With home prices and personal incomes plummeting in Southwest Florida, local governments have declared the affordable housing crisis to be over, the Sarasota Herald-Tribune reported.
The tough economy has spurred demand for lower-priced homes, which, in turn, is driving the large number of recent mobile home park deals, investors say.
This month, Equity LifeStyle Properties Inc. bought the 63-acre Lake Village mobile home park at U.S. 41 and State Road 681 in Nokomis. The park with nearly 300 home sites was sold for $23.8 million by the owner, a subsidiary of Hometown America.
In August, Equity LifeStyle paid $53.4 million for the 2,211-site Colony Cove mobile home park in Ellenton and $6 million for the 201-site Emerald Lake mobile home park in Punta Gorda.
And last month, a unit of National RV Communities LLC of Scottsdale, Ariz., bought Saralake Estates off Bahia Vista Street for $10.55 million. Saralake has nearly 200 mobile home sites.
During the boom, mobile home parks were being bought by developers who planned to shut them down and redevelop the land on which they sat.
Except for mobile home parks at key intersections, the flurry of purchases being made these days is driven by the attractiveness of investing in mobile home parks, said Charles Ellis, a principal and vice president for acquisitions at National RV.
That company was formed in 2005 and now owns 58 mobile home properties, 80% of them in Florida. It is backed by financing from General Electric Capital Corp.
“From an investor standpoint, the revenue is very stabilized,” Ellis said.
Once a mobile home is placed on a site and various improvements made, it becomes cost prohibitive to move, which translates into a stable stream of rents for investors.
National RV’s focus on Florida — most of its properties are in Manatee, Sarasota, Pinellas and Pasco counties — stems from a belief that middle-class retirees still want to retire to Florida but might not be able to afford a single-family home that costs well into the six figures.
“They’re more likely to buy a $30,000 or $100,000 park model or manufactured home,” Ellis said.
The history of mobile home park conversions makes residents at these newly acquired properties leery of the new owners, said Ellis, who noted there is a rumor at Saralake that National RV will clear the property and build a three-story medical office building there.
The rumors have not been quelled, Ellis noted, by either National RV’s history of buying and holding onto properties or by the fact that commercial office construction has all but halted in this region.
“As far as they know, I’m just some big corporation,” he said of Saralake’s residents. “We’ve owned it for three weeks now and we need to earn their trust.”
The stream of rent National RV says is so stable is improving these days, thanks to the economic downturn and the housing crisis, according to Equity LifeStyle.
In its second-quarter report, the public company that owns 111,000 home sites noted that it expected rental incomes to increase 2.7% this year. The report also noted that the extreme slowdown in new home construction was part of the reason rental demand was high, and that, in this market, it had an opportunity to convert renters into home buyers.
“The No. 1 thing with mobile home parks in the current economic crisis is affordable housing’s really in,” said Dave Reynolds, whose MHP Investment and Leasing LLC in Cedaredge, Colo., specializes in mobile home parks in the Midwest.
A key part of the housing crisis has been the difficulty many would-be buyers have in qualifying for a mortgage from a bank. But part of the investment strategy for the buyers of mobile home parks is to provide financing to park residents.
“The park owner becomes the lender,” said Reynolds, whose company also operates industry websites, such as mobilehomeparkstore.com.