Mobile Home Parks are a Highly Fragmented Asset Class
Updated: Jul 22, 2020
Welcome back to the Passive Mobile Home Park Investing Podcast. My name is Andrew Keel.
In this episode, I talk about reason #7, which is all about how mobile home parks are a highly fragmented asset class. Of the 44,000 mobile home parks in the United States, it’s estimated that about 90% of these mobile home parks are still owned by mom and pop operators. I’ll talk about what this means for investors and why now is a great time for you to start investing in mobile home parks.
Would you like the pre-investment checklist that I use to review mobile home park deals before I invest in them? We are offering this as a free gift if you go to iTunes and leave a five-star review. To get the pre-investment checklist, leave us a five-star review on iTunes and then send us an email to PassiveMHPinvesting@gmail.com. In the email, please tell us who you are, what screen name you used to leave that review, and we’ll send the pre-investment checklist, directly to your inbox.
00:18 - Hello and Welcome
00:33 - Reason #7 Mobile Home Parks are a Highly Fragmented Asset Class
01:15 - Ripe for consolidation
02:22 - Mom and Pop mobile home park owners
03:27 - Now is the time
03:55 - Pre-investment checklist
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Welcome to The Passive Mobile Home Park Investing Podcast with your host, Andrew Keel. This is the podcast where you can get the education you need to invest 100% passively in a highly profitable niche of mobile home parks.
Welcome to The Passive Mobile Home Park Investing Podcast. This is your host, Andrew Keel. Today, we’re going to discuss the seventh reason why you should be investing in mobile home parks.
Reason number seven is that there are very few large competitors or institutional players. The mobile home park industry is a highly fragmented, inefficient market, with the largest players owning less than an estimated 10% of the total properties. Also, most of the larger operators are only looking for larger, stabilized, and turnkey communities, limiting the competition for small- to medium-sized value-add communities.
The overwhelming majority of mobile home parks are owned by mom and pop non-professional operators with high equity. This is the only remaining real estate asset class still ripe for consolidation. And it’s coming, from REITs like ELS to the Singaporean Sovereign Wealth Fund, and large private equity funds such as Blackstone, The Carlyle Group, and Apollo that have all begun buying mobile home parks. It is estimated that there are 44,000 mobile home parks in the US. It’s also estimated that about 90% of these mobile home parks are still owned by mom and pop operators.
Investor Chris Bennett pointed out that about 93% of multifamily apartments above 50 units are owned by companies with multiple assets. This doesn’t mean that they’re all well-run, but it does mean that in general, these assets are owned by professional operators who are looking to get as much value out of these as possible. They do so by using the most recent technology and value-add tactics available, which isn’t happening in mobile home parks.
Mobile home parks have a highly fragmented ownership base and this is a big deal for you and me as investors in the asset class. Typically, a mom and pop mobile home park owner doesn’t have the knowledge, the desire, or the resources to increase income and maximize value, and they don’t really need to. After all, many of these owners have owned these mobile home parks for generations. They usually live in the mobile home park and also usually know the tenants by name. It’s very common to see mom and pops that collect rents at the door. Their goal is to minimize hassle and keep collecting cheques.
Many mom and pops often have no debt on these assets, and their cost is very minimal. It’s common to come across mobile home communities that haven’t had their rents increased in 10–20 years. However, many of these mom and pops are now ready to sell and move on into retirement. Now is the time to jump into the mobile home park asset class due to the majority of owners being ready to pass on the torch to the next generation.
That’s it for today’s show. Please tune in next week for our episode on why mobile home parks are also a known tax shelter. Thanks for tuning in.
Would you like the pre-investment checklist that I personally used to review mobile home park deals before I invest in them? We are offering this as a free gift to those of you who go to iTunes and leave our podcast a five-star review. To get the pre-investment checklist, leave us a five-star review on iTunes and then send us an email to firstname.lastname@example.org. In the email, please tell us who you are and what screen name you used to leave that review, and we will send out the pre-investment checklist directly to your inbox. It's that easy. Once again that email address is email@example.com. Thanks again for tuning in.