The total returns on MHPs have been attractive and consistent over the last 25 years. Not uncommon to see double digit total returns.
Limited & Decreasing Supply
Approximately 42,000 MHPs in the US. Supply is decreasing as MHPs are taken out of service, often for redevelopment and new supply not keeping up. 1% of MHPs are demolished each year.
Strong and increasing demand for affordable housing such as mobile homes. Number of HH burdened by housing costs is projected to continue to increase over the next 20 years. US population getting older and have little to no savings, so increased demand for affordable housing.
The lowest capital expenditure to revenue of any real estate asset class ex 8.8% for apartments and 3.5% for MHPs. With the traditional MHP model you are typically only providing land and utilities.
MHPs have proven to be much more resistant than other property types during economic down-cycles. MHPs revenue is the least impacted by changes in GDP. Low yearly tenant turnover at 2% for MHPs compared to 47% for apartments.
New MHP development is essentially nonexistent. Estimated only 137 MHPs built in the last 11 years ending 2018 and some of this development is additional phases of existing parks. 68% of all MHPs where built prior to 1980. Government restrictions and NIMBYism inhibits new development.