Trailer park, mobile home park, Manufactured home community, land lease community — which one is it? Every other niche of real estate has only one name. Office, retail, hotel, apartments, industrial, storage – it’s simple and makes complete sense. So why do mobile home parks have four different names?
The industry continually wants to upgrade its image through changing its name
It comes as no surprise that the mobile home park industry has a bad reputation. Jeff Foxworthy made a living off of dispensing hours of mobile home park jokes. Shows like COPS like to highlight the crazy antics of some mobile home park residents. As a result, the industry has a pattern of trying to re-name itself, almost to fool customers into thinking it’s a whole new product.
The continual name change has only served to confuse customers, and perhaps harm the industry further. Most people don’t even know what a “land lease community” is, so how can advertising that name be effective? Even industry lenders use the old name “mobile home park” because they think it’s the most accurate.
The high level of returns offsets the industry’s continual market blunders
Of course, nobody who owns a mobile home park cares about the name. We are only in it for the money. And mobile home parks have the highest yields in real estate – nobody disputes that. We buy mobile home parks based on 10% cap rates and 20% cash-on-cash returns day in and day out. So, from our perspective, the name means nothing.
But the different names do serve to confuse the heck out of the consumer. We have people all the time who ask us “what is a manufactured home community?” We even have lenders and appraisers that have asked us “so what’s a land lease community?” Nobody is being fooled by changing the name into thinking the product is more upscale. But many potential buyers or renters end up in apartments because they understand what that name means.
In all of the other housing sectors, the actual construction of the dwelling is meaningless and not reflected in the name. Have you ever heard of a home being called a “brick” or a “frame” or a “vinyl siding”? What about an apartment complex being called “stucco rentals”? I’m not sure why the original founders of the industry decided to use the word “mobile” or “manufactured” so prominently in the name, but that was a stupid idea. Both are adjectives that describe the features of the product – the fact that they can be moved or built in a factory — but are not very positive features as far as selling them? The name that should be used for the asset class, instead of trailer park, mobile home park, manufactured home community and land lease community, should be “affordable housing” That is not only completely accurate, but the most descriptive and understandable for the customers.
The demand for affordable housing is a megatrend in America today. With 20% of American households earning $20,000 per year or less (some have suggested that this number is actually closer to 30% as it misses a huge number of Hispanic households that are not on the radar), and 10,000 baby boomers retiring per day into average social security payments of $14,400 per year, the need for affordable housing in the U.S. is gigantic.
Whether you call them trailer parks, mobile home parks, manufactured home communities or land lease communities, they all equal one thing: inexpensive housing that makes the owner a lot of money. Hopefully, the industry can one day simply replace all of these names with the simple moniker of “affordable housing”.