Investors turn to mobile home parks as demand for affordable housing increases
Due to high housing costs, mobile home parks are becoming increasingly popular with various types of tenants. Wall Street is capitalizing on this trend and investing in both mobile home parks and built-to-rent communities.
Build-to-let communities refer to building large tracts of single-family home communities for long-term rental. Mobile home and rental construction tenants stay in their communities much longer than apartment tenants, making them even more attractive to investors.
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Two Key Benefits of Investing in Mobile Home Parks
Lower unit cost: One of the main advantages of mobile homes is that investors can get more units for a lower unit cost. An investor could purchase a five-unit apartment building for $1 million with a unit cost of $200,000. On the other hand, an investor might have a unit cost of $10,000 if they purchased a mobile home park with 100 lots available for $1 million.
Tenants are responsible for repairs and maintenance: With mobile homes, the tenant owns the home itself, but the investor can own the land. Since the tenant owns their home, they would be responsible for repairs and maintenance. Investors can save even more money by not having to be responsible for these repairs. This expense is also greater since the price of many resources, including wood, has increased by more than 200% since 2019.
Alden Global Capital acquires Chapel Hill Mobile Park
Alden Global Capital, a New York-based hedge fund, holds stakes in real estate across the United States. He recently acquired a mobile home park in Chapel Hill, North Carolina, which has been controversial in the local community. Residents complained that the hedge fund was raising rents without improving maintenance or amenities. Rising rents have pushed these tenants into mobile homes, and even higher rents could lead to more homelessness.
The Carlyle Group buys four Mesa home parks for $230 million
This hedge fund manages more than $301 in assets under management (AUM) and holds stakes in news companies and real estate. He purchased four mobile home park units in Mesa, Arizona at an average cost per unit of $145,293. Outside of Arizona, the Carlyle Group Inc. (NASDAQ: CG) also acquired mobile homes in Florida and California. These three states are prime locations as they are part of the Sunbelt, which has some of the fastest real estate markets in the United States.
West Valley MHC: A New Mobile Home Investment Opportunity
Accredited investors can invest in mobile home parks using Realty Mogul. One of RealtyMogul’s newest offerings is West Valley MHC, a mobile home community with 411 units in Las Vegas, Nevada, each renting for an average of $811 per month. West Valley MHC holds promise as it is located in Las Vegas, which is one of the top five rated US rental markets in terms of rental growth and demand.
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Housing prices continue to soar, prompting some to move into mobile home parks. Mobile home parks have cheaper rent and overhead than traditional apartments. Wall Street firms like The Carlyle Group and Alden Global Capital recognize this and are pumping money into this space. Accredited investors can also access this booming real estate market using sites like RealtyMogul.
Photo by Roger Starnes Sr on Unsplash
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