How has COVID affected the MHC industry?

Over the past few years, manufactured housing communities (MHCs), have become extremely popular as there is a great demand for affordable housing in the United States. As the COVID 19 pandemic continues to impact business throughout the country, there is an even greater demand for affordable housing and MHCs are proving to be recession resistant. Only two years ago office and hotel investments were on the rise. Today both of those are dead zones and savvy real estate investors are turning to manufactured housing. With stay-at-home orders, urban rioting and the loss of jobs, the American population is escaping the urban core and moving into the suburbs greatly attracted by the prospect of living in mobile home communities.

American population is escaping the urban core and moving into the suburbs greatly attracted by the prospect of living in mobile home communities.

With the global realization that we can work well remotely, people are moving out of metropolitan centers to reduce their rent expenses. “Manufactured Housing is a steppingstone to traditional home ownership for a large population of renters coming out of the city. For someone who is a renter and doesn’t have the means to go into traditional single-family homes, manufactured housing is a great alternative. With MHCs you actually own your home so it’s a quasi-equity, but you lease the land the home sits on, so it checks the affordability box,” says Peter Tripp, Vice President at Onyx Capital.

“Low-cost housing is becoming a top priority. You can’t get any better when it comes to affordable housing than manufactured homes,” says Jeff Rose in “How To Invest $1 Million In 2021 – Without The Stock Market,” in Forbes Magazine. MHCs can deliver outstanding quality and performance at prices that are up to 50 percent less per square foot than conventional site-built homes, according to Manufactured Housing Institute. “Today’s manufactured homes are built to a standard of safety comparable to, and in some cases exceeding, standards for site-built housing,” MHCs are far more eco-friendly than site-built communities and use fewer materials without compromising the home’s safety or structure. In addition to low cost and safety, residents enjoy living in land-lease mobile home parks because of their community feel and sense of belonging. Social distancing has reminded us of the importance of interacting with our neighbors (albeit over the fence) and enjoying green spaces which are both big parts of mobile home communities. Apartments are no longer in demand and people dream of a detached dwelling with a yard. “With every health reminder that the only safe place is “outdoors” it’s easy to see why mobile home parks and their micro green spaces (yards) and macro green areas (common areas to walk) are hotly in demand,” says Frank Rolfe in his article, “How We Sold 11 Homes In The First Business Day of 2021” for Mobile Home University.

MHCs can create higher yield for investors as there is minimal turnover and their tenant retention (or stickiness of tenants) is strong. Since residents own their mobile home units and it’s very expensive to move them, they usually end up selling their homes and therefore maintaining MHC occupancy. “Tenant retention of the asset class through the pandemic has proven the stability of the asset class and those are the things, going forward, that investors are looking for,” says Peter Tripp from Onyx Capital. Investing In a tax protected cash flowing asset is attractive to everyone.

Large institutional capital is chasing deals in MHCs because they understand how effective mobile home tenant retention is. “Proving tenant retention abilities of manufactured housing through the pandemic has garnered more interest from large institutional capital, bringing them into the space now. Going forward we expect to see a further consolidation of the space,” adds Peter Tripp. So, if you are looking to make a smart investment that will not be affected by the national recession, let us help you.