become accustomed to inflation rates of 1% to 2%, and therefore tolerated investment returns that were only mid-single digits in everything from stocks to bonds. Even those who ventured into real estate often did so with REIT dividends of around 4%.

One of the most common questions we get regarding buying mobile home parks is “can you make $100,000 per year on a single asset?” This is understandable as most investors are looking at alternative investing to do what the stock market fails at, and that’s to provide predictable and significant cash flow on a recurring basis. With the average dividend yielding around 2.5%, you would need $4 million in stocks to accomplish this. And to own $4 million in stocks you’d have to earn around $8 million pre-tax. That’s not much of a business model. So here’s why mobile home parks can hit this target, but based on complete science and not a “get rich quick” infomercial premise.

The Holiday season invariably includes mobile home fires. Not necessarily in your park. Maybe only once a decade, if ever. But there’s no question that fires occur in mobile home parks more frequently in winter than summer.

Amazon has become one of the gold standards for the modern stock market investor, who marvels at their retail dominance and future-thinking. But how does Amazon stock actually compare to an investment of the same amount in a mobile home park? Here’s how it stacks up.

We all know that Zell’s REIT Equity Lifestyle is the largest mobile home park owner in the U.S. with over 160,000 lots. But now he appears to be investing in the macro industry itself. Sam Zell has announced that he is buying MHVillage (the largest website selling mobile homes) and Datacomp (who supplies mobile home park market data) https://therealdeal.com/texas/2022/01/26/sam-zells-equity-lifestyle-properties-invests-147m-in-manufactured-homes/. What does this mean for the mobile home park industry?

The #1 American fear is public speaking, followed by snakes.

A recent article in Realtor.com is forcing those who criticized mobile homes as investments for consumers to eat their words

There are only around 44,000 mobile home parks in the U.S. – and that number is set in stone with roughly ten times more torn down each year than built new. Of that number, around 4,000 are owned by professional investors, leaving about 40,000 up for grabs. What are you doing to buy your fair share of these properties – and why bother?

There are two simple facts in the American economy right now. They are somewhat tied together, but not entirely.

Mark Cuban recently bought a mobile home park and a strip club in a town called Mustang, Texas

In 2014 I helped a Bloomberg reporter write a story on the mobile home park industry by answering their questions.

About a decade ago I was at a mobile home park industry conference where a speaker gave a report on why single-family homes in the U.S. cannot be built at an affordable price. The reason was the high price of residential lots in most American cities, which average around $80,000 each. When you add the price of the home, the speaker remarked, there’s no way that even a small home could possibly go up for less than $150,000 or so. Recently a non-profit in Florida tried this unsuccessful strategy again and ended up with 900 square foot homes for over $200,000 https://www.msn.com/en-us/money/realestate/new-affordable-housing-ends-up-more-expensive-than-some-expected/ar-AAO2ryJ which they claim was partially caused by lumber price increases as a result of the pandemic. But it all simply points out that the mobile home park “moat” of affordable detached dwellings cannot be breached in a modern America.

One of the big attractions to owning mobile home parks is their very passive nature. You rent land and you collect rent. There’s no toilets to fix and no units to show. But even with a simple business model, complications grow as your holdings do, and many owners prefer to keep their involvement in day-to-day activities at a minimum. So how can you keep your mobile home park investing passive even as your holdings grow in size?

America is a rapidly changing market when it comes to housing. And it’s essential that you stay on the right side of the “megatrends” since these are what propel your investment forward. With the landmark events since March 2020 – and particularly the change in administration from Trump to Biden – some of the key drivers to success have materially changed and these should be noted and considered. And the net effect would appear to greatly favor investing in small town mobile home parks and avoiding opportunity zone options. Here’s four big reasons why.

He may be able to launch cargo into space and invent the electric car industry, but Elon Musk is not always thinking big – at least not when it comes to his housing. Musk, a billionaire, is currently living in a $49,500 “Casita” made by Boxabl, which is a 375 square foot tiny home. So how will tiny living by Musk translate into mobile home park industry success?