How Private Investing Has Come to Dominate Manufactured Housing

In a time of general housing shortage, a growing number of low- to moderate-income Americans have found a solution in manufactured homes. These homes are built off-site, saving the buyer an average of about $120,000. However, manufactured homeowners often do not own the land under their house and must pay rent to a landowner.

Private investor groups have begun acquiring manufactured homesites and increasing the land rent, making it more difficult for residents to afford their space. Certain aspects of the micro and macroeconomy have given these investors opportunities and advantages in owning manufactured housing communities; namely the low nationwide housing supply, high profit margin on ownership and the vulnerability of the residents. Manufactured homeowners need legislation like the Manufactured Housing Community Sustainability Act (S.1581, H.R.3296), sponsored by Sen. Jeanne Shaheen (D-NH) and Rep. Ilhan Omar (D-MN-5), to counteract this advantage and actually own their communities.

Building new manufactured housing is limited by restrictive zoning laws, making it difficult to place a manufactured home outside of a preestablished park or create a new one. The finite supply of manufactured housing parks means that, in general, investors do not have to worry about the value of their property falling. Because it is a relatively safe bet, some investors have expanded their ownership to tens of thousands of home sites. Each of these factors have allowed, and could continue to allow, private investing groups to buy up large numbers of mobile home sites.

Once investment groups have acquired manufactured housing communities, they quickly increase the land rent to pay the costs of purchasing. The rent hike supposedly goes toward improving the community, but in many cases residents report little significant change. The owners of the community are incentivized to beautify the parks aesthetically to attract new residents, but often fail to address more expensive structural issues. By controlling the costs and revenue from the manufactured housing parks, investment groups can turn a large profit in a short amount of time. This encourages the investment groups to acquire more and more communities.

As rent rises in manufactured housing communities, many residents find themselves struggling to afford basic needs. These communities are home to many families who are on fixed income and cannot easily adapt to large changes in living expenses. In theory, these people can move to a different park if an investing group raises their rent. But, in reality, such moves are infeasible. To relocate a manufactured home is expensive and older homes are susceptible to damage. Meanwhile, selling one’s house on the high-rent land is difficult, as there are few buyers willing to pay what the landowners are asking.

Still, investment groups can expect an increase in the number of people who are looking for manufactured homes as the rate of retirees increases in the next few years. These homes are affordable and often near other aging residents, making them an attractive option to retirees. With manufactured homeowners unable to leave, and a wave of retirees on the way, investment groups can expect steady demand for their land.

Because real estate investment groups can expect steady supply, demand, and profitability out of manufactured housing communities, it is no wonder that they are willing to invest so much into these properties. To give residents a better chance at owning their own communities, Congress should pass the Manufactured Housing Community Sustainability Act, which encourages community owners to sell the land to the residents. The Act also promotes the long-term stability of the communities as resident-owned cooperatives. Take two minutes and request that your Representative and Senators sign on to the Manufactured Housing Community Sustainability Act here.

We also encourage you to join our I’M HOME Network to help us raise the visibility of manufactured housing and our Affordable Homeownership Advocacy Campaign to advance our vision of ensuring everyone in our country has a clear path to homeownership.           

Related Content