Multifamily CCIM Feature

Moving Opportunities

Mobile home parks are an appealing niche within the multifamily sector that are here to stay.

On New Year’s Eve 1967, daredevil Evel Knievel attempted to jump over the fountains at Caesars Palace in Las Vegas. Falling short, he crashed spectacularly, suffering a crushed pelvis and femur and fractures to his hip, wrist, and both ankles. He spent several weeks in the hospital recovering.

More than two decades later, in 1989, Evel’s son, Robbie Knievel, successfully made the jump his father had failed to complete, becoming the first person to ever clear the iconic fountains on the Vegas Strip.

So why did one jump end in disaster while the other ended in glory? Because Robbie mitigated his risks. He studied his father’s jump and determined his father’s choice of motorcycle, a Harley-Davidson XR-750, was not ideal for the jump.

Robbie decided to go with the lighter and more agile Honda CR500 motocross bike he had been using up to that point because, unlike the Harley, which was built for dirt track racing, the Honda was built for jumping in motocross events. By making this one important decision, Robbie was able to mitigate the risk of crashing and successfully made the jump his father had missed decades earlier.

In 2020, many Americans experienced a different type of crash. As COVID-19 ravaged the U.S. economy, unemployment shot up to levels not seen since the Great Depression. Many workers suffered economic hardship from which many are still struggling to recover.

In 2008, amid the Great Recession, the country suffered a similar economic crisis. Emerging from that economic disaster, many of those affected individuals vowed to never be caught in that situation again. They decided to mitigate future risks to avoid the type of economic devastation they had just suffered through. 


Recession-proof cash flow, the idea went, would compensate for any loss of employment income. Recession-proof appreciation would protect against inflationary pressures during a downturn. Alternative assets, those uncorrelated to Wall Street, would ensure continuing cash flow and growth.

Those investors who learned from their mistakes in 2008, just like Robbie Knievel learned from his father’s mistakes, mitigated the risk of future disasters like the one in 2020 by turning to recession-resistant assets that offered ongoing income and growth — essential to not only riding out a storm, but also for achieving financial freedom.

What assets did the survivors of 2008 turn to that helped them weather the 2020 disaster? Many looked to income-generating real assets. By investing passively, investors were able to generate earnings around the clock as well as create multiple streams of this income — allowing them to move more and more away from a dependence on labor income.

The real asset class many investors gravitated towards was affordable housing. As demand in all other classes of real estate dropped in 2008, demand for affordable housing bucked the trend. Loss of jobs and a reduction in income forced many to downsize in housing.

In the years since the Great Recession, affordable housing has been in short supply as homeownership has become more and more elusive to more and more Americans — and the gap between supply and demand has only grown since 2008.

Knowing what we’ve learned about the demand for affordable housing in the past decade, it should come as no surprise that the one segment of the affordable housing asset class that was not only recession-proof but thrived during the COVID-19-induced downturn was mobile home parks (MHPs).

While other segments of multifamily saw reduced occupancy, increased delinquencies, and reduced rents in 2020, MHPs saw occupancy rise and rents increase. 2020 has proven passive investments in MHPs through private equity or syndications are ideal for mitigating risk and avoiding future economic disasters.

What makes MHP syndications ideal for mitigating risk?

Recession-Resistant Income. Despite the name, mobile homes are not particularly mobile. It costs an average of $7,000 to move a mobile home less than 100 miles. This ensures operators of MHPs a consistent, reliable source of cash flow from rock-solid occupancy rates.

In the wake of COVID-19, MHPs drew plenty of interest from investors looking for stability. In 2Q2020, sales in manufactured housing communities reached $821 million, an increase of 23 percent compared to 1Q2020 and 12 percent from 4Q2019, according to JLL. The price per pad reached an average of $50,792 in 2Q2020, a year-over-year increase of 26 percent. These positive numbers look even more impressive considering the experiences of other sectors, including multifamily, during the pandemic.

Value-Add Opportunities. Industry estimates approximate that as many as 90 percent of MHPs in the country are owned by mom-and-pop operators. MHPs owned by legacy owners who are not professional landlords offer tremendous value-add opportunities. Mom-and-pop operators may mismanage everything from income potential to operational standards. These small operations present opportunities to correct inefficiencies to improve occupancies and rents.   

Another opportunity is distressed parks where, with property and operations improvements, rent can be increased without a decrease in occupancy. This dynamic is realized successfully because the fixed nature of MHP results in residents willing to handle rent increases instead of incurring the costs of uprooting their homes. (By the way, residents often accept rent increases because professional management can improve the property and increase their quality of life.)

Lower Maintenance Costs. By only owning the land and renting out lots to tenants to plant their homes on, MHP investments have a significantly lower cost per door compared to multifamily properties. The lower cost per door, coupled with drastically reduced maintenance expenses compared to apartment communities, alleviate the pressure on cash many multifamily communities experience during downturns. Whereas apartment communities put off many repairs during economic downturns because of reduced occupancies and increased delinquencies, MHPs do not suffer the same pressures because: 

  1. Ongoing maintenance expenses are minimal.
  2. MHPs don’t suffer vacancy declines during downturns resulting in reduced income.

Low Supply Means Ideal Conditions for Future Exits and Dispositions. There are 44,000 mobile home parks in the U.S., and, because of strict zoning laws due to social stigmas surrounding them, very few new MHPs are developed in any given year. “Not in my backyard” is the common refrain heard at city and county planning meetings, which is why the market for MHPs is continually a seller’s one — ensuring healthy profits from a future sale or disposition.

If there was ever a year to test the recession-resistance of MHPs, 2020 was that year. Not only did MHPs demonstrate resilience, but they also experienced growth while other segments shrunk. That is why passive investments in MHPs like syndications are ideal for mitigating the risk of future financial downturns.

All of these factors combined result in above-average cap rates compared to other commercial real estate sectors. In addition, the locked-in tenant base is what enables park owners to enjoy stable recession-resistant cash flow. With cap rates of 7 to 10 percent, according to Wealth Management, few other sectors come close to matching MHPs’ financial potential and performance. (MHP cap rates in some markets have “figured it out” and are now lower than apartments, but it is possible to still find off-market deals at 12 to 15 percent!)

MHPs fill a unique niche in that they provide consumers an affordable housing option — in contrast to multifamily dwellings — with the privilege and pride of homeownership without shared walls. By investing in recession-proof cash-flowing real assets that have demonstrated consistent, historical growth, investors will give themselves the best chance of sticking the landing in the face of overwhelming economic challenges.

For more on this topic, check out “Evaluating Mobile Home Park Investments,” an online course through CCIM Institute instructed by Fred E. Niemann, IV, CCIM.

Ferd E. Niemann IV, CCIM

Ferd E. Niemann IV, CCIM, is a mobile home park owner, operator, and lawyer based out of Kansas City. Contact him at or (833) 647-5997.

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