Mobile Home Park Investing Newsletter

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May 1st, 2019

Memo From Frank & Dave

Memorial Day is a federal holiday in the United States for remembering and honoring persons who have died while serving in the United States Armed Forces. There is hardly anyone in the U.S. that does not have a friend or family member that has served in the military. Yet there is too little discussion of this sacrifice and the necessity of having a large army to protect our way of life. This past year, we began a program of renovating – and even giving away on occasion -- mobile homes in our properties to veterans in need. Here are some examples. In one of our Dallas parks there was a veteran who suffered a stroke. He did not have the money to build an adequate deck and ramp for his RV that he lives in, so we built it for him at no charge.

rv deck

In our park near Tulsa, we had an 85 year-old veteran who was barely getting by in a tiny travel trailer with extremely primitive living conditions, and we decided to give him a mobile home at no cost. Watch the news story on it here.

At our park in Phoenix, we helped a veteran’s widow who needed home renovations but lacked the funds to get the job done. Again, we did this at no charge.

mobile home deck ramp

What all of these cases have in common is that, as a park owner, we have a responsibility for the welfare of our residents and the spirit of the greater community. Sure, we could turn our heads and pretend to not see these situations, but that’s not the right thing to do. When residents are doing their best to be an asset to the community, it’s up to us to go the extra mile when required. We urge all owners to share in the fun of helping improve our residents’ lives. The cost is small and the rewards are many. In the case of veterans, these are men and women who risked everything for our freedom and deserve that extra boost in times of need.

Have a happy and safe Memorial Day!

Spotlight On Industry Consolidation In Raw Numbers

mobile home park street

In an article titled “More Managers Make Move to Mobile Homes” in Pensions and Investments magazine, the current state of industry consolidation was broken down by the numbers. Here are some of the facts presented in the article.

The key reasons that mobile home parks are hot right now with private equity groups

According to Pensions and Investments magazine, these are the key reasons that private equity groups are buying mobile home parks:

  • Value-added return potential by converting parks to institutional ownership and making improvements and increasing rents. Essentially, instituting professional asset management.
  • Correctly positioned for current U.S. megatrends of retiring seniors downsizing (10,000 per day) and the continual expansion of those needing affordable housing. The mobile home park industry has – through sheer luck – ended up in the exact correct spot for all U.S. trends.
  • Less capital expenditure needed than other real estate sectors. This is because mobile home park owners own the land and not the homes themselves. This model is unique since our customers are actually stakeholders in the business – they own the home and we own the land.
  • The ability to create portfolios that can be sold or spun off into real estate investment trusts (REITs). There are currently three U.S. mobile home park REITs (ELS, SUN and UMH) and one Canadian mobile home park REIT (Brookfield).

The bottom line is that private equity groups have identified mobile home parks as a very attractive investment opportunity.

Only 10 new mobile home parks have been built in the U.S. over the past two decades

Warren Buffett is not the only investor that has a strong belief in the concept of a “moat” – basically the barrier to competition. In the case of mobile home parks, the simple fact that virtually all U.S. cities forbid new park construction creates an incredibly enviable supply/demand relationship for park owners.

Little current institutional ownership

Of the 44,000 mobile home parks in the U.S., Pensions and Investments magazine estimates that only around 15% are owned by institutions. The self-storage industry, by comparison, is three times more consolidated. As a result, private equity groups are attracted to the size of the opportunity – the largest real estate consolidation play in the U.S.

Stability of cash flow since homes don’t move

Mobile homes are anything but “mobile” and that makes revenues the most stable of any real estate sector. Case in point, the default rate on mobile home park loans is among the lowest in the U.S. The estimated retention rate of customers in mobile home parks is around 14 years.

17% of the $4 billion in transactions in 2018, up from 9% of the $1.2 billion in transactions in 2013

Private equity groups are all about “scale” and have to meet minimum thresholds to invest sufficient capital to warrant their time. There were three $2 billion + transactions over the past three years, and a number of transactions in the $100 million + category. This gives private equity groups the motivation to move ahead.

The ability to finance transactions through the Federal National Mortgage Association (Fannie Mae)

One new attraction to the mobile home park industry for private equity groups is the growth of Fannie Mae and Freddie Mac “agency” debt. While the number of loans they were involved in was relatively small a decade ago, it now represents over 50% of all mobile home park loans (based on dollar value). These loans offer low, fixed interest rates, terms over a decade, and are non-recourse – all extremely attractive.

The safety of following the self-storage playbook

One of the unique attributes of the mobile home park industry is that it is following the exact same path as that of self-storage. You can literally predict the future of community ownership by simply looking at the timeline of storage properties. The similarities are endless:

  • Each has roughly 45,000 properties.
  • Each is around 50 years old.
  • Each does well in recessions.
  • Each has low maintenance costs.
  • Each employs managers at roughly the same price point.
  • Each has low loan default rates.

Private equity groups see the success of the consolidation of self-storage and this gives them confidence in the outcome of investing in mobile home parks. And they are attracted to the fact that mobile home parks have no danger of over-building, while storage faces that risk every day.

Conclusion

Pension and Investments magazine correctly identified the fact that private equity groups are moving into this arena at a rapid pace, and the reasons for that shift. Stay tuned for further insights and articles in investment publications, as the industry reaches its “golden years”.

Why Most Smart Park Owner Are Changing Over To Purchasing Platform To Buy Virtually Everything For Their Property

In 2018 we became huge customers of Purchasing Platform – one of their largest. And we suggest any park owner to look at what this new buying service can do in regards to positively impact your community. It’s literally a game-changer.

What is “Purchasing Platform”?

Purchasing Platform is an online GPO (group purchasing organization) and eMarketplace that has been created specifically for the mobile home and mobile home park industries. More than 1,800 MH communities access Purchasing Platform every month to take advantage of their pre-negotiated pricing, single checkout from 40+ vendors, auto expense mapping to their chart of accounts, multi-level workflow approval to provide accountability across their portfolios, etc. They offer 20-30% savings on more than 10 million products and an integrated "Buying Desk" service that acts as a purchasing agent for your community to make sure they always deliver aggregate savings on every order. 

How big do you have to be to use Purchasing Platform? Can you use it with only one property?

The answer is yes – there’s no minimum limit of properties or dollars spent. Some of the largest industry portfolios use them but the majority of their clients own and operate between 1 and 30 mobile home parks. This is not a service that is only available to the largest owners – it’s one that every park owner in the U.S. can utilize.

