1. The Demand for Affordable Housing is Skyrocketing: The percentage of people in the U.S. considered “poor” or “working poor” (a family of four making $44,000 or less in annual income) now totals 48% of the population. This population will continue to increase due to the significant debt this country has at both the federal and state levels and increased global competition continuing to force down wages for the “working poor.” Combine the above scenario with the fact that very little affordable housing of any kind has been built in the U.S. since the mid-1990’s and it’s easy to see why manufactured homes are increasing in popularity and demand prices are going higher.
2. Higher Cash Flows: Apartments, by their nature, have 40-50% of their residents “turn over” each year, which requires maintenance employees and heavy maintenance costs. Well-run mobile home communities have less than 15% turnover annually as most residents own their own homes and cannot afford to move them. residents who own their homes are responsible for the maintenance of their home, not the community owner, thus eliminating the need for full-time maintenance employees. A well run apartment complex will have expenses averaging 50-55% of gross income. A well-run MHC will have expenses of 30-35% of gross income. Most people prefer to live in a manufactured home than an apartment.
3. One out of every 10 homes in America is a manufactured home: the demand continues as ten thousand baby boomers retire everyday according to the Washington Post, most will downsize living space and move to communities with onsite amenities such as manufactured home parks.
Manufactured homes are frequently misrepresented, stigmatized and overlooked as a source of affordable housing due to outdated stereotypes of “trailers” and “mobile homes,” yet manufactured housing that is well built and maintained can be attractive, more energy efficient than some site-built homes, grow in value and open the door to homeownership for millions of families.
- Produced in one-fifth the time and at half the cost of site-built homes, manufactured housing assembled in a controlled, factory environment uses fewer materials and generates 35%-40% less waste than comparable site-built units.
- Compared to a typical HUD Code manufactured home, an Energy Star qualified manufactured home can save homeowners from $190 to $246 a year in average energy costs, or 24% to 29% of total heating and cooling costs+
- The life expectancy of modern manufactured housing is equivalent to comparable site-built housing. Properly-installed manufactured housing under HUD’s new construction code is also as safe and storm resistant as any other new home.
Investing in safe and affordable housing for the poorest Americans may not seem sexy, but it sure is needed. And as an investor who has made a conscious decision to set my sights on Mobile Home Communities in some of the states that can use affordable housing most, I can honestly say that while the financial rewards are wonderful, the gratification of fulfilling a real need is even more rewarding.
Next time I will explain how and where a new investor can begin a buy and hold portfolio with as little as $500.00
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