Mobile Home Parks Become Red-Hot Senior Living Option

Mobile home parks have long been a part of the senior living landscape, and they have emerged as one of the most in-demand product types in recent years. They offer investors stability and steady returns, and they provide older adults amenities found at other senior housing communities at more reasonable price points.

In fact, senior mobile home communities can be an affordable alternative to the ongoing trend of luxury active adult construction, and offer amenities and a sense of community on par with — and in some cases exceeding — new age-restricted housing, Lifestyle Choice Realty founder Bill Gorman told Senior Housing News.

Winter Springs, Florida-based Lifestyle Choice Realty specializes in senior mobile home communities including park management and converting communities into resident-owned cooperatives.

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Lifestyle Choice is one of a host of companies that recognize the upside mobile home communities hold for investors and residents. As interest in these communities continues to run increase, traditional senior housing owners and operators should keep an eye on the product type for inspiration of how to compete for residents in the future, as well as develop new models for housing and health care.

Red-hot investor interest

In spite of the many misconceptions associated with mobile homes, the housing type has a long and rich history in the U.S. The first mobile homes in the country were built in the 1870s, and mobile home construction saw a boom period after World War II.

The value associated with the home itself blows away anything from a single-family home standpoint.

Sun Communities President and COO John McLaren

Today, 22 million people live in mobile homes in the U.S., according to data from the Manufactured Housing Institute. In 2017, 93,000 mobile homes were built in the U.S., accounting for 10% of new single-family home starts.

As more baby boomers enter retirement failing to fully recover the wealth they lost during the Great Recession, well-managed senior mobile home communities are viable options to extend quality of life and financial nest eggs.

Investors have taken notice, CBRE (NYSE: CBRE) Senior Vice President Norm Sangalang told SHN. Based out of San Diego, Sangalang is a senior member of CBRE’s manufactured housing team, where he brokers mobile home community sales. Prior to joining CBRE seven years ago, Sangalang owned and managed mobile home communities. 

Investor interest for mobile home communities has always been strong but has picked up steam in recent years as active adult has become more popular as an asset class.

“The 55-plus [community] is the most sought-after space for investors,” Sangalang said.

Demand for senior mobile home communities is also driven by how few opportunities there are in the market to acquire a quality community, Lutz, Bobo & Telfair Partner Scott Gordon told SHN. Gordon specializes in real estate and mobile home park law for the Sarasota, Florida-based firm, and represents private investors and REITs as well as homeowner-owned communities.

“It is a seller’s market and there is a glut of debt [available],” he said.

That investor interest is being driven by real estate investment trusts and private equity money seeking to build large portfolios, from which long-term value can be created via solid management and economies of scale.

Chicago-based Equity Lifestyle Properties (NYSE: ELS), real estate mogul Sam Zell’s mobile home REIT, is the largest owner of U.S. mobile home communities. Equity Lifestyle is also Zell’s best performing REIT in recent years, increasing in value from just over $40 per share in 2015 to a current 52-week high of $128.43 per share.

Another publicly traded mobile home REIT, Southfield, Michigan-based Sun Communities (NYSE: SUI), has also seen its stock value skyrocket in the past five years. Sun stock closed trading on July 30 at $132.81 per share.

There is an activity level in mobile home parks that you don’t find in senior apartments or condo communities.

Lifestyle Choice Realty founder Bill Gorman

Sun owns 380 mobile home communities across the country, with one-third of its portfolio dedicated to the 55-plus active adult segment, President and COO John McLaren told SHN.

Sun creates value across its portfolio through ensuring the quality of communities is a cut above the industry standard. Individual communities are physically inspected every six weeks and Sun continuously reinvests in its communities, maintaining the homes and modernizing amenities to meet the future demand. 

Another factor causing investors to seek mobile home deals is that they are stable investments, Sangalang told SHN. Since value appreciation is driven by management and operations, an investor can hold on to a mobile home park for an extended period of time and almost certainly see a solid return on investment.

Bountiful, centralized amenities

Like their brick-and-mortar counterparts, senior mobile home communities often offer extensive amenities packages to attract residents. Some of the more common amenities include swimming pools, fitness centers, softball fields, and golf courses and boat docks at more upscale communities.

Owners with scale such as Sun and Equity Lifestyle are also keeping track of newer amenity trends, and adapting to them, McLaren said. Shuffleboard courts, once common and prevalent, are being repurposed in favor of other sports such as bocce and newer trends like pickleball.

active adult senior housing, senior mobile home communities, age-restricted living Sun Communities
A view of some of the amenities at Sun Communities’ Woodlands at Church Lake, a senior mobile home community in Groveland, Florida.

Other communities are adding dog runs, knowing the boomer demographic will want to bring their pets with them, Sangalang told SHN.

Arguably the best amenity is the one that makes mobile home parks attractive to active seniors: walkability. Roads in these communities are private, and residents can simply park their cars in their carports and walk to their neighbors’ homes when they want to socialize, and walk to the other amenities within the park.

Gorman believes mobile home parks offer a better option for seniors looking to maintain an active lifestyle. The horizontal layout of mobile home parks offer advantages not found in vertical communities such as lawns, carports and ramps to a home’s entry points.

“There is an activity level in mobile home parks that you don’t find in senior apartments or condo communities,” he said.

Affordability and demand

Residents who decide to move to a senior mobile home community discover they can get more for less, as mobile homes costs less to build. The median price of new single-family home sales in the U.S. in June was $310,400, according to Census Bureau data. The median price for a home across Sun Communities’ portfolio was $122,000 at the end of the second quarter, McLaren told SHN. 

It is a seller’s market and there is a glut of debt [available].

Lutz, Bobo & Telfair Partner Scott Gordon

Coupled with the range of amenities found at a senior mobile home community, the barrier to entry is less than a single-family home, in terms of price and down payment.

“The value associated with the home itself blows away anything from a single-family home standpoint,” McLaren said.

Supply and demand dynamics also favor the investor. Sun Communities has wait lists across its portfolio; its internal data revealed that the REIT accepted 50,000 applications for housing last year, for 5,000 available homes.

active adult senior housing, senior mobile home communities, age-restricted living Sun Communities
Pismo Dunes Resort, a Sun Communities senior mobile home park in Pismo Beach, California.

Residents of senior mobile home communities further benefit from pricing stability, which has remained in line with cost of living increases the past few years, Sangalang told SHN.

One drawback to moving to a senior mobile home community is the resident will have to pay for one’s own home health care services out of pocket, as cognitive and ambulatory functions decline. Sun Communities does not offer home health partnerships, but McLaren believes the active lifestyle of residents offers its own benefits, notably extended quality of life.

When seniors do eventually age out of their mobile homes, they’re finding the values of their homes are growing with the demand. Sun Communities offers brokerage services for residents transitioning to higher acuity levels of care to sell their homes. Between 2017 and 2018, residents who retained Sun to sell their homes realized a 9.5% increase in home equity.

The typical senior mobile home owner runs the gamut from affluent retirees who stuck to a regimented savings plan, to blue collar workers who want the flexibility of enjoying their favorite hobbies, but at an affordable price, Gorman told SHN.

“This housing appeals to nearly everyone who explores it,” he said.

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