Why use Purchasing Platform?

In addition to the obvious cost savings on products and services, use of Purchasing Platform drastically reduces the number of trips your manager has to make to retail stores (time spent not managing your property), eliminates the need for expense classification and receipt transcription while also providing valuable oversight to the owner with workflow approval. They also allow members to load their own catalogs to make sure that managers only can order what they want them to.

Summary of benefits

Here are the main reasons that we have become huge users of the Purchasing Platform:

  • Easy to use interface. Not hard at all for any manager to master.
  • Single checkout from more than 40 of the industry’s largest vendors.
  • Huge savings on more than 10 million products.
  • Price Match Guarantee: if you can find it lower somewhere else, they’ll match it.
  • Create your own custom catalog.
  • On-Demand Buying Desk feature gets you immediate support for volume quotes.
  • Comprehensive Workflow Approval functionality to keep you in control of all buying.
  • Maps out all expenses to your Chart of Accounts.
  • Integrates everything seamlessly into your property management software.

You can try Purchasing Platform at no risk for 90 days

Purchasing Platform allows all park owners to try their system for three months with no obligation to continue. That’s how we got started – we gave it a try and liked it. So if these advantage look good to you (which they certainly should) we recommend you contact Purchasing Platform today at 312-622-6552 and [email protected] and get set up on a 90 day trial.

We think you’ll find this to be one of the big improvements in your operation for 2019.

How Great Deals Can Still Get Made Even In Competitive Markets Like LA

LA skyline

If buying mobile home parks was like pro football, then the toughest team in the NFL would be Los Angeles. That’s because the lot rents are insanely high there – reaching $5,000 per month in Laguna Beach, and nearly $3,000 per month in Malibu. Jimmy Goldstein, who sits courtside at all Lakers and Clippers games and owns the famous Frank Lloyd Wright home in the Hollywood Hills, pays for his lifestyle with the ownership of a handful of mobile home parks in Los Angeles. As a result, the competition to buy mobile home parks there is furious, and cap rates often plummet to 4% or so on the best deals. So with the numbers so big and the competition so high, how can anyone still find great deals there?

Think like a creative “deal maker”

When we do the Mobile Home Park Investor’s Boot Camp in Orange County, we tour a property that was “created” by a former attendee a few years ago. It’s located across the highway from Disneyland, and began with a corner of an RV park that was being sold to settle an estate. This person creatively attacked the opportunity by envisioning a stand-alone property that would soon be a nice community with new homes that they bought in and sold. There’s no substitute for looking at things a fresh way and saying to yourself “what would I have to do to make this deal work?” In highly competitive markets like California, you can’t expect to find normal deals at good prices – you have to invent them.

Understand the “pivot points” of ramping up net income

You only have a few tools to work with when trying to sculpt a deal that is a winner. Those include pushing rents, filling vacant lots, sub-metering utilities and billing them back and cutting costs. So to build a profitable deal in a highly-competitive market, you have to look for deals that have significant potential in these four areas. A deal you can buy at a 5% cap rate with $600 per month lot rent is a whole different story at $800 rents. Watch for situations where you can make material changes that result in net income opportunities.

Remember that “hot” markets will ultimately yield cap rates when you go to sell

When you buy a mobile home park in an area like Los Angeles you have to change some of your fundamental assumptions. And the biggest of those is your expectations on cap rate – both when you buy and when you sell. If there are lower cap rates going in, you should demand lower cap rates when you sell. If the cap rate in Indiana is 8%, then it’s reasonable that a hot California market cap rate might be more like 6% for a similar property. But that also means the same is true when you go to sell it. If you expect to buy at a 6% cap rate but sell at a 9% cap rate, then no deal will work. If you can’t sell yourself on the concept that California and similar markets will sell at lower cap rates years from now, then it will be hard to make the numbers work. And that means that to play the California market you have to really believe in that market for the long term.

Conclusion

There is no market in the U.S. that you can’t succeed in (except Hawaii since it has no parks). However, the level of play in markets like Los Angeles is extremely tough. If you are creative, resourceful and believe in the future of the area, then you can craft good deals even when it looks impossible. And based on the rent levels in those markets, you are richly rewarded for that effort.

Business Uses In Mobile Home Parks: An Overview Of Issues

taco truck in mobile home park

While we all think about mobile home parks as being residential in nature, sometimes the tenants see that differently and open businesses out of their homes. These can range from part-time affairs to full-time avocations. But the problem is that they seldom meet the rules and regulations of your community as well as the city at large. So what are the problems and how do you address them?

Legal issues

Let’s start with the legal issues of having a resident open a business in a mobile home. The first complication from this activity is that it is against the ordinance in many cities. While some activities are benign and the city may look the other way (such as having a resident that does alterations or sells Avon) others are totally unacceptable, such as doing auto repair. So the first stop on assessing the viability of allowing a resident to work out of their home is to get a handle on the local laws regarding their choice of type of business.

Liability issues

Then come the insurance considerations regarding that business. Some uses create liability for the park owner, while others do not. An accountant that offers tax preparation out of their mobile home does not really create any issues for the mobile home park. It creates no byproducts, nor causes much additional traffic or parking issues. But the same cannot be said about the resident that operates an unofficial childcare center, which introduces more kids that may be unsupervised and greater danger of car accidents or playground incidents. The bottom line is that all business uses in the mobile home park need to be referred to your insurance agent for review.

Community issues

Finally, what is the impact to the overall community-at-large – both good and bad? If someone opens a food truck in the mobile home park that the residents like and frequent – and the law allows this – then this may be viewed as effectively an additional park amenity. However, if someone opens a manufacturing operation in their back yard, it can create excessive noise and odors. So the final stop on approaching the issue of businesses in mobile home parks is the impact to the neighbors and whether the concept is a benefit or a detriment to the greater good.

Conclusion

Many mobile home park residents quietly operate businesses out of their mobile home. Some go unnoticed. But others present an issue that must be addressed by the park owner. This should give you a road map to assessing the situation.

How M.J. Vukovich Can Help You Build An Empire By Re-Using The Same Capital

vending machine

There’s an old concept of tying a string to a dollar bill and buying each item in the vending machine and then yanking the dollar back out and using it again. That’s illegal in most applications, but not in buying mobile home parks. The way mobile home park owners yank the dollar back out is in the form of cash-out re-financing. To accomplish this, you need to obtain a conduit or Agency loan that allows for this to occur. And the master of putting together this type of debt product is M.J. Vukovich with Bellwether. We have been using him on all of our institutional debt (which means deal sizes of $1.5 million or more). If you are working on park financing on deals $1.5 million or greater, you should give M.J. a call at 720-758-9227 to discuss the options, or email him at [email protected]. The call costs nothing and the results may give you huge cash-out proceeds (which are also tax free as they are technically a loan).

