Good Question - Posted by ray@lcorn
Posted by ray@lcorn on October 20, 2003 at 13:46:17:
Good to hear you’re still kicking things around. (better than getting kicked around, huh!) I like to revisit blown deals too… never know when the seller may come around to my way of thinking.
You?re asking a good question too. Of late I?ve been evaluating my thoughts regarding all categories of real estate investment properties, and quite honestly I?ve given parks short shrift because of my heavy involvement with retail, hotel and multi-family residential over the last few years. Like everyone, I tend to concentrate on what is in front of me to be done, and my focus has been elsewhere. But I’ve continued to evaluate deals and search for development opportunities in this sector as well. I’ve had too much success with the property type over too many years to ever leave them for long.
In times like these it is valuable to question the status quo, and evaluate whether what has always been will continue to be so. As I survey the economic landscape, more often than not the answer is no, things will change and are changing. I think this is true for the real estate industry as a whole, and may extend even further into the fundamental structure of our economy. The effects on manufactured housing communities specifically will be affected by those broad changes, as well as industry specific challenges.
The short answer to your question is yes, parks remain a stable and attractive investment, for all the same reasons that were true in the past. They have a much more stable income stream than other forms of rental housing; zoning and land-use regulations create high barriers to entry for competition; and, the product itself, i.e. affordable housing, is one with an ever present market.
But I always have qualified that opinion with a disclaimer that local market factors generally control whether a particular property is a good investment. Nothing substitutes for a good market, and entering a poor one takes a different skill set than operations in normal conditions.
Now there is a further qualifier that has to be considered. The manufactured housing industry has suffered some lumps in recent years that the overall real estate markets have not, and those industry specific factors can and do have a bearing on the future of owning parks. I started answering this post on Saturday, and the more I thought about the topic, the more questions I had. As I researched to find answers to the various ramifications of recent industry events, my response to your post grew into an article length essay about the state of the industry and how I see things playing out.
I’ll finish the article and get it to JP to be posted here on CRE Online. Watch for it with the next site update.