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Passive Investing in Mobile Home Park REIT's (Real Estate Investment Trusts)

Updated: Sep 20







SHOW NOTES


Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. This is the first episode in a new series on “how” to invest passively in mobile home parks. On this episode of the Passive Mobile Home Park Investing Podcast, Andrew talks about investing in trailer park real estate investment trusts (REIT’s). REIT’s own and operate everything from hospitals to warehouses and even mobile home parks. They trade, just like stocks but they are required to pay out 90% of their profits as dividends. Check out this episode to find out the reasons why REIT’s maybe a good option for investors looking to retain a high level of liquidity.


Andrew Keel is the owner of Keel Team, LLC, a Top 100 Owner of Manufactured Housing Communities with over 1,300 lots under management. His team currently manages over 20 manufactured housing communities across ten states – AR, GA, IA, IL, IN, MN, NE, OH, PA and TN. His expertise is in turning around under-managed manufactured housing communities by utilizing proven systems to maximize the occupancy while reducing operating costs. He specializes in bringing in homes to fill vacant lots, implementing utility bill back programs, and improving overall management and operating efficiencies, all of which significantly boost the asset value and net operating income of the communities.


Andrew has been featured on some of the Top Podcasts in the manufactured housing space, click here to listen to his most recent interviews: https://www.keelteam.com/podcast-links. In order to successfully implement his management strategy Andrew’s team usually moves on location during the first several months of ownership. Find out more about Andrew's story at www.AndrewKeel.com.


Would you like to see mobile home park value add projects in progress? If so, follow us on Instagram @passivemhpinvesting for photos and awesome videos from our recent mobile home park acquisitions. Once again, that's @passivemhpinvesting on Instagram. See you there.



Talking Points:

00:20 - Welcome back to the Passive Mobile Home Park Investing Podcast

01:13 - A single investor versus partnering with a larger group of investors

02:08 - Mobile home park investing in four different ways

02:55 - Investing in trailer park real estate investment trusts (REITs)

04:09 - The benefits of REITs

04:28 - The three publicly-traded, mobile home park REITs

05:00 - Sun Mobile Home Communities

05:40 - Equity Lifestyle Properties Inc.

06:33 - UMH Properties Inc.

08:08 - The downside to REITs

08:30 - In conclusion

09:42 - The pre-investment checklist




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Links & Mentions from This Episode:

Sun Communities: https://www.suncommunities.com/

Equity Lifestyle Properties: https://www.equitylifestyleproperties.com/

UMH Properties Inc.: https://www.umh.com/

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

Andrew Keel Facebook page: https://www.facebook.com/PassiveMHPin...

Andrew Keel Instagram page: https://www.instagram.com/passivemhpi...

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 this episode of The Passive Mobile Home Park Investing Podcast. This is your host, Andrew keel. This episode is the start of our next series, and it will cover how you can invest passively in mobile home parks. We are going to discuss the different avenues available for passive investors to start investing in the space.

Also, starting this week, we are going to start publishing some of our recent interviews. Episode 14 is going to be our first interview with experienced securities attorney Mauricio Rauld. We have several other amazing interviews scheduled, and I'm going to start posting these sooner than originally planned. Buckle up for lots of takeaways, and getting to know some of the industry's top experts.


Many new investors don't know that they can partner with a larger pool of investors to buy large multifamily properties, for example, mobile home parks. As a single investor with $50,000-$100,000 to invest in real estate, one could probably only afford to invest and purchase a single-family rental, but as a pool with other investors, you can take advantage of the scale and returns available in bigger properties.


Also, partnering with a larger group of passive investors comes without the usual landlord hassles, including tenants and toilets. There are four main ways one could invest passively in the mobile home park space, and we're going to cover those in the next few episodes.


The first option is investing in one of the publicly traded mobile home park REITs, and this is what we're going to talk about today. The second option is investing in a mobile home park investment fund. The third option is to invest directly into mobile home parks as a limited partner via property-specific syndication or joint venture. Option number four is to buy a mobile home park directly oneself and hire a property management company to run operations. However, this is definitely more of an active role than you might think, and we will discuss this further in another episode.