Mobile Home Park Lessons Learned From “The Art Of War”

art of war cover

For those who enjoy military strategy books, there is none better than “The Art of War” by Sun Wu, written around 2,500 years ago. This book has been a favorite of many military leaders, ranging from Douglas MacArthur to Mao Tse Tung. However, the thirteen lessons dispensed in the book can be related just as easily to business and particularly to buying and owning mobile home parks. We have been a big fan of this book since we first heard about it decades ago. The book has thirteen chapters, and here is how each one relates to our industry.

#1 PLANNING: “War has five decisive factors, which you must take into account in your planning”

Sun Wu wrote that there are five items that must be aligned correctly to win a war: 1) a moral compass 2) the weather 3) geography 4) knowledge and 5) organizational correctness. In many ways, this approach to overall analysis of engagement is similar to the requirement of great due diligence when buying a mobile home park. A careful focus must be made to the viability of the market, the condition of the infrastructure, the correctness of the numbers, the availability of debt, and the demand of the location. Great due diligence yields success, but failure to conduct diligence properly yields failure.

#2 WAGING WAR: “Only someone who understands the perils of waging war can also understand the best way of conducting it”

You must be completely educated in what you’re doing before you even consider jumping in. There is a huge amount of information available on the mobile home park industry and how to properly buy and manage these properties. Immerse yourself in it.

#3 STRATEGIC OFFENCE: “Knowing when to fight and when not to, brings victory”

This concept is more related to mobile home park management. When you own a mobile home park, you are responsible for the welfare of your community, and this means understanding what is essential for your residents to have a clean, safe, attractive place to live, as well as what imperils this mission. While a non-running car on all flats in a lot may be totally unacceptable on all levels, sometimes you need to look the other way on minor issues like a few toys in a yard. There is a difference between keeping peace and order and micro-managing. A good owner keeps his residents happy and a bad owner tries to rule through fear.

#4 DEPLOYMENT: “Whilst you are unsure of victory, defend; when you are sure of victory, attack”

You should buy a mobile home park only when you have completed exhaustive diligence and know it to be a success. Until you are completely convinced of its viability, you should not pull the trigger and risk your capital.

#5 MOMENTUM: “To make the force of your army’s attack like a grindstone crushing an egg – you must master the substantial and the insubstantial”

To quote J.W. Marriott “it’s the little things that make the big things possible”. When managing a mobile home park, it’s important to focus on the total “package” of quality of life for the residents, including rules enforcement, sense of community and a feeling of fairness and respect. The great mobile home parks have a superior feel in every aspect.

#6 THE SUBSTANTIAL AND THE INSUBSTANTIAL: “There are no constants in warfare, any more than water maintains a constant shape”

All smart mobile home park buyers have an aptitude at adaptation. Markets change, interest rates rise and fall, and you have to be able to morph your buying targets to meet the realities. For example, interest rates fell enormously after the advent of the Great Recession in 2007. This brought cap rates down substantially. Smart buyers understood that the key to hitting 20%+ cash-on-cash returns is to maintain a 3-point spread between the interest rate and the cap rate, which meant that lower cap rates were fine as long as the 3-point spread was maintained.

#7 MANUEVORS AGAINST THE ENEMY: “A ruler must understand the priorities of the local nobles before he can make profitable alliances”

This relates to the continual friction between mobile home parks and city government. The real reason that cities hate mobile home parks is that they cost them a fortune. Mobile home parks have an extremely high percentage of children, which costs the city roughly $8,000 per year per child to educate, yet bring in a notoriously low amount of property tax since the mobile homes (personal property) are often valued at only $1,000 to $5,000, and the average lot (real property) might be assessed at only $50,000 or so. In Missouri, for example, assuming an older mobile home in a park with two kids living there, the tax income would only be $550 per year ($55,000 at 1% tax rate) and the expenses to the city would be $16,000 per year (two kids at $8,000 per year each). You multiply that by 100 lots and you can see the problem. At the same time, cities are aware that they must follow real estate laws (grandfathering) and federal guidelines (it’s illegal to discriminate against the poor) so they can’t fight back effectively. When we bring a mobile home park back to life after decades of neglect, we have to remind the city of these limitations, but also appeal to their desire for a nicer community at large and the fact that we are removing an eyesore and making it into an oasis.

#8 THE NINE VARIABLES: “A reckless disregard for death will indeed result in death; too much regard for life will result in capture”

When you buy a mobile home park, there is always inherent risk. We try to avoid deals that have excessive risk, and we accomplish this with proper due diligence. But we can never fully remove risk from any mobile home park transaction. If you only invest where there is a complete absence of risk, the only options are T-Bills and perhaps CDs – but these pay an extremely low return. There is an old saying that goes “behold the turtle: it only makes progress when it sticks its neck out”.

#9 ON THE MARCH: “Never climb to join battle on high ground”

Never extend too far on any mobile home park deal. While it’s perfectly normal to buy a park at a lower cap rate with the expectation of an immediate boost in rents or reduction in costs, you would never want to pay a low cap rate with the simple expectation that cap rates will decline over time or that you can fill 100 lots with new homes when you have never tried to sell a home in the park before. Hold out for deals that have a healthy risk/reward relationship.

#10 TERRAIN: “The experienced soldier only makes a move when he is sure of his direction and only takes to the road when he is sure of his supplies”

One of the worst things a mobile home park buyer can do is to enter their search without a working knowledge of the industry, the process and the product. The mobile home park industry – while on the surface seemingly simple – actually has a huge number of variables and potential deal-killing attributes. Additionally, the buyer themselves must know their own limitations on capital and borrowing and even the amount of time they can devote to the business. Knowledge equals power in mobile home parks.

#11 THE NINE TYPES OF GROUND: “March by unexpected routes, and attack where they are not fortified against you”

To us, this represents the manner in which you find mobile home parks to buy. We are strict advocates in the necessity of volume and to get high numbers of parks to look at you have to utilize many different sources: on-line listings, direct mail, cold calls, dropping by the owner’s house, and brokers. Even then, it’s the park owners that are the hardest to find that are typically the best opportunities. When we succeed in reaching a seller who has never talked to a buyer before, that is our best chance at cutting a great deal.

