Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.
As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...
From Dennis Fassett, Cash Flow Mercenary...
In my never-ending search for trends and ideas for real estate investing, I read an interesting piece about mobile homes.
After traveling in relative obscurity for decades, except for a few heavyweights like Sam Zell, it looks like 2017 is the year in which mobile home parks will finally be identified for the wonderful business models that they are, as well as the prime solution to the affordable housing issues in America.
The interesting thing is that this attention is coming from a number of sources. Here are the sources the article discussed...
The U.S. Government
After being ignored by the Federal Government for the past 50 years, that period of silence is ending. In 2016, Congress passed a bill that allows Section 8 vouchers to be used to buy mobile homes beginning in mid-2017.
That’s a huge step, as there are roughly as many people in Section 8 apartments in the U.S. as there are in all of the mobile home parks in the U.S. combined.
In addition, Fannie Mae and Freddie Mac have introduced new programs to finance mobile home parks that are more attractive than any other offering. Finally, there is talk that Fannie Mae and Freddie Mac may start working on making it easier for first-time homebuyers to buy a mobile home – by taking a more active role in repurchasing these loans. It’s a great year for the industry legislatively.
The Media
Although the media has for decades relegated the very concept of the mobile home park as something to ridicule – through such shows as COPS, Myrtle Manor and Trailer Park Boys – that attitude is shifting as a result of the very serious issue of housing those of lesser incomes.
The affordable housing crisis in the U.S. is a huge news story, and the nation’s newspapers, magazines, television stations and online sources are beginning to look past those old stereotypes and see the bigger story: that mobile home parks allow people to be homeowners and have a nice yard and neighborhood for a fraction of the price of single-family and multi-family options.
Private Investment Groups
There were three $2 billion transactions in the mobile home park sector in 2016:
1) The sale of Carefree to SUN (a U.S. REIT)
2) The sale of Northstar to Brookfield (a Canadian REIT)
3) The sale of YES to GIC (the sovereign nation fund of Singapore)
Clearly, the mobile home park industry is poised for massive consolidation. The Carlyle Group – the largest private equity group in the U.S. – already owns over 3,000 lots and is buying more.
These transactions give incredible credibility to the industry and helps it become more mainstream.
Bottom Line
So, 2017 is looking to be a pivotal year for the mobile home park industry.
It already has the highest yields of any form of real estate, but it has long lacked respect. This year, that missing element is coming into focus, and it’s an exciting time to be involved in the birth of a mainstream real estate investment arena.
If you are not currently investing in mobile home parks, you should definitely investigate this opportunity before it’s too late.
You In?
Are you into mobile home investing? Share below.
Dennis Fassett
earned a BS in Economics and followed that up with an MBA in finance. After working and corporate finance and banking for several years, he started buying single family houses, and quickly built a very nice portfolio of cash flowing rentals. When the credit markets started to dry up and he couldn’t get any additional single family mortgages he shifted his focus to apartment buildings. He now has over $3 million in rental real estate. He manages most of it his self and still has a day job. Dennis has even created his own Private Equity fund to buy apartment buildings.