Why Manufactured Home Communities (MHCs) Will be Hot in 2025 and Beyond
Can the appeal of manufactured housing as an investment grow even stronger? Experts weigh in on the sector’s prospects
The following are excerpts from a comprehensive report by Laura Calugar @ MULTIHOUSING NEWS — Banking on its inherent affordability and independent, self-sustaining nature, manufactured housing has continued to shine over the past decade. Nowadays, demand is through the roof, supply is barely catching up, rents are accelerating and occupancy is as high as it’s ever been.
“Since 2014,when national manufactured housing occupancy rates sat at 86.5 percent, the rate has risen an average of 90 basis points annually,” said Anthony Pino, manufactured housing specialist with Northmarq. And the healthy occupancy has been complemented by gradual rent increases, which hit 7.7 percent over the past 12 months.
These robust fundamentals have been steadily attracting new institutional investors and REITs ultimately leading to further consolidation within the space. Other reasons why this asset class is getting so much attention include the land-lease model that reduces capital expenditures for operators, and the fact that MHCs operate without government subsidies, providing a stable, market-driven approach to affordable housing.
“It often represents the lowest-cost primary housing available” said Mike Nissly, founding member of the Manufactured Housing & RV Group at Colliers. “Investors find the manufactured housing sector appealing as it aligns with essential macro investment themes, namely affordability and senior housing demand.”
Additionally, what continues to drive the investment appeal is the benefit of not owning the habitable dwelling. The parks can operate on a 40 to 55 percent expense load or an expense per site of $3,000 to $5,000, depending on the property tax format for each state, according to Danny Douglas, senior managing director with the Danny Group at Marcus & Millichop. And as interest rates drop, the asset class’ appeal to institutional investors looking for an attractive long-term yield and stability will only grow.