#12 ATTACKING WITH FIRE: “A wise ruler thinks ahead, and a good general builds on his victories”

A common job interview question is “where do you see yourself in five years?” That’s a really good query for most park owners. Every park owner reaches a plateau ultimately, when they have exhausted their personal capital yet are seeing more good investments and have honed their management skills to a high level. So basically it’s essential to always be thinking about the future and planning accordingly. If you want to grow your portfolio, at some point you will need to take on additional capital partners. This is how the REITs began (read about Sam Zell’s thoughts on this issue in his book “Am I Being Too Subtle”), as well as all larger portfolios.

#13 USING SPIES: “Foreknowledge can be obtained from men who have accurate knowledge of the enemy’s situations”

There are many people who have advance knowledge about the mobile home park industry yet may not even be aware of that fact. One example is paving contractors, as they know which parks are going up for sale because most community owners pave their streets before putting their property on the market. Another example are state mobile home associations, who know pending legislation that can affect everything from home installation standards to licensing issues. Smart park owners compile lists of all sources of competent information and monitor this data on a continual basis.

Conclusion

“The Art of War” is a great book on strategy. Although written for the military, the concepts it contains relate to many other endeavors, including mobile home park acquisitions and management.

Why We’ve Been Converting All Of Our Water Sub-Meters To Metron

We have been rapidly converting every existing water meter in our 30,000 lot portfolio to Metron-Farnier Sustainable Services. So why are we such huge fans of the Metron metering system? The answers are many:

  • These meters are read remotely and do not require our managers to read them (or screw up the readings).
  • The meters are read by Metron every 60 minutes, 24 hours a day. As a result, Metron can alert you when there’s a leak, and that can save you thousands of dollars per year.
  • The meters are amazingly accurate and strong.
  • Metron’s meter bodies have been manufactured in Europe for years – they are well-established and a proven performer.
  • Metron’s electronics are built and tested in Boulder, CO.
  • The cost is only around $5 per month per meter, and in most states this cost can be passed on to the resident.
  • These meters do not require you to have access to them, so they are perfect for winterization or difficult access situations.

So why would you not use Metron? We don’t have a clue.

To get more information on Metron metering, call Rick Minogue at 303-449-8833 or email him at [email protected] Tell them that Frank & Dave sent you. We’re their biggest fans.

Epic Managers And What Traits They Share

lady next mobile home

This is an old photo from a mobile home park in the 1950s, and it’s labeled “Sally the Manager”. While we don’t know Sally, she looks like a real character and was perhaps an effective manager. Many mobile home parks have that one special person that really kept things perfect (collections, rules violations, community spirit). So what do these epic managers have in common and what should you, as the owner, be looking for?

Ability to interact successfully with people

Some mobile home park operators have changed the title of the park manager to “resident relations specialist”. This is fairly accurate, as one of the key traits of successful park managers is the ability to get along with the residents and to make them abide by the rules in a successful manner. After all, a 100-lot mobile home park has roughly 300 residents, and that’s a huge responsibility to maintain supervision over. So the first building block of a successful park manager is great people skills.

Dependability

An epic manager has to be counted on at all times. They have to be in the office during the correct hours, follow the correct procedures on collections and rules violations, and make the correct entries in your software. One of their most basic traits is that they simply show up and never let you or the residents down in that regard.

Fairness

Great managers must be, by nature, fair in all regards – even when that means them acknowledging that it’s the park’s fault (such as when a tree branch falls and hits a car). Residents respect someone whose morality is above reproach and hate managers that are corrupted and choose favorites. No customer can complain about the manager’s decision when they know that it is fair.

Shares your vision

Epic managers understand the bottom line and that the property must, at all times, be a financial vehicle that is budgeted to hit a certain rate of return. They must also understand the drivers to that profitability, which include collections and keeping operating costs on budget. A good manager also correlates the necessity of attractive property condition with staying within lending requirements and city hall’s mandates.

Pride of ownership

Virtually all mobile home park managers live in the parks they supervise. As a result, it is imperative that they set a good example and serve as the role model to all residents. They should have the nicest home, the nicest yard, and the cleanest car. All residents will follow a leader who does exactly as he tells others to do – customers hate hypocrites. It’s impossible to get residents to maintain their property when the manager fails in this regard.

Conclusion

There are many great mobile home park managers across America. They are the most important member of any community management team, and are the front lines ensuring your property meets its budget and maintains a safe, clean affordable place for your residents to live. When you see managers that share these traits, do everything you can to keep them. These are the epic greats of the industry.

The CASH Program From 21st Mortgage: One of the Big News Stories of 2019

One of the biggest things going in the mobile home park industry is the CASH program from 21st Mortgage. If you own a mobile home park, the power of this program is astounding. You can fill vacant lots with zero out-of-pocket cost. You can get customers approved to buy homes with amazing speed and a “can-do” attitude. You don’t have to get in the middle of financing or the SAFE Act. And you can tap hundreds of thousands – or millions – of dollars sitting there in vacant lots. The demand for affordable housing in the U.S. is enormous, and the only thing holding most parks back from 100% occupancy are new and used homes that your customers can qualify for. With the CASH program, those obstacles can be overcome and your occupancy can soar. We are the largest users of this program in the U.S., and we know how great it is.

For more information on this program visit their website or call Candice Doolan at 800-955-0021 ext 1735 or email her at [email protected].

Average U.S. Mortgage Hits $354,000 – Ten Times That Of A Mobile Home. What Are The Implications?

us-capitol

The average mortgage in the U.S. has just reached an insane threshold – ten times that of a mobile home. In an era in which certain CEOs make 300 times that of the average worker, this has not received much media attention. But it points to the fact that America is moving farther and farther away from even remotely addressing the needs of affordable housing.

Why this gets so little attention

The plight of Americans who need housing that they can afford seldom gets any attention. Perhaps that’s because this group gives little to political campaigns and are ignored by our leaders. Or maybe it’s because they spend little on consumer products and therefore the media’s advertisers discourage such programming. Or maybe it’s simply the ignorance of the average American on the whole affordable housing issue. Whatever the reason, the general lack of concern is, well, a big concern.

How that is beginning to end

A couple years ago, Congressional leaders started to ask questions regarding the whole affordable housing issue in the U.S. They held hearings to try to understand how it all works. And the results were less than satisfactory for the status quo. They learned that “affordable” apartments are nothing more than the resident paying 20% of their income and the American taxpayer paying the balance. They learned that “subsidized” affordable housing is not sustainable, and that many apartment owners have learned how to game the system at the expense of the government. As a result, they directed Fannie Mae and Freddie Mac to do more to support the mobile home park industry (the only non-subsidized form of “true” affordable housing.

