Midwest Park Capital has launched its first manufactured home community fund. The $10 million Mobile Home Park Investment Fund LLC will target a diversified portfolio of low-risk, high cash-flow properties in order to deliver capital preservation, consistent quarterly cash-on-cash income and equity growth.
The fund will target strong sub-markets in secondary and tertiary markets with annual population growth of more than 4 percent and rental rates below market rate, focusing on communities ranging in size from 75 to 250 units and completed between 1970 and 1990. After purchase, the fund’s strategy is to evaluate and implement capital improvements to the property’s infrastructure and common-area facilities in order to maximize return on investment.
Despite being commonly known as mobile homes, manufacture housing is not as mobile as many might think. In a press statement, Jonathan Tuttle, co-manager of the Mobile Home Park Investment Fund, said that most owners of this type of assets tend to sell their property rather than move it. This contributes to the stable cash flow of the communities and—given that some 92 percent of properties still have mom-and-pop ownership—it highlights the fact that the sector is prepared for disruption and acquisition. In addition, these properties have had the lowest failure rate out of all asset types over the last 50 years and bank lending data shows they have been one of the best-performing during the current health crisis, Tuttle noted.
Answer to affordability
According to Co-Manager Cristian Dukes, the fund’s goal is to help solve the affordable housing crisis while providing strong and stable returns to investors. With some 22 million people—or roughly 8 percent of the U.S. population—living in a manufactured home and nearly 60 million people in need of affordable housing, manufactured homes are growing in popularity as a possible alternative.