Manufactured housing offers an affordable housing option for an increasingly cost-burdened population. Harvard researchers found that nearly half of renters were cost burdened (defined as spending more than 30% of income on rent).
The Supply of Manufactured Housing is Declining
Manufactured housing communities are regularly demolished in favor of redevelopment into alternative uses such as apartment complexes and shopping centers.
Government Sanctioned Oligopoly
Political and economic concerns surrounding manufactured housing curtail their development, with only a small number of communities built in the United States each year. Most municipalities have banned the development of mobile home parks in recent decades.
Stable tenant base
The average length of tenancy of a mobile home park tenant exceeds ten years. This is in sharp contrast to apartment tenants, whose average tenure is only a few years. Vacancy in strong mobile home park markets is low and the switching costs associated to move a mobile home are high.
Low maintenance costs
Manufactured housing, relative to other real estate assets classes, experiences low maintenance costs when manufactured housing community owners own few to no mobile homes and only lease the underlying land to the tenants.
Mobile home parks are often mispriced, resulting in attractive investment opportunities. This mispricing can result from mismanagement of the park and misconceptions surrounding the asset class, among other reasons.