Why the media gets it all wrong

Another culprit in the affordable housing crisis is the media, which delivers endless messages that are negative to the mobile home park resident as well as owner. In search of ratings, they portray all mobile home park residents as lesser beings and all owners as evil landowners who profit from poverty. This not only continues the stereotype of “trailer trash” but discourages investors from injecting money into saving and turning around failing mobile home parks.

New and better ideas are still needed

While Fannie Mae and Freddie Mac have done a magnificent job of financing mobile home parks using “agency” debt (which now represents roughly 50% of total dollar volume of all new mobile home park loans annually), they are still in the early stages of securitizing the loans on mobile homes themselves. Hopefully, they can ramp this up strongly in the years ahead, which will open the door for thousands of more American families to buy their own mobile home directly from a dealer. But there are still other ideas out there that need to be embraced and molded. These include the elimination of too costly and unnecessary HUD installation standards, and even potential tax breaks for those who invest in affordable housing (similar to the new Enterprise Zone rules but more all encompassing).

Conclusion

Everyone should be alarmed that the average U.S. home mortgage is now ten times greater than the average mobile home mortgage. America’s failure to acknowledge the severity of the affordable housing crisis is hurting all chances to mitigate the situation. Hopefully, the nation will begin to accept the lack of support for the mobile home park industry and begin to embrace the only true form of non-subsidized affordable housing.

The Importance Of Joining Your State Mobile Home Association

When you own a manufactured housing community, you will be governed by both state and federal laws and regulations. It’s an impossible task to try to manage these elements by yourself.

In the state of Iowa, owners of manufactured housing communities are subject to 43 different state code sections. Most of these laws also have administrative rules which accompany the/m.

The most important thing to remember about laws and rules is that they are not static things: they do change over time. When these laws and rules change for the better, it is almost always because a state association got involved and petitioned the state legislature to make the change. And you can always expect that any suggestion for positive change, in our view, will be opposed by other interest groups at the state legislature.

When laws and regulations change for the worse, it can often be due to the fact that the state association is not performing at a level necessary to combat the bad legislative ideas. Any association can find itself in a weaker position. Part of the reason why this can happen is that the membership takes its eye off the ball and no longer is willing to spend the time and money to make sure the association is able to perform at the highest level.

The same reality applies to federal laws and regulations. There are national associations available to the manufactured housing profession which work toward better federal laws and regulations.

The Iowa Manufactured Housing Association, IMHA, is working on six issues at the state legislature this year: revising the abandoned home law; clarifying how to handle homes left behind when a tenant dies with no heirs or estate; service/assistance animals; taxation of water/ testing of water; and additional funding for the manufactured housing revolving loan fund within the Iowa Finance Authority. This program sets up low interest loans to be used by customers exclusively in manufactured housing communities.

If you’re counting along with me, you’ll note that I only listed five issues. The sixth issue pits us against local governments at the Statehouse. If you’re looking to purchase a lease community in any state, one of the things to consider is if the community is in the status of being a legal, non-conforming use. If so, you need to know if you can fill in vacant spaces with either new or preowned homes. We’ve had cities and counties telling our members that they cannot replace homes in legal, non-conforming manufactured housing communities.

Fortunately Iowa has strong case law protecting private property rights. The city of Des Moines lost an Iowa Supreme Court case last year when the city attempted to shut down an older mobile home park in the city. IMHA legislation, which has an excellent chance of passage, will codify the positive findings of our case law, plus it will add new language protecting the rights of community owners to add homes onto vacant spaces.

All these issues, and more, are very common in every state in the country. Joining an industry association, and staying aware of laws and regulations, is an investment in protecting your asset.

Joe Kelly
Executive Vice President
Iowa Manufactured Housing Association

Is Your Attorney a “Deal Killer” or a “Deal Maker”?

How many deals have you seen go down the drain because your attorney stacked up a million roadblocks to even the simplest problems, and then failed to offer any path to solve them? This is called “deal killing” and some attorneys do this so that they take no risk – if the deal never happens, they can never be criticized for missing a deal point, or for not spotting a flaw in the contract. The problem with this, however, is that you can’t get anywhere. At the other end of the spectrum are the “deal maker” attorneys that recognize real problems from trivial ones, and strive to solve these roadblocks using common sense and legal experience. And the best of those type of attorneys is Dave DiMarco from Woods Oviatt Gilman. We once had a deal go south in a big way – the very driveway into the property was determined to be on somebody else’s property. Any other attorney would have said “well, that’s it, the deal’s dead” but Dave DiMarco sprung into action. We located the owner, negotiated a purchase, personally handled the details, and the deal went forward. And all that over a weekend, no less. And that’s why we love Dave DiMarco and you should, too. If you need service like that, then consider using Dave DiMarco on your next transaction. You can reach him at (585) 987-2833.

Thoughts On Building Upgraded Mailbox Areas

mobile home park mailboxes

One feature of every mobile home park is mail. Some properties have individual mail boxes on each lot, while others have these in banks at the front, and the best seem to have locking aluminum units under a pleasant cover – such as the one shown above. What are the benefits and disadvantages of taking your mail area to the next level?

What does the postmaster say?

Before even thinking about building any structure over your mailboxes, you will need the permission of the U.S. post office, typically via a call to your local postmaster. There may be some requirements you have to follow (minimum height above the boxes, etc.), although we’ve never had any push back over this improvement to the mail delivery area.

What’s your budget?

Just like the home renovation shows on HGTV, there’s no limit to how much you can spend on any building project. But what limits your options is your budget on how much you are willing to devote to this park amenity. In general, figure on a cost of around $5,000 for a really good enclosure – although you might get by for less based on the cost of labor in your market.

What a great mail box amenity would include

A truly great mail area would, first of all, be attractive enough to increase the value of the park via the appraiser’s first impression. It would tie all common areas together. The choice of color and roof line would be in-keeping with the theme of the overall community. But it would be more than just a “cover” to keep residents free from the sun and rain when getting their mail. It would also include the ability to convey information to the residents on a daily basis, utilizing an information bulletin board with locking plexiglass doors.

