Still a good time to be in the MHP business? - Posted by Brian,WI

Posted by tom on October 22, 2003 at 06:54:45:


i had a talk with my banker recently and she said that the whole way banks look at financing MH is about to change. this is a BIG deal. basically many of the big players have dropped investing in singlewide notes, and the remainder now charges much higher rates.

a similar shake up is underway in doublewides. this has got to effect parks as the financial costs to the owner/tenants goes up in comparison to other forms of housing. i am sure Ray would have more of the details of these events.

i guess you can’t have your cake and eat it too. i got a double on 5 ac that the bank had ‘written off’ because of structural damage (which i fixed). that cost them around 70k. in a low income area around me there are doubles 10-15 yrs old that are totally trashed. water/moss seems to be an issue with the low pitched roofs, and the mostly glue siding. the older metal-metal (or the T-111) ones seem to hold up better, tho the banks dislike them even more (i think they are better built for around here).

sunshine in your day
from the land of rain (WA),


Still a good time to be in the MHP business? - Posted by Brian,WI

Posted by Brian,WI on October 17, 2003 at 20:28:58:

Hi all,

I may go back after a MHP deal I’ve posted plenty about here. There was some jacking around (buy seller) last time, but I’m gonna see if I can still make it work.

The question is…Is the MHP business still viable with the low interest rates and easy to get loans? I’m sure there hasn’t been a mass exodus of MH in park owners to single family homes, but it seems like there has been a decline in the purchase of MH’s and some dealers REALLY downsizing.

So what do you think?

Good Question - Posted by ray@lcorn

Posted by ray@lcorn on October 20, 2003 at 13:46:17:

Hi Brian,

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.


Re: Still a good time to be in the MHP business? - Posted by Chuck

Posted by Chuck on October 18, 2003 at 24:12:07:

Spend a month reading the mobile home forum (and it’s archives) on this site… every question and situtation you could think of has been asked and answered there many times over.