Seizing the Investment Potential of Manufactured Housing Communities (MHCs)
Manufactured housing communities (MHCs) are answering the housing affordability crisis in the U.S.
As construction, aesthetics and amenity offerings have elevated, the quality and reputation of MHCs have also dramatically increased. These are not “trailer parks”; they are gated, age-restricted (55+), four- and five-star communities with exceptional amenity packages. Clubhouses, swimming pools, fitness centers, libraries and dog parks are common, and select properties now also include shuffleboard and pickleball courts, as well as designated cornhole areas and micro-golf courses.
Capital Square is a top-tier owner and operator of MHCs in Florida, providing much needed housing at an affordable cost.
Why Invest in Manufactured Housing Communities?
Four- and five-star MHCs in Florida are some of the most sought-after assets in the nation.1
A scarcity of MHCs in the state and growing demand for housing creates a supply and demand imbalance and a potentially excellent investment opportunity. Older parks are frequently converted to new land uses, further reducing supply, and developing new MHCs can be difficult due to strict municipality zoning rules.
The occupancy rate is 99.4% for four- and five-star, 55+ communities in Florida as of May 2023. Meanwhile, these homesites’ rents increased 12.3% from May 2022 to May 2023 and 6.3% annually on average since 2014.2
Lower operating costs enable greater affordability.
MHCs offer lower costs compared to traditional multifamily real estate, with community maintenance limited to the upkeep of amenities, roads and water/sewage infrastructure. Increasing numbers of first-time homebuyers are considering manufactured homes as a new path to homeownership.3
Income pairs with attractive yields and long-term growth potential.
Manufactured housing communities are a viable option for steady cash flows and capital appreciation.
In addition, the need for lower-cost housing combines with unique value-add opportunities – from landscaping upgrades to new pickleball courts – all of which encourages high homesite occupancy and even further rent growth potential.
A needs-based investment opportunity with compelling characteristics, MHCs provide homes for more than 22 million people across the U.S.4 Because MHCs are considered a low-risk investment, real estate investment trusts, pension plans and other institutional investors have been increasingly including this unique asset class within their portfolios.
Learn more about Capital Square’s real estate investment opportunities.
Sources: 1. Colliers International. | 2. JLT Market Report. | 3. “2023 Manufactured Housing Facts.” Manufactured Housing Institute. | 4 Ibid.
Disclosure: Securities offered through WealthForge Securities, LLC, Member FINRA/SIPC. Capital Square and WealthForge Securities, LLC are separate entities. There are material risks associated with investing in DST properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to see any securities. Please read the Private Placement Memorandum (PPM) in its entirety, paying careful attention to the risk section prior to investing. Diversification does not guarantee profits or protect against losses. Private placements are speculative.