How to get maximum use from the bulletin board

There are essentially three key uses for the informational bulletin board inside the mail box enclosure:

  • To post those notices as required by law, such as HUD.
  • To let residents know that there are vacant homes available for their friends and family (and also to reach visitors to the mobile home park that might need a home).
  • To remind residents of certain beneficial behaviors for the greater community (such as “freeze warning: let your faucets drip”).

The best bulletin boards use some creativity and showmanship. You will be amazed at what you can buy on a website that caters to scrapbooking, such as colorful borders and giant letters that you can use across the top of the display.

Conclusion

Many of the top-tier mobile home parks in the U.S. have nice mail box enclosure structures, which also include informational bulletin boards. When looking at upgrading your community, don’t overlook the advantages of this simple tool to give your residents a daily reminder of why they like living on the property.

Need A Phase I Environmental Report? Mike Renz Is Your Man For The Job!

The New York Times called Frank a human encyclopedia of all things mobile home park and, if that’s true, then Mike Renz is the human encyclopedia of all things under the ground. You see, when it comes to Phase I Environmental Assessments, nobody in the industry is more knowledgeable than Renz. He’s our go-to guy for all things pollution-oriented, from Phase I reports to simply asking questions on what we see going on next door to the property (or even inside that concerns us). We were once walking through a property and saw a brown colored solution oozing from the property. Within minutes, Mike had pulled up the data and figured out what it was (rusty water from an iron-ore- rich artesian spring). That’ the kind of information that we find invaluable in today’s litigious world of environmental condition. On top of that, we’ve had Phase I reports that failed for existing pollution, and Mike Renz has been able to solve them by using common sense and technology, like the time he proved the EPA wrong by doing a simple core-drilling to prove that a supposed landfill on a mobile home park did not actually exist (it had been phoned into the EPA by a former manager who had a grudge against the owner). If you want that level of expertise on your side, then you need Mike Renz to be your Phase I Environmental provider. That’s who we use, and he’s amazingly good.

You can contact Mike Renz at (614) 538-0451.

Filling Lots And Boosting Income: A Primer

mobile homes

One of the best ways to increase the value of any mobile home park – and help to solve the affordable housing crisis – is to populate vacant lots with new and used homes. However, it’s not as simple as it looks. Indeed, there’s a methodology to correctly fill any park’s vacant home sites.

How much demand do you have?

The initial item is to determine how much demand exists for homes in the mobile home park. This is derived through a “test ad” in the largest metro newspaper’s classified section, as well as an one on Craigslist. This ad will also measure how much demand there is at certain price points. The industry has a basic rule of three calls = one showing and three showings = one sale or rental. As a result, the number of calls that a property gets will also help forecast the velocity that vacant lots can be filled.

New or used?

There are two options when bringing in homes to fill vacant lots: to buy new homes or used homes. The advantages of new homes are that they are the nicest option, don’t require home renovations before they can be sold, and make your park more attractive. Used homes are better when the potential customers cannot afford new homes – either because they lack the down payment or necessary credit scores.

How many to order at one time?

Regardless of whether you are looking at new of used homes, the smart park owner only brings in one or two initially. The reason is that you can’t really learn about your customers until you put a home in front of them and see what happens. You can learn a huge amount from those home credit applications, and it will become immediately apparent if you have a new home or used crowd customer base. Once you have nailed down the basic economics of your clientele you move more rapidly in ordering larger batches of homes at one time.

HUD installation issues to consider?

In some states, HUD (the government’s department on Housing and Urban Development) mandates expensive installation standards, such as pouring concrete slabs, piers or runners under mobile homes. These costs will have to be included in your price on the home. Additionally, in some states you only have to do these additions on lots for new homes, but not for used. This will steer you towards used homes over new.

Size and configuration of home?

There are two different components to determining the size of mobile homes to fill your vacant lots: 1) what size fits the lots 2) what size can your customers afford. While we favor homes that are at least 14’ x 46’ or larger (because that’s the smallest two bedroom/1 bath manufactured and we rarely buy one bedroom units) the differences between a 66’ home and a 76’ home are relatively minimal but that extra element of cost may tip your home offering over the top of what customers can afford. Additionally, in some markets (such as Florida) virtually all customers want double-wide and not single-wide homes.

Manufacturer?

Most customers do not know the difference between the major manufacturers – but the park owner does. Some builders have consistent quality and good warranty support, while others do not. We tend to favor Clayton as they build over 50% of all mobile homes in the U.S. and offer a range of products from very inexpensive (TRU brand) to top-of-the-line. This allows you to one-stop-shop. On used homes, it’s not really a matter of who built it, but the size and condition of what’s on the market and how well it’s priced.

Finance program and conditions on home type and age?

21st Mortgage (which is owned by Warren Buffett’s Berkshire Hathaway) is the largest financier of mobile homes in the U.S. As a result, they are the most common lending source for most mobile homes – both new or used. The CASH program is 21st Mortgage’s ultimate tool for park owners to fill vacant lots, as they pay 100% of costs including shipment, installation and lot preparation.

Wind zones and snow loads?

Certain parts of the U.S. require certain additional structural requirements for snow on roofs and wind stress on the home. You must make sure that any new or used home you buy meets these standards. If you are buying a used home in a southern state, it will obviously not have a high snow load rating, and an area of calm weather will not have the proper wind rating. Smart park owners learn what the requirements are in their area and stay vigilant that all homes brought in meet these needs.

Rent or Sell?

In general, it’s always best when customers buy their mobile homes as opposed to rent them. When they buy the home, they become a stakeholder in the mobile home park – they own the home and you own the land. Additionally, a homeowner displays a far greater element of pride of ownership than a renter. Finally, an owner (in the end) pays a fraction of the monthly amount of the renter, and that leads to much greater stability (studies suggest that owners stay for 14 years while renters stay for only a year or so). That being said, a renter can often become a buyer over time. To help promote that concept, most smart park owners utilize a system called rent/credit in which the renter still earns “retention points” (similar to Southwest Airlines frequent flyer miles) that can be redeemed – same as cash – to buy the home in the future.

Pricing strategy?

There is a strategy in pricing that makes complete sense for both the park owner and home customer alike. If you calculate the monthly mortgage payment on the home and add that to the lot rent, that’s the monthly cost of owning. You then need to add $100 per month to that amount to set the rental amount on the home. In this manner, there is a mathematical reason to want to buy over rent, and to pay the mortgage off so that you only have the lot rent as a monthly cost.

Conclusion

Over the years there has been much thought put into the correct methodology of filling vacant lots in mobile home parks. There’s no reason to re-invent the wheel, just follow the path forged by other owners.

