The word “mobile” in “mobile home” could not be farther from the truth, according to Rolfe. The actual statistic is that 98% of manufactured homes never move from the spot where they were originally delivered. Fortunately, attitudes are changing.
He points out that recently, even the largest private equity group in the U.S. – the Carlyle Group – has started to invest in manufactured home communities. In addition, few people realize that Warren Buffet is now the largest owner of factory-built homes and financing, and that Sam Zell is the largest owner of manufactured home communities. So why is Wall Street so impressed with the manufactured home community business?
Rolfe says that the number one attraction for Wall Street investors to manufactured home communities is that these properties have the highest returns of any form of real estate investment. He feels this is probably because there are more sellers than buyers, thanks to decades of the “stigma” scaring off widespread investor interest.
Nuwire Investor tells MHProNews that manufactured home communities focus on the lowest earning demographic group in the U.S. – those that earn from minimum wage to around $15 per hour. Sixty percent of all new jobs created in the U.S. since the “Great Depression” of 2007 began are minimum wage. Affordable housing becomes even more in demand during times of economic hardship. It’s the same concept that is propelling Dollar Tree and Dollar General past their rivals.
Manufactured homes are the least expensive form of housing in the U.S. As a result, there is always room to push rents higher, as even a 100% increase in most markets maintains the status of being cheap. The average apartment rent in the U.S. is $1,030 per month. The average manufactured home lot rent is $250.
Rolfe, who is owner of one of the country’s largest group of manufactured home communities, says that one benefit of owning these communities is that they have an enviable expense ratio that runs typically 30% to 40% of gross. This is the lowest of all real estate sectors. One key driver to this is that manufactured home communities are all about renting land, and land does not require any repair & maintenance to the homes, although there is some upkeep required for water lines and septic / sewer systems.
Another thing that makes existing manufactured home communities valuable is the fact that there are few new communities being built. While you can develop a new apartment complex, retail center or self-storage facility virtually anywhere, Rolfe says it’s difficult to put in a new manufactured home community. Because of the “stigma” that manufactured home communities have been saddled with, this makes the likelihood of competitive communities springing up very doubtful. Having no future new supply always makes values remain high and even increasing.
Rolfe has been an investor in manufactured home communities for almost two decades, having owned and operated more than 110 manufactured home communities during that time. He is currently ranked, with his partner Dave Reynolds, as the 10th largest community owner in the United States, with more than 13,000 lots in 20 states in the Great Plains and Midwest.
Rolfe’s first venture into this market was his purchase of a community in Dallas called Glenhaven. His feels that his talent lies in buying poorly managed communities and turning them into model home communities. He said that he has always believed manufactured home communities are all about “affordable housing”.
“Beginning with Glenhaven, I noticed that a manufactured home community – when properly managed – offers a significantly better quality of life than a comparably priced apartment. Nobody likes to have neighbors banging on their walls and ceilings, or the lack of a yard or nearby parking – or just the lack of a feeling,” he explained. “It occurred to me that I could have my phone ringing off the hook if I could deliver an affordable detached dwelling with a yard that was safe, clean and respectable. That’s what I delivered at Glenhaven, and that’s what I’ve been doing ever since.”
Rolfe feels that nothing has much changed in the manufactured home community industry over the past 50 years, except for the perception of the industry. He says that Wall Street is suddenly waking up to the amazing advantages of investing in manufactured home communities, and the rest of America cannot be far behind. ##
(Photo Credit: NuWire Investor)
Article submitted by Sandra Lane to – Daily Business News – MHProNews.
