Covid-19, Economic Downturn & Mobile Home Parks

[Dane Fossee]

Hi everyone, 

How do you think the mobile home park space will perform in the next 1-24 months? Do you believe the Covid induced economic downturn will takes its toll on the industry? Do you think we will see less competition and more buying opportunities (or the contrary)?

Thanks!

[Frank Rolfe]

This is a geographic and individual park issue. Most parks are doing extremely well at collections -- roughly the same as pre-Covid. However, then there are others that are doing 50% worse. It all boils down to how many residents you have on social security and essential services employment vs. non-essential services. Additionally, that has a lot to do with the types of employment in that market (for example Las Vegas vs. Kansas City) and their dependence on social gathering.

I can tell you from the experience of the 2007 Great Recession that the following will most likely occur:

1) demand for affordable housing will increase

2) some number of moms and pops will get distressed and decide to sell

3) lender interest in our sector will increase because we once again proved that we are the ultimate contrarian hedge

Buying parks will be weird for the rest of this year, as lenders and other businesses struggle to re-open. But the fundamentals of the mobile home park as a business model have not changed. You will need to build in plenty of extra time for diligence and financing (probably 120 days to get a loan right now). Then things will start to back to normal in Q1 2021.