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The Future Of Mobile Home Park Investing: Three Big Names

Chief Executive Officer at Keel Team Mobile Home Park Investments, overseeing the company’s acquisitions and investor relations.

If you’re considering large-scale commercial real estate investment options, you may initially think of apartment complexes or modern mixed-use developments. However, for some private and public companies, as well as legendary individual investors, mobile home parks offer exceptional upside opportunities along with some downside protection. In this article you will learn where I think the future of mobile home park investing is headed and who some of the biggest players in the space are.

Warren Buffet

Among the Oracle of Omaha’s game-changing investment strategies have been big bets on mobile homes. In 2003, Berkshire Hathaway purchased Clayton Homes, currently the largest builder of manufactured housing in the United States. Clayton subsidiaries include 21st Mortgage (the country’s largest lender for manufactured and mobile homes) and HomeFirst, an insurance agency offering coverage to mobile home owners. In 2003, Berkshire Hathaway acquired Clayton Homes for $1.7 billion; 17 years later, in 2020, the pre-tax earnings of Clayton Homes reached $1.25 billion. It’s easy to see that Warren Buffet’s bet on mobile homes is paying off.

Sam Zell

As the iconic founder of Equity Group Investments, Sam Zell has decades of experience in a range of commercial real estate strategies. As Chairman of the Board of Equity LifeStyle Properties, Inc. (ELS), the country’s largest owner of mobile home parks, Zell sees tremendous growth potential in both manufactured housing communities (another name for mobile home parks) and RV resort properties. ELS is continuing to make strong moves in this space, recently acquiring RVC Outdoor Destinations, MHVillage and Datacomp in December 2021 for a total of $147 million.

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Recently, private equity money has begun flooding into mobile home parks. Blackstone Group, with $881 billion AUM, has made some major mobile home park acquisitions over the last few years, and it seems they’re not slowing down. Blackstone isn’t the only private equity company competing in this space; Carlyle Group and Apollo Global Management, among others, also include mobile home parks in their real estate portfolios.

Investing Insights

Why has mobile home park investing attracted some of the top investors across the country? I think a primary reason is the unprecedented demand for affordable housing. Also, mobile home parks can typically be purchased for higher cap rates, providing investors more income per dollar invested. The majority of mobile home parks are owned by “mom-and-pop” Baby Boomer generation operators who are starting to retire. For these reasons, I see the mobile home park asset class continuing to consolidate over the next five to ten years.

Large operators are building investment portfolios full of mobile home parks and I think this is good for the asset class, stimulating capital improvements to older properties that are known for deferred maintenance. Through 2022, I suggest you keep an eye out for this alternative investment option. I predict that we will start to hear of even more big names joining the movement.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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