The MHU Investor’s Club Classified Ads

To advertise here, you must be a member of the MHU Investor’s Club which is a program available to our Mobile Home Park Boot Camp and Mobile Home Park Home Study Course customers. Contact us for more information.

Member Name: Steve BaikPhone: 206-326-8764
I am looking for more parks. City utilities preferred, but septic will be considered. Price range from $750,000 - $5.0 Million. 30+ Lot, flexible on location. Wholesalers and brokers, please send me your deals. Also, any investors looking to invest passively in MHCs, please contact me. We have few LP's slots available.
Member Name: Mike BothaPhone: 808-478-1479
Seeking to buy parks - Montana, Wyoming and Idaho We are seeking to acquire Mobile Home Parks in MT, WY and ID. Our target park size is 20-80 lots, with city water and sewer. We may consider other areas or opportunities. We are actively pursuing opportunities in these markets, and have the resources to make offers and acquire parks immediately. Please contact us if you own, or know of a park that meets this criteria in these areas. We are happy to work direct with sellers or brokers. Thank you Mike
Member Name: Jonathan CohenPhone: 516-523-6205
Anyone like or looking to buy in NY or the northeast?
Member Name: Ian FisherPhone: 646-431-8783
Hi - I'm an investor in the single family residential space with a $35MM rental portfolio, and would love to hear from MHP investors who are looking at deals and open to discuss potential joint venture opportunities. Ideal deal has significant value add and needs at least $1-2MM of equity. Equally, I am always on the hunt for attractive deals in other real estate sectors and would welcome anyone interested to reach out to learn more - I am currently offering a small top-off piece of equity in my single family rental portfolio.
Member Name: Lori GoodPhone: 619-933-1828
Distressed North Carolina park approximately 30 minutes north of Fayetteville. 28 spaces with 16 park owned homes that are in rough condition (rated F for rehab), 6 tenant owned homes, 6 vacant lots. Current rents are below market at $160. This park can be re-developed and bring in up to 125 spaces. The front 20 acres are all pine and owner would consider offers on this. Although it provides a nice cover area to maintain that country setting community feel. $234,000.00. Email: [email protected]
Member Name: Harrison HelmerPhone: 910-391-4993
Looking to purchase Mobile Home Park's in the Fayetteville,NC and the surrounding areas [email protected] [email protected]
Member Name: Major HillardPhone: 804-314-1788
Hello there. Six years ago I stopped investing in apartment complexes and completely invested my life/company to Mobile Home Park Investments. My wife quickly joined my efforts and now the MHP business has become the family business. Every property in our portfolio has been a value add park at purchase. Each property has more than doubled in market value and initial investment cashed out within 24 months. Currently we are expanding and in need to invest/work with new equity, passive, and active partners. Check out our website at MHESTATESLLC.com. Feel free to call at anytime. South East MHP Specialist (VA, NC, SC, GA, TN, AL, LA).
Member Name: Michael HinshawPhone: 949-202-9806
Dear Mobile Home Park (MHP) Owners and Brokers, Donna and I are interested in purchasing a MHP and can act quickly to close the deal. We are principals and will be happy to pay referral fees or commissions when we close on your park. Our preferred park criteria include up to @$2M purchase price, 50 – 150 spaces, paved roads, city water, city sewer and a sound economy. With that said we do realize that few parks are perfect and we are willing to concede certain criteria for the right opportunity. We have quick access to additional equity and can purchase a park up to @$4M if the seller is willing to participate in a 1031 exchange. Please feel free to visit our webpage at http://gallerymhp.com for more on our background and objectives. If you do have a newly available MHP to sell we would like to discuss purchasing it with you. I can be reached at 949 202-9806 or [email protected] Sincerely, Mike Hinshaw
Member Name: Steven IltzPhone: 503-439-9069
Looking for a MHP deal size of about $3 million , with about $1.8 million of debt or larger. Have about $930,000 cash as part of a 1031 exchange. Need to identify a replacement by Sept 25th, 2018 . Looking for Mobile Home Park to own or joint venture with others. I have cash to invest. My preference is to own a park with city water/ sewer, paved streets. If your looking for someone for your team for Joint Venture that can add value and time along with cash, give me a call (503) 439-9069 Portland, OR. Former MHP owner, that turned a average MHP to a great MHP that was 100% owner occupied park. I can help to turn a park from good to great.
Member Name: Steven JuelkePhone: 970-308-5571
UNIQUE 10-15 CAP NICHE MARKET DISCOVERED !!! Hands on Contractor/investor seeking funding partner to take advantage of huge housing shortage in a high rent market ($1100-1300 for 2- bedrooms) where park owned homes are extremely profitable and used inventory is available!
Member Name: Shoaib KhawajaPhone: 312-568-6493
Looking for equity partners who would like to purchase MHP's in the midwest. (MI, IL, OH, WI, IN). I have cash to invest.
Member Name: Young KimPhone: 310-948-1256
We have a buyer who is looking to 1031 exchange in California, parks ranging from $2-5Mil purchase price. Looking for off market opportunity only. Happy to pay referral fee at closing. Time sensitive. Thank you
Member Name: Brian LamPhone: 415-816-0514
Looking to meet other investors in the space which may result in future partnering as deals arise. Our target is $1 - $3M parks in the Midwest on city utilities. We're interested in meeting like minded people who can deploy /partner at $100 - $500k increments.
Member Name: A. Baker MontgomeryPhone: 469-551-3851
My group is looking for parks up to 10MM in Texas, the Southwest and Midwest. Please feel free to contact me anytime, more than happy to pay finder's fee. Thanks
Member Name: Todd MulhollandPhone: 239-450-1523
Seeking a business partner with hands on mobile home rehab experience in FL preferably the Central FL area. I have a fairly good business model, financial backing and customers ready I just need a dependable partner with actual mobile home rehab and construction experience preferably in the Central FL area to start but I'm looking to take this program at least state wide. I will also entertain offers from independent contractors as well looking to work together to rehab homes. Please contact me if interested.
Member Name: Ferdinand NiemannPhone: 816-806-1849
We are experienced operators looking to buy parks with 50+ lots in MO/KS/IA/IL/NE, in metropolitan areas with at least 100,000 people. Public water and sewer preferred. We will pay referral fees or provide a minority ownership interest for a deal you have under control or solid leads for off market deals. We have significant equity available and can close quickly.
Member Name: Andy NissenPhone: 614-456-5391
- Capital partner wanted to buy parks Will provide Capital Partners with Tax benefits or Cashflow or Equity - depending on your needs / desires. Let us know how we can work with you to accomplish your goals through MHP investing. We currently own two parks. Have 4 years experience owning and operating MHP's. Real Estate investing since 2004. Experience as a general contractor. Accredited investors ourselves. Currently seeking Parks in and around the Carolinas and Ohio but will gladly go further if the deal is right. Call or e-mail any time. Will gladly provide resume, references and so on. Thanks, Andy
Member Name: Patrick O'HarenPhone: 408-206-8998
We are willing to pay a commission or finder's fee for off-market deals. 40-150 spaces, more if part of a multi-park portfolio. We have capital and MHP operating experience. Please call me at 408.206.8998 or [email protected] www.genuitycap.com
Member Name: Joan ProbertPhone: 604-985-8788
I am a Canadian investor looking at parks in the in the following states: Arizona, Nevada, Washington, Oregon, Idaho, Montana. My business partner and I are heading out on a road trip at the end of October and are keen to meet other investors on the way. We'll also be looking for great recommendations on where to stay and what to discover. We're looking forward to meeting other MHU investors along the way! If you have some ideas please reach out to my business partner Liza Rogers as she's planning the route! [email protected] 250 532 1625
Member Name: Kenneth SwearengenPhone: 301-465-9110
I'm looking for a small (20-30 lots) MHP to purchase in PA, MD, DE, WV, or VA. I'm open to every type but anything with lagoons.
Member Name: Mike TrilloPhone: 425-246-4785
Attn MHP Owners: we are interested in buying several parks! Attn MHP owners with large portfolio: If you need to offload your smaller parks, please call me! Attn newbies who want to birddog or assign deals: I’ll pay you up to 5% referral fee on any deals you send my way! Attn Realtors: I have a very healthy incentive commission plan with any deals you send my way! I’ve got the cash to close the deal from $500k to $5M, 30-200 lots, within 40 miles of a growing metro area of 100k+, public or private utilities (WA, OR, ID, NV, UT, CO, WY, MT, ND, SD, NE, KS, MN, IA, MO, WI, IL, MI, IN, KY, OH, PA, VT, NH, MA). Please contact me (425-246-4785), [email protected] or visit us at www.GreaterCauseRealtyGroup.com. Looking forward to hearing from you! :)
Member Name: Cindy Tucker-DavisPhone: 970-987-7523
Thank you to everyone I spoke to regarding a manager position. I learned so much from you! If you are in need of a manager, let me know and we can talk. Thank you! Cindy
Member Name: Nick VrscakPhone: 919-880-4086
MHP Owners & Brokers I am interested in purchasing a Park in NC (1M-1.5M) preferably in the Raleigh Durham Metro. Park criteria is 50 – 100 spaces, paved roads, city water, city sewer. However I do know that there can be potential elsewhere so I am willing to consider other deals in other markets with a good economy. Please do not hesitate reaching out to me if you have anything. Nick Vrscak (919) 880-4086 [email protected]
Member Name: Ed WillisPhone: 907-460-6646
If anyone is looking to start a direct mail campaign to find deals I can help you. If you're not wanting to do the owner address research yourself I could provide you with lists for MO, KS, NE, IA, & ID (1000 owner addresses thus far). If you've got another state you want to mail I could help with that too. I can help you design your postcard or do it for you. I also know of deals I'm unable to do that I can refer. Let me know if you're interested, Ed Willis 907-460-6646
Member Name: Jason WilsonPhone: 661-978-9039
Looking to buy and manage our first mobile home park in East TN or northeast to south central TX. 30 - 100 sites with city water and sewer preferred. Willing to work with brokers or sellers. Purchase price 1.2 million or less. Open to updating or performing mild renovations.
Member Name: Shelly ZickefoosePhone: 559-907-8080
Looking for a mobile home within 500 miles of AZ. Max size 18x70. Min age 2003. Max price $12,000. Call (559) 907-8080. Thank you,
Member Name: Brian ZobergPhone: 305-301-2443
I have several years experience of buying, owning, operating and selling (for excellent returns) mobile home parks. I am looking to partner with other owners, investors who are interested in buying their first park or expanding their portfolio. I am also offering to pay a referral fee for a mobile home park on any deals. Please contact me if you are interested. Criteria: minimum 25 occupied lots, city sewer or septic, city water or well water.