Today, we're going to focus on the first way you can invest passively in mobile home parks, and this is through a REIT or a real estate investment trust. REITs own and operate real estate, everything from hospitals, to warehouses, and mobile home parks. They trade just like stocks, but they're required to pay out 90% of their profits as dividends. REITs also can take an unlimited number of non accredited investors, which is important to note because, in some of our other passive investment options, investors must be verified as accredited.


We will discuss the definition of accredited in a later episode, but basically you have to have a certain net worth or income annually in order to participate in the investment. REITs are a great option for income investors that want to retain a high level of liquidity. However, the returns can be relatively low compared to the potential in other passive mobile home park investing options like syndications and funds, for example. At the same time, you're sacrificing liquidity in exchange for these potential higher returns.


Benefits are REITs are very stable investments, and all three companies have been around for 45 years or longer. There are three publicly traded mobile home park REITs, and one can buy stock in all three, just like one would buy and sell any other publicly-traded company stock. The three mobile home park REITs are—in order of highest to lowest total returns based on their year-end 2019 reports—1) Sun Communities, 2) Equity Lifestyle Properties, 3) and the UMH Properties.


Number one, Sun Communities Inc, their stock symbol is SUI. Their website is suncommunities.com. Sun Communities has a large portfolio in Michigan, Florida, and Texas, with currently over 60% of their holdings in these three states. A quick fact about Sun Communities, according to the Sun Communities June 2020 investor report, their yearly home move-outs are less than 1%. Tenure of residents in Sun Mobile Home Communities is approximately 14 years. Talk about a sticky tenant base. Sun Communities has been in business for over 45 years.


On to the next one is number two, Equity Lifestyle Properties Inc. This is Sam Zell’s company. Their stock symbol is ELS. Their website is equitylifestyleproperties.com. ELS has a high concentration of properties in coastal states, like Florida, Arizona, and California. They focus primarily on Class A, amenity-rich resort communities. Quick fact about Equity Lifestyle Properties, the average age of their tenant base is 56 years old. This may show us that ELS has made a bet on riding the silver tsunami wave we spoke about back in episode three. ELS has been in business for over 50 years.


On to the third option, last but not least, is the small-cap UMH Properties Inc. Their stock symbol is UMH, their website is umh.com. UMH’s portfolio is highly concentrated in the Northern Appalachian shale region. Pennsylvania and Ohio hold more than 60% of UMH’s portfolio. Quick facts about UMH, their average monthly site rent is $453 a month, and that's according to their May 2020 investor report. UMH has been in business for over 50 years as well.


It's important to note that each of these three mobile home park REITs also has ownership in resort-style RV parks that make up about 25% of their portfolios. According to an article written by Hoya Capital about the manufactured housing REIT industry, it states the following.


Manufactured housing REITs were one of the best performing real estate sectors of the past decade. The sector produced cumulative returns that nearly doubled the next closest REIT sector. Mobile Home Park REITs outperformed the REIT average for a remarkable 7th straight year in 2019. The downside to REITs is that investors can't take advantage of some of the potential tax benefits available in privately held real estate investments. Most syndicates, for example, are structured as flow-through, or pass-through entities, which means items like depreciation, and interest expense are passed through to the individual investors.


In conclusion, if high liquidity is important to you, then REITs are a great option for passive investing in this asset class. These REITs are holding high-end properties in their portfolios, and their end goal is stability. Value-add properties just aren't as attractive to these large owners. Also, REITs need bigger properties to move the needle for a large amount of capital they need to deploy.


That's it on this method of investing passively in mobile home parks. Please hit the subscribe button to get set up to receive episode 14 later this week, which will be our first interview on the podcast, and again that is with securities attorney, Mauricio Rauld. Mauricio and I discuss the most important things investors need to look out for when investing in passive mobile home park opportunities.


Also, next week, we are launching episode 15, which will be all about mobile home park investment funds. Make sure you don't miss those. That's it for today. Thank you all so much for tuning in.


Would you like to see mobile home park value add projects in progress? If so, follow us on Instagram @passivemhpinvesting for photos and awesome videos from our recent mobile home park acquisitions. Once again, that's @passivemhpinvesting on Instagram. See you there.

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