Rents Increasing & Vacancy Decreasing –
Tightening vacancy is promoting rent growth across the US. As less lots are available to place homes, the average monthly rent is climbing. Rents vary widely throughout US markets from the lowest average monthly rent in the Mid-Atlantic of $404 to the highest average monthly rent of $580 in the West. Vacancy varied in Q2 ‘19 with the highest in the Midwest at 14.6% to a low in the West of 5.1%.
Higher Sales Prices
Sparse number of parks for sale yet interested buyers are plentiful. Investors currently willing to consider smaller sized parks outside their preferred geographic boundaries in secondary and tertiary markets. Also willing to consider parks that have deferred maintenance, private utilities and some POHs.
Cap Rate Compression
Large top-tier parks that come available have many offers with cap rates in the 4% – 5% range but can dip to 3%. On the other end of the pricing spectrum for a locally owned Class C less than 50 lot parks in the South may have a double- digit cap rate.