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  • Andrew Keel

Mobile Home Parks Have a Low Loan Default Rate

Updated: Jul 22



SHOW NOTES


Welcome back to the Passive Mobile Home Park Investing Podcast hosted by me, Andrew Keel.


In this episode, I’m going to be talking about the sixth reason why you should invest in mobile home parks. Reason #6 is all about low loan default rates. Manufactured housing communities have a 50% lower loan default rate compared to multifamily apartment default rates. Today I’ll talk about those low loan default rates and share examples of some big names and success stories in manufactured housing.


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 at 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.


Talking Points:

00:20 - Hello and Welcome

00:40 - Reason #6: low loan default rates

00:47 - Mobile home default rates compared to multifamily apartment default rates 01:30 - Warren Buffet and Clayton Homes

02:35 - Sam Zell and Equity LifeStyle Properties

03:20 - Summary and Conclusion

03:42 - Pre-investment Checklist


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https://www.youtube.com/channel/UCy9uI3KGQmFgABsr9lUtRTQ Links & Mentions from This Episode:

Keel Team's official website: https://www.keelteam.com/

Andrew Keel's official website: https://www.andrewkeel.com/

Andrew Keel LinkedIn: https://www.linkedin.com/in/andrewkeel

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Twitter: @MHPinvestors

TRANSCRIPT


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 are going to discuss reason number six as to why you should invest in mobile home parks. Number six sells itself, in my opinion. Mobile home parks have one of the lowest default rates out of all commercial loans.


Don’t just take my word for it. Daniel Din, the Multifamily Credit Director at Freddie Mac says that manufactured housing communities have a 50% lower default rate compared to multifamily apartment default rates. That’s huge.


Mobile homes may not seem like the most glamorous real estate investment, but the industry has drawn some of the biggest and most successful investors in the United States. Let me know if any of these names ring a bell: Warren Buffet, Sam Zell, Blackstone, the Carlyle Group. All four are currently active in the space.


Billionaire Warren Buffet owns Clayton Homes, the largest manufactured home company in the country. Clayton Homes delivered over 44,000 factory-built homes in 2019 alone. Warren Buffet also owns Vanderbilt Mortgage that lends on mobile homes and mobile home communities, and 21st Mortgage. 21st Mortgage is the largest lender for manufactured houses in the United States.


The Oracle of Omaha seems to be having success in the space as well. According to the Warren Buffet 2019 Berkshire Hathaway letter to shareholders, it was stated that the increase in revenue in 2019 alone approached what the firm paid to acquire Clayton Homes back in 2003.


Another big name in the industry is billionaire Sam Zell. Mr. Zell runs Equity LifeStyle Properties which is the largest owner of mobile home parks in the world. He was quoted during the middle of the COVID-19 shutdown, saying how manufactured housing has performed well and that he believes that it will continue to perform well through the black swan pandemic event. Zell’s firm has poured $150 million into expansion last year, and they finished 2019 with over 150,000 home sites which is 11% more than it’s 2011 total.


In conclusion, low loan default rates could be correlated to lower risk for investors. Make sure to tune in next week for our episode on how it’s estimated that 90% of mobile home parks are still owned by mom and pop owners. That’s it for today. 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 passivemhpinvesting@gmail.com. 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 passivemhpinvesting@gmail.com. Thanks again for tuning in.

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