#003: Benefits of MHP Investing: Minimal Turnover
Tenant turnover can be a very costly and timely headache for Landlords. Every time a tenant moves out, the unit needs to be cleaned, repaired, and a new tenant needs to be qualified and moved in. This requires time and money from the Landlord. Even more so if there is an eviction involved, and the unit may sit with a non-paying tenant for months.
Mobile Home Parks, however, experience significantly less turnover than other real estate sectors, given that most Mobile Home tenants are at a stage in life where they are looking to stay in one place as long as possible. They may be elderly, disabled, or on a fixed income that offers no alternative housing solutions.
Additionally, many mobile home residents own their home and just rent the lot from the park owner. They are even more incentivized to stay in one community for an extended period of time because they have pride of ownership and moving a mobile home is an expensive (and sometimes impossible) endeavor depending on the age and condition of the home.
MHP residents are said to stay in their home for 11 years on average, in comparison to the average multifamily stay of 2.5 years. Apartments often act as a temporary housing solution for college students and young adults getting their finances in order so they can rent or buy a home. Even single family homes experience high turnover as families are often looking for something bigger, better, cheaper, in a better school district, or they are saving money and establishing credit to buy a home.
From an investment standpoint, well-managed Mobile Home Parks offer decreased turnover and enhanced stability in comparison to all other sectors including multifamily, apartments, and single family. A counter perspective is that there is more risk involved when dealing with affordable housing and low-income tenants, which outweighs the low turnover. This is a common misconception. Many affordable housing tenants are families receiving government assistance, elderly residents collecting social security, or veterans on disability.
Additionally, according to the NCCP, low-income is defined as making less than twice the Federal poverty line, which is currently $13.5k in 2022 according to HealthCare.Gov. This means individuals making less than $27k/year are defined as “low-income”. Ironically, the average income across the United States in 2022 is $30,000. This means that roughly 40% of U.S citizens are considered “low income”. Being “low income” often comes with the stigma of being a criminal or a drug addict, when the reality is they are everyday, working class citizens.