Issue link: https://read.dmtmag.com/i/119220
COMMUNITY CONSULTANT How Manufactured Home Communities Became Sexy - And Why They'll Stay That Way BY FRANK ROLFE When I got in the manufactured home com- $20,000 per year or less. 7% of the U.S. popmunity business, nobody had any interest in it ulation is in poverty. 50 million Americans are at all. Why should they? Back then, America on food stamps. The new reality is not prosperwas on a prosperity wave and the last thing that ity but survival. Well-paid factory jobs have appeared a growth industry was cheap housing. been replaced with minimum wage. And the Self-storage facilities were the new, hot thing, unemployment rate is nearly 10%. fueled by the industry roll-up of Public Storage. Suddenly, affordable housing became It looked as though manufactured home comimportant munities were on a continual decline, and those If you earn $20,000 per year, then your total involved in them were budget for housing is going to end up like folks around $500 per who invested in 8-track month. That pretty In only twenty years, tape technology. Making much eliminates every manufactured home things worse was the extype of dwelling explosion of new manufaccept for living in a communities have tured home sales in the manufactured home gone from wallflower late 1990's, which gave a community or a bad false boost to the business apartment. And to the beauty queen of given these options, model, and made a joke of the industry by danthe manufactured real estate investing. gling a carrot made of home is always the And there's absolutely plastic – and then taking winner. That's why away about as many ocnothing on the horizon our community in cupied lots as they filled, Marion, Iowa reto take away the once the chattel collapse ceived over 170 calls began. looking for housing trophy. Then America went last week. The debust mand for affordable The prosperity wave in the U.S. came to a housing grows daily, and we are the only niche screeching halt about 2006. Suddenly, the that can adequately serve this market. American economy began the biggest decline Meanwhile, the industry gained since the Great Depression. Today's statistics credibility and visibility are alarming if not unbelievable. 47% of AmerThe first time that I saw a positive writing on icans are on some form of social program. 20%+ the manufactured home community business of U.S. families have a household income of was when it made "The Millionaire Next Door" APRIL 2013 20 THE JOURNAL book's list of top investments of millionaires. Then you had Warren Buffet's purchase of Clayton, and the Berkshire Hathaway stamp of approval on the industry made people take notice, most of whom had never even thought of manufactured homes before. And, of course, having Sam Zell as the largest owner of communities gives a certain respectability, due to his long success record of timing and real estate asset class selection. And the other forms of commercial real estate tanked All the former darlings of commercial real estate have lost their allure in modern times. The advent of the internet has changed the demand for office space and hotel rooms. Expensive housing options, such as luxury condos, have been hit by the removal of no income documentation loans, and higher down payments. On-line options such as Amazon and eBay have taken the gusto out of brick-and-mortar retail. The decline of manufacturing has hit industrial space. And only a crazy person would be developing residential lots when we have a multi-year oversupply in virtually every metro market. High yields and low defaults are the new sexy Sure, manufactured home communities are not always pretty. They don't always make for terrific cocktail party conversation. But they deliver in three very important areas: they have strong cash flow, dependable occupancy, and the lowest default rate of any type of real estate loan. In a troubled economy, those qualities are what's important. Today, buyers and lenders