Priceless Mobile Home Parks
This edition of MHP Weekly is basically “Never Sell” porn. The below is what can happen if you buy a decent asset in a high growth location, get lucky and hold…a LONG time.
Background
Most of the country’s manufactured housing was built between 1950-1980 as the population exploded & we needed cheap housing fast. That lead to quick approvals for mobile home park developments on the edges of large cities. Turns out some of those edges were pretty nice.
Many of these parks were built on shockingly good land. Over time, plenty of parks with ocean or snowcapped mountain views were redeveloped into luxury housing. Yet, for whatever reason there are still a few holdouts. These park owners (or in some cases the mobile home owners) somehow ignored decades of cold calls and purchase offers. We should know, we’ve tried and failed to buy plenty of beach town parks.
How or why they held so long:
knew they had a gem and wanted to gift it to the grandchildren
loved the cash flow and didn’t have better reinvest options
didn’t want to pay the taxes or didn’t know what to 1031 exchange into
enjoyed running the property and being the “park mayor”
used the park as a giant piggy bank, refinancing every 5-10 years
Consistently refinancing is the only way we could have these parks for decades. Alternatively, we might have created a ground lease and sold the leasehold interest. That keeps the “priceless” asset (the land) in the family and ditches the hassle (the operations). Every once an awhile you’ll come across a park with a ground lease in an extremely expensive market.
Regardless of how it happened, the below are miraculously still mobile home parks. Some of them are likely owned by the original developer’s family. Some have been turned into condos where the mobile home values are soaring. Either way they are a testament to patient ownership and path of growth investing.
Here’s a snap shot of some these communities:
Paradise Cove – Malibu, CA
Probably the most famous and expensive mobile home park in the world is Paradise Cove in Malibu, California. Individual home listings in this community start in the mid $1 millions with some reaching $3-4 million (not exaggerating) for a silly old single wide. The majority of mobile homes lose value over 30 years. Yet these shoeboxes are appreciating like mansions due to rent control. If lot rents were uncapped, they’d probably be closer to $5K / month.
Lot rent starts at the low low price of $1,700 per month which isn’t too bad considering the location.
Fireside Resort – Jackson Hole, WY
Fireside Resort is located in Jackson Hole, where billionaires flock for ski season or throw on Wranglers & boots to play cowboy in the summer. Land is fiercely protected to maintain the rustic aesthetic the area is famous for (heaven forbid it turns into Aspen or *gasp* Park City).
Given these restrictions, it’s rare to find “affordable” housing but that’s what Fireside Resort provides. This park has upgraded its housing stock with modular homes that feel more like mountain cabins than mobile homes. Or, if you have a spare $20M, you can get the larger version just up the road in Teton Village.
Cannery Village – Newport Beach, CA
In the “I can’t freaking believe this is still a mobile home park” category is Cannery Village. This thing is located dab smack in the middle Balboa Peninsula in Newport Beach.
With lot rents ranging from $2,700 - $5,000, you get most of the beach + harbor benefits for a fraction of the cost. Sure, you live in a mobile home, but your Christmas card return address will say Newport Beach - think of how jealous your friends will be!
Actually some of these mobile homes are pretty legit. It’s the only place we’ve seen double-decker mobile homes. Double your pleasure, double your fun?
The park also owns plenty of boat slips, which makes it a great option for those that would rather splurge on a yacht than their home.
Smuggler Park – Aspen, CO
Luxury ski towns like Aspen have high demand for labor (especially during the busy tourist season) but no affordable housing. That’s a “real” problem if you don’t want to pour your own cocktail after ski (après-ski for the fancy folk).
Smuggler Park was built in the late 1970s - away from the action - to house resort workers. In the 80’s the tenants were actually able to purchase the park and their own home for $25K each to keep the property affordable for local service labor. But as Aspen gained in popularity and the town expanded, the park’s location improved, and has priced out lower wage residents.
A mobile home there recently sold for $1.8 million. Decent looking park in an unreal location, but we can think of better ways to spend that kind of cash.
Laguna Terrace - Laguna Beach, CA
We strain to call this a mobile home park. This community is beautiful and is set against a world famous stretch of coastline in Laguna Beach. Built in 1948, many of the homes have 180 degree ocean views. Lot rent starts at $3,000 & includes use of the clubhouse, pool and is just short walk to the idyllic beaches of Laguna.
Warren Buffet was a long time neighbor (vacation home) just up the road. He bought that home for $150K in 1971 and sold it for $7.5M in 2018. Warren bailed on Laguna, but the tenants of Laguna Terrace aren’t giving up their spots anytime soon.
Montauk Shores - Montauk, NY
Quite possibly the craziest mobile home community in the country is Montauk Shores in New York’s Hamptons (yes THE Hamptons). Built in the 50s it’s homeowners include billionaires Dan Loeb & Darius Bikoff. We assume their homes are glorified beach cabanas to store beach gear and shower after a surf session. This park has seen its fair share of wild summer night parties.
A few the communities on our list actually started as surfer communities for blue collar vacationers but inevitably transformed into the posh communities of today. Homes don’t come up for sale very often but a recent 590 sqft home sold for $1.6 million.
While the opportunity to buy a mobile home park in an infill location on the beach has probably passed, this is still a good reminder of what can happen if you buy in the obvious path of growth and don’t sell prematurely.
Happy trails,