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?

Do You Need a Property Management Company?

Do you own or invest in a manufactured home or RV community? Take a moment to ask yourself the following questions to determine if you need a property management company.

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FINANCIAL

  • Do you have the need for timely, accurate and comprehensive financial reporting?
  • Do you need a more detailed explanation of the financial health of your community?
  • Do you have special reporting needs for partners or lenders that require more than the typical monthly reports?
  • Are collections and resident ledgers a challenge?
  • Would an automatic payment system help your cash flow?
  • Are payables too time consuming?
  • Are you missing out on discounts from vendors and contractors because you are not part of a larger group?

RESIDENT RELATIONS

  • Is there tension between residents and management or residents and owners?
  • Is it a challenge enforcing the rules and regulations in your community?
  • Is there any past or present litigation involving the residents?
  • Do you understand the state and local laws regarding being a community owner?
  • Do you survey residents annually to assess their satisfaction with living in the community and then act on the results?
  • Does your current management hold social functions throughout the year to show appreciation to the residents?
  • Do your residents have access to a community Chaplain and other outside resources for residents that are hurting?
  • Are your residents screened and background checked by a reliable national service prior to being approved for residency?
  • Are residents given a thorough orientation concerning rules and regulations and given other pertinent information prior to moving in?

PHYSICAL PLANT

  • Is there enough time in your day to evaluate your community and establish the proper operational reserves and capital improvements?
  • Are getting bids for operational and capital improvements too time consuming and/or difficult to get?
  • Does management regularly inspect the entire facility to make sure every home and common area is kept in pristine condition?

SALES & MARKETING

  • Are the number of homes for sale in your community increasing?
  • Are you challenged with the expansive requirements of selling homes within your community?
  • Do you have in-fill needs but don’t know today’s products, manufacturers, and requirements?
  • Do you have an on-site sales program for resales that helps preserve home values and resident relations?
  • Are your homes for sale listed on multiple international web sites specific to the manufactured home buyer?

ADMINISTRATION

  • Do you conduct regular reviews of contracts, insurance, and reserve requirements?
  • Do you have a knowledgeable and articulate representative to attend board and association meetings?
  • Does your current manager have an understanding of all pertinent laws, statutes, and provisions?

HUMAN RESOURCES

  • Would you like someone to handle all of your recruiting (advertising and interviewing) and hiring needs, including background screening, drug testing, administering skills assessments and much more in an effort to hire top quality candidates?
  • Are you in need of a payroll and/or benefits administrator?
  • Are you looking for someone to assist you with labor law compliance as well as implementing a Workplace Safety Program?
  • Do you know that personnel files must be locked in a safe place, contain specific information, and be kept confidential?

Don’t let the stress of owning a manufactured home or RV community weigh you down. Let the professional, full-service staff at Newby Management help make your community the best it can be! Call for a free consultation at 941-721-0046.

Are Mobile Home Communities Good Investments?

mobile home community, mobile home investment, mobile home property managementYou’ve probably heard about Warren Buffett’s success in the mobile home industry. While his prosperity in the industry is a lofty goal, there is still money to be made in manufactured housing. It stems from the high demand for affordable housing in America today. It’s a crisis that this industry is helping to solve, and one that is seriously undervalued at the moment.

In 2014, the U.S. Census Bureau reported that there were nearly 47 million people living in poverty, which means that many or more are struggling to find homes they can afford. More and more people are turning to mobile homes, from student loan debt riddled millennials to baby boomers looking to downsize. It’s a vast market and one that hasn’t yet been cornered by investors. In fact, Rolfe estimates that of the roughly 50,000 mobile home parks in the country only about 10,000 are professionally owned.

While owning a mobile home community is a good investment, it’s one that requires a great deal of time and knowledge to maintain. That’s why so many owners and investors are turning to professional management companies to help them navigate the industry and make their investment profitable. There are a number of things to consider, from the importance of capital improvements to the removal or updates or old housing.

In Newby Management communities, we ensure that capital improvements are budgeted for each community, that often means making repairs that are long overdue. Sometimes these improvements are grand, other times necessary. In one community, we recently completed a multi-million dollar club house, while in others we are working to repave roads, repair the pool and trim trees. You have to take each community where it is.

We also work to improve the homes. If there are park owned homes that are in good condition, we will rehab them to varying degrees, some are freshened up, others are given a full makeover. When homes are in disrepair we work toward removal, and often times replace them with new manufactured homes from builders like Skyline, Clayton and Homes of Merit. This not only draws in new residents, but also greatly improves the value of the community.

Our real estate team is diligent about getting homes sold, whether they are new or used. Our goal this year has been 100% occupancy in all our communities. This doesn’t happen over night, and  it takes an astounding level of dedication, but our robust team is always looking for new ways to market homes and to encourage buyers to live in Newby Communities. We market on numerous online home sales websites, local newspapers, social media and online advertising to sell homes quickly and for the right price.

From there, we also handle resident relations. This is an often overlooked and  important aspect of owning a mobile home community. Residents want to feel valued, and they are also looking for affordable housing that fits their lifestyle. This is especially true for seniors who are looking for a place to retire. They want to know what kind of activities are happening, what the amenities are and if there are other adults living an active lifestyle in the community.

It’s difficult to be on-site at multiple locations handling the day-to-day issues that arise. Hiring a professional property management company will help you get the most out of your investment. Whether you need help with resident relations, real estate, finances, or marketing, you’ll find that most management companies have the ability to assist with these items. When you don’t have to worry about the daily needs of the community, you’re free to make other investments or spend your time how you’d like.

Learn more about mobile home investments.

Learn more about Newby Management’s property management services.