Manufactured Housing: A Hidden Investment Opportunity

Remember your grandma’s mobile home park? Nothing to do, rickety houses lining disheveled streets. Today’s four and five star manufactured home communities are a far cry from those, and investors are taking notice.

These communities offer green spaces, amenities and high-end homes that offer the convenience of single-family homes without the cost. From fitness centers and clubhouses, to activities and luxury swimming pools, these communities are becoming more and more attractive to investors. In business terms, they offer stable returns, long-term occupants, and a relatively low capital cost to maintain the properties.

The financial risk is relatively low as well. Second only to self-storage, these communities have one of the lowest rates of default. It also has the second-highest net operating income growth, making manufactured home communities very attractive to both mom-and-pop, along with large investors.

Speaking of mom-and-pop, they make finding a manufactured home community for purchase difficult. The stability of the asset encourages long-term ownership, and the assets are often kept in the family. Still, investors in the market can often find a distressed property with 50% occupancy in need of repairs and community spaces. Besides mom and pop owners, large companies own a majority of the parks in the Untied States. Sun Communities, Equity Lifestyle Properties and RHP Properties are the top three owners, with a combined ownership of 200,000 sites.

An increased demand for manufactured housing from baby boomers and young families has encouraged lenders like Fannie Mae and Freddie Mac to announce an increase in manufactured housing production goals. The average cost of a manufactured home, minus land, is $70,600, compared to nearly $300k for a single-family home, according to the Manufactured Housing Institute.

Due to their affordability, manufactured housing falls outside of the institutional lending limit caps set for Fannie and Freddie. Interest rates have remained low, and borrowers have the option to shop around for the load terms that best suit the mobile home community, and the market. Because of this, borrowers benefit from a competitive product with a low interest rate, and a good return in a low-risk environment.

In the meantime, demand for manufactured homes continues to rise, leaving investors on the market searching for the next good deal.

Why Manufactured Home Communities Need Involved Management

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Tim Newby, CEO of Newby Management, serves residents cake at Camelot Lakes during their annual Summer BBQ.

A manufactured home community can seem like a business investment. It can be easy to forget that each community is a living, breathing entity that has its own individual character and personality. There isn’t a magical formula for managing manufactured home communities, and that’s why you need a hands-on property management company.

At Newby Management, we have been serving manufactured home and RV communities for 40 years. This has given us the experience we need to foster communities where people love to live. We know what works and what doesn’t, and we’re always trying to better ourselves as a company.

We have set certain standards for ourselves, like being close to our communities. This allows us the benefit of face-to-face interaction on a regular basis. It means being able to respond quickly in the event of crisis. It means being present and knowledgeable on all aspects of the community. A property management company who wasn’t readily available would not be able to accomplish this.

As manufactured home community property managers, being onsite means you can be aware of problems and address them proactively. You won’t have to wait for something to be in disrepair before you hear about it. If the pool looks dirty or the bushes need to be trimmed you’ll be  able to take the steps necessary to correct the problem.

This hands-on approach is carried out daily by regional managers who oversee specific communities and make regular onsite visits. They become familiar with each of their communities, the residents and the specific issues and concerns that each community might face. It’s this level of customized care that sets Newby Management apart from other companies.

Hands-off management companies will often try to apply a one-size-fits-all solution to each community. While these solutions may act as a band-aid for the community in the short term, they will not address the long-term needs of the community as a whole.

Having an involved management company sometimes means that every team member helps resolve issues that may arise within a community. At the community level, our team members have personal relationships with our corporate staff that makes it easy for them to handle everyday problems with ease. Plus, the community managers can speak directly to the person who can handle their specific issue.

As a Christian company, we also pay special attention to the needs of both our team members and residents. This often means going above and beyond to offer specialized service and care. Whether it’s prayers, our chaplaincy program or something more, we strive to provide personal care to our communities.

Managing manufactured home communities requires knowledge of a constantly changing product, the most important aspect of which is people. It’s requires sensitivity, availability and a strong business sense. These are all strengthened and added to when a hands-on management company is present.

How do you handle the demands of your manufactured home community?