Mobile Home Parks And Military Bases – A Good Fit?

fort riley water tower

The U.S. military was the most important force in the development of the mobile home park as a successful housing option. It was the U.S. government’s purchase of around 500,000 units during World War II that made the mobile home a large-scale housing source. Today, there are many mobile home parks built near U.S. military bases. But is that a good fit from the park owner’s perspective?

Understanding the relationship between the base and housing demand

In most mobile home parks near military bases, the residents are not actually soldiers but instead service staff to the base or surrounding businesses. This is because most mobile home park owners prefer owners to renters, and soldiers rarely buy since they move around so much. So while the mobile home park is extremely reliant on the base as an employer, it is not that reliant on the military as a customer. This is why mobile home parks don’t show much impact in occupancy when there is massive movement of soldiers overseas, such as happened during the Iraq war.

Type of base and long-term potential

Not all bases are created equal. Since 1961, the U.S. government has gone through periods in which it attempts to streamline military bases by closing weak ones and consolidating these into more vibrant bottom line is that , while we think of military bases as being stable employers, there are a few bases that risk closure. There is a list of many of these bases that can be found on the internet https://en.wikipedia.org/wiki/Base_Realignment_and_Closure . Large bases such as Fort Hood in Texas and Fort Benning in Georgia are immune from risk, as are most of the household-name locations. But there is a small subset that could face closure in the future and these should be avoided.

Recession-Resistant employer

After the 2007 Great Recession, it became readily apparent that there are three types of employers that can’t shrink even in giant economic catastrophes: 1) government employers 2) education employers and 3) healthcare employers. Military bases are an obvious example of the government at work. This is infinitely safer a bet than a private sector employer. We call these type of employers “recession resistant”.

Need for affordable housing

Just because a market has a military base, that does not ensure that there is still a demand for affordable housing. At the end of the day, it still all revolves around the median single-family home price (hopefully $100,000+) and average apartment rent (hopefully $1,000+ per month). Without expensive housing there is no need for affordable housing. Some base markets have it, and other don’t.

Conclusion

Military bases make good market employers. Just make sure that the base is not poised for closure in the years ahead and that the market displays high housing prices.



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