It’s not hard to find a headline that supports the growth in demand for the affordable housing industry. On the radio a couple days ago, we heard a new report that 1 in 6 Americans lives at or below the poverty line. Another headline declared that there are 50 million Americans on food stamps. And the potential shut down of the U.S. government via “Sequestration” looms any minute now, setting off the economic implosion of around 700,000 government workers, unemployment for another 50,000 part-time government workers, and a potential plunge into recession for everyone else. So when will there be good news again? The truth is that all of the above is GOOD NEWS if you own mobile home parks. It sounds terrible, but that’s the way it really is. Our industry is based on serving the bottom of the housing food chain. As that demographic grows, so does our demand and ability to push occupancy and rents. That’s the beauty of being in a contrarian industry such as affordable housing.
Memo From Frank & Dave
Filling Your Vacant Lots Just Got Easier With The Legacy Park Finance Program
Most mobile home park operators have vacant lots to fill in their parks. They know they have the demand to fill the homes, and they know that they can get enough in rent to cover the costs. But the problem is financing – nobody carries the paper on the homes so you have to come out of pocket 100%, right? Well, that’s not the case anymore. Legacy Homes has brought out a new Park Finance Program that allows you to buy homes to fill your lots directly from Legacy, and they’ll finance 70% of the cost of the home including installation. We think that this will be a game changer for many operators, as they have been dreaming of a dependable financing source for their home purchases. And the Legacy product is outstanding as a home – nice floor plans, attractive colors, and great low pricing. We have been customers of this program from day one, and are excited that Legacy is now offering this program to all park owners, large and small. If you are interested in it, call Mark Ledet at Legacy at (786) 785- 9827, or contact us for a reference. We’re one of their largest customers.
Why Mobile Home Parks Deliver Affordable Housing Better Than Their Peers
Everyone should be very aware at this point that the U.S. economy is going down the tubes. You have to search hard to find a single headline that would support optimism. Most of the “up-beat” articles are on topics like companies that did not have as big a loss as they expected, or were able to beat analysts’ predictions by lasting several more months before going bankrupt. If the U.S. economy is on the road to affluence like the President tells us, then we must be missing something. All we see is doom and gloom. And who is the Lebron James of doom and gloom housing? Who can put a roof over the head of folks who can’t afford more than $500 per month, better than anyone else? Who is the “affordable housing king”? Mobile home parks, of course. But why is that?
Built to be cheap
Since 1976, the mobile home has been supervised by HUD. And the premise was to keep it as cheap as possible. While apartments and single-family homes have been forced to contend with ever-increasing construction codes that are more costly, mobile homes have been allowed to fly under the radar in their factories with HUD seals. You could never build a conventional housing type in the manner which mobile homes are construction. That’s why you can buy new mobile homes for the same price of a car, whereas a stick-built kitchen costs as much as a mobile home. So mobile home parks start off with a huge price advantage.
Built to operate cheap
Mobile home parks are as sparse in expense as the homes. Unlike multi-family complexes that offer dense landscaping, amenities, and virtually concierge service, mobile home parks have spartan common areas, few amenities, and a laissez-faire management style. You can easily operate a large mobile home park with nothing more than a manager and maybe a part-time maintenance man. You can’t even operate the pool at an apartment complex on the same money. And that does not even include the fact that the mobile home park does not have to do any repairs to the homes themselves. Multi-family is continuously bogged down in replacing roofs and painting and updating the facades. Mobile home parks are only responsible for the common areas and vacant lots, so the cap-x is extremely low. There is no other type of housing that has as low an operating cost as a mobile home park.
Never traded at ridiculous levels of debt
Another reason that apartments just can’t compete is that they have been selling at 5% cap rates and they are awash in debt, which makes the demands ever higher for increasing rent. Case in point is the fact that the average apartment rent in the U.S. is $1,030 per month, as compared to the average mobile home park lot rent at around $250 per month. Mobile home parks have always been priced reasonably, and required conservative lending levels. As a result, they can post a profit on a much lower rent, and do not need to keep pushing rents just to break even.
The proof is in the pudding
A park we have in Iowa recently logged over 170 calls in one week for a mobile home for rent. The reason we get these type of stats is that nobody can touch us on pricing. If affordable housing is the goal, nothing can touch a mobile home park. If you earn minimum wage, you can afford it. If you earn only $6 per hour – as those 10,000 retiring baby boomers per day are adjusting to – you can still afford it. And that’s why we can keep every house we have 100% occupied.
Nothing can compete with mobile home parks when it comes to serving the affordable housing niche. That’s why our business has never been better, or ever had a brighter future.
Mobile Home Park Joke Of The Month
A friend of ours emailed us this joke recently:
“You know you might be a redneck if your home has more miles on it than your car”.
If anyone else has some mobile home park humor to share, feel free to send it in to [email protected].
Did You Know That Buckminster Fuller Designed A Mobile Home?
Buckminster Fuller – the famous architect, designer and futurist – designed this mobile home in 1946. It was called the “Dymaxion” and was built in Wichita, Kansas, which is now probably the mobile home capital of the Jayhawk state. The house was made of aluminum and had self-generating power, and weighed in at only 3,000 pounds. Obviously, the model never reached mass production, apparently not being advanced enough to topple the dominance of the flat-roof trailer. But Fuller shouldn’t feel bad, since the industry also failed to put into production the prototype mobile homes of Frank Lloyd Wright and Raymond Loewy, too.
One Of the Best Parts Of Being On The Road
One of the best parts of driving out to look at mobile home parks is the interesting things you see along the way. On a drive to Indiana a few days ago, I drove by a large military museum in a very out-of-the-way location. I just had to pay the $5 to look in the brick building behind the tank and jet. Inside I found Patton’s uniform from the Battle of the Bulge, and Eisenhower’s from the Normandy Invasion -- all kinds of items that had been donated over the years. 10 minutes later, I was back on the road again. The best part about road trips are these type of attractions.
This can come in handy at parks with poor collections
And this can be a blessing if you need to look at a bunch of parks quickly
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