All Forum Posts by: Tariq K Frantz

Spencer, I couldn't agree with you more! Manufactured/modular homes have to be part of the solution - the lack of affordable housing in this country is at epidemic levels.  I used to work in the Real Estate Transaction Group of the New York City Economic Development Corp ("NYC EDC") and a big focus was to bring modular construction to new high density multifamily projects, and they recently announced they have done or are trying just that, https://ny.curbed.com/2019/3/5/18251679/new-york-affordable-housing-modular-prefab-construction

Best, TK

My pleasure, Greg.  Glad you enjoyed the post.  It really is an amazing space, probably one of the last property types yet to be institutionalized but it's coming - public REITs own less than 3% of the existing stock and its estimated only about 15% is owned by private institutional investors.  All the best, TK  

I have seen a lot of BP discussion on MHCs - as a real estate investment banker, I get to analyze many different property types and thought I would share some of the key investment metrics that have led some of the world's smartest and largest institutional investors (listed below after the metrics) to invest in MHCs. Happy to discuss any of this further.

- Affordability: Wage growth has lagged cost of housing growth in the U.S. over the past 35 years. This trend is expected to continue for years to come. Housing is a necessity and MHC is one of the most cost-effective options.

- Increasing Demand Across Age Cohorts: Boomers downsizing coupled with a growing number of Americans who can no longer afford to rent or own traditional housing continues to drive demand for MHC - see chart below.

- Limited Supply: Only 10 new MHC sites have been approved in the U.S. over the last two decades - see chart below.

- Downcycle Outperformance: MHC is the least sensitive property type to negative changes in GDP.

Lastly, a quick glance at some MHC investors and proponents:

Warren Buffett is a significant investor in the MHC space, favoring the sector for its stable, predictable cash flow. He owns Clayton Homes and 21st Mortgage, the largest manufacturer and largest financier of manufactured homes in the country, respectively.

Sam Zell is on record as saying that MHC is the one property type he would never sell. In 1998, he started Equity Lifestyle Properties (NYSE: ELS), the largest MHC REIT in the nation by market cap. ELS has reported quarter-over-quarter growth for 20 consecutive years, including throughout the Great Recession.

Blackstone is one of the largest, most sophisticated real estate and private equity investors in the nation. In June 2018, the company made their first foray into the MHC space, acquiring a 14-asset portfolio for $172M.

Green Street is the gold-standard for independent research within the commercial real estate industry. The firm has had MHC as its top performing property type for the last year and a half and a November 2018 report described MHC as “one of the most attractive property types in both the public and private markets due to 1) a best-in-class cap-ex profile; 2) structural barriers to new supply; and 3) still-too-high nominal cap rates.”

I hope this helps those considering investing in MHCs - happy to discuss further. Best, TK

Are there HM lenders in the Midwest that will do loans of less than $75K? I've heard this is the minimum for most. I would like to buy homes for cash and use HML just for rehabs (to keep interest rate costs down but still invest with scale). Thanks, TK

Hi Whitney, thank you for taking the time to respond to my post, your response was very helpful.  My plan sounds similar to how you started - I plan to use my cash for the first 1-3 deals but then begin to employ hard and/or private money to scale (and will factor in the costs and reserves).  Thanks again, TK

Thank you for taking the time to respond, Chris.  Best, TK

Thank you, Brian, I appreciate your response.  How do ensure they have the property under contract beyond taking their word for it?

Hello All, I am curious of your experience working with wholesalers?  David Greene suggests not doing your first deal(s) with them until you have gained more deal experience, agree disagree? Pros & Cons?  Thank you - have a great long weekend.  TK

I have seen a lot of BP discussion on MHCs - as a real estate investment banker, I get to analyze many different property types and thought I would share some of the key investment metrics that have led some of the world's smartest and largest institutional investors (listed below after the metrics) to invest in MHCs.  Happy to discuss any of this further.

- Affordability: Wage growth has lagged cost of housing growth in the U.S. over the past 35 years. This trend is expected to continue for years to come. Housing is a necessity and MHC is one of the most cost-effective options.

- Increasing Demand Across Age Cohorts: Boomers downsizing coupled with a growing number of Americans who can no longer afford to rent or own traditional housing continues to drive demand for MHC  - see chart below.

- Limited Supply: Only 10 new MHC sites have been approved in the U.S. over the last two decades - see chart below.

- Downcycle Outperformance: MHC is the least sensitive property type to negative changes in GDP. NOI growth in MHC has proven much more resilient than the major sector average during downcycles, while being in-line or better than average during upcycles.

Lastly, a quick glance at some MHC investors and proponents:

Warren Buffett is a significant investor in the MHC space, favoring the sector for its stable, predictable cash flow. He owns Clayton Homes and 21st Mortgage, the largest manufacturer and largest financier of manufactured homes in the country, respectively. 

Sam Zell is on record as saying that MHC is the one property type he would never sell. In 1998, he started Equity Lifestyle Properties (NYSE: ELS), the largest MHC REIT in the nation by market cap. ELS has reported quarter-over-quarter growth for 20 consecutive years, including throughout the Great Recession.

Blackstone is one of the largest, most sophisticated real estate and private equity investors in the nation. In June 2018, the company made their first foray into the MHC space, acquiring a 14-asset portfolio for $172M.  

Green Street is the gold-standard for independent research within the commercial real estate industry. The firm has had MHC as its top performing property type for the last year and a half and a November 2018 report described MHC as “one of the most attractive property types in both the public and private markets due to 1) a best-in-class cap-ex profile; 2) structural barriers to new supply; and 3) still-too-high nominal cap rates.”

I hope this helps some of you considering investing in MHCs - happy to discuss further.  Best, TK

Thank you for rationale and explanation, Frank.  Very, helpful.  Best, TK