Mobile home park demand continues to rise, particularly in the Midwest. With a growing need for affordable housing, these communities provide viable solutions for families and appealing opportunities for investors. This case study examines the Keel Team’s investment in a mobile home park near Youngstown, Ohio, to explore how improvements and strategic management can drive return potential while meeting housing needs.

Why the Midwest Stands Out for Mobile Home Parks

The Midwest offers a unique landscape for mobile home park investments. The region typically combines affordability with steady demand for cost-effective housing. Economic shifts and limited new housing developments create a growing need for alternative living options, making mobile home parks an attractive solution.

Investors often find the Midwest appealing due to its relatively low entry costs, high demand for affordable housing, and opportunities to enhance underperforming mobile home parks.

The Youngstown, Ohio Case Study

In May 2018, the Keel Team acquired an 80-lot mobile home park outside Youngstown, Ohio. Purchased for $660,000, the acquisition required an initial equity investment of $375,174.80, raised from limited partner investors. The mobile home park presented challenges but also opportunities for improvement and growth.

This case study highlights how operational improvements and strategic refinancing unlocked significant value within a two-year period.

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Improvement Initiatives

Upon acquisition, the mobile home park required upgrades to its infrastructure and management. A series of initiatives were undertaken to enhance operations, increase occupancy, and improve resident satisfaction.

1. Filling Vacant Pads
   Unused lots represented a clear opportunity to increase income. The team prioritized filling these spaces, generating additional revenue for the mobile home park.
2. Infrastructure Repairs
   Maintenance issues, particularly with utility systems, were addressed promptly. Correcting these issues reduced operating costs and improved reliability for residents.
3. Road Repairs and New Signage
   The roads were repaired, and new signage and fencing were installed. These changes created a more welcoming appearance and improved the overall resident experience.
4. Removing Run-Down Homes
   Abandoned or poorly maintained homes were removed. This initiative not only improved the aesthetic appeal but also made room for newer, more attractive housing options.
5. New Management
   Hiring skilled on-site management was crucial to creating a well-run community. Improved processes for collecting rent and handling maintenance requests were implemented, enhancing operations.
6. Modest Lot Rent Increases
   With significant improvements made, lot rents were increased modestly. This adjustment contributed to higher net operating income (NOI) while remaining affordable for residents.

Financial Results

These efforts transformed the mobile home park, improving its operational efficiency and financial performance.

Cash-Out Refinancing Event

On March 26, 2020, the Keel Team refinanced the mobile home park, securing a $1,384,247.41 cash-out distribution. This non-recourse debt allowed the limited partner investor pool to recover their initial equity investment of $375,174.80 and enjoy a total return of $1,009,072.61 over two years.

Return on Investment

The partnership achieved an annualized cash-on-cash ROI of 134.48%. This remarkable result underscores the potential of mobile home park investments, particularly when combined with strategic upgrades and refinancing.

Future Opportunities

Following the refinancing event, investors retained ownership in the mobile home park, enabling them to benefit from future appreciation and potential additional refinancing opportunities.

The Impact of Mobile Home Parks on Affordable Housing

Mobile home parks like the one near Youngstown, Ohio, play an essential role in addressing the affordable housing shortage. By offering cost-effective living options, these communities can provide stability for residents and potentially valuable returns for investors.

1. Affordability for Residents
   Even with modest rent increases, mobile home parks remain one of the most affordable housing options. This affordability supports low- and middle-income families who might otherwise struggle to find suitable housing.
2. Improved Community Standards
   Upgrades to infrastructure and management generally enhance the quality of life for residents. These improvements help reduce the stigma often associated with mobile home parks, making them a more attractive option for families.
3. Housing Supply Expansion
   Filling vacant lots and improving underutilized properties add much-needed housing stock. This expansion helps alleviate some pressure on local housing markets.

Challenges Facing Mobile Home Park Investments

While mobile home parks present opportunities, challenges can arise, particularly in the Midwest.

1. Zoning Restrictions
   Local zoning laws often limit the development of new mobile home parks. Investors must navigate these regulations carefully to maximize their opportunities.
2. Aging Infrastructure
   Many mobile home parks require significant repairs to infrastructure. Addressing these issues is essential to maintaining affordability and livability.
3. Perceptions and Misconceptions
   Stigma surrounding mobile home parks can impact demand and pricing. Overcoming these perceptions requires education and community engagement.

Why the Midwest Continues to Attract Investors

The Midwest remains an attractive region for mobile home park investments due to several factors:

• Lower Acquisition Costs
  Property prices in the Midwest are often more affordable than in other regions, making it easier for investors to enter the market.
• Stable Demand
  The need for affordable housing is consistent, particularly in areas with strong manufacturing and service-based economies.
• Room for Growth
  Many mobile home parks in the region are underperforming, providing opportunities for value-add improvements and increased NOI.

Lessons from the Youngstown Case Study

The Youngstown mobile home park case study highlights several key takeaways for investors:

• Strategic Improvements Usually Pay Off
  Investments in infrastructure, management, and community aesthetics can drive significant financial return potential.
• Refinancing Unlocks Value Potential
  Refinancing can provide liquidity while enabling continued ownership and future appreciation.
• Community Enhancements Matter
  Improving the quality of life for residents benefits both the community and the investment.

Final Thoughts

Mobile home park demand in the Midwest continues to grow as affordable housing remains a pressing issue. The Keel Team’s success in transforming the Youngstown, Ohio mobile home park demonstrates how strategic investments and improvements can potentially deliver strong returns while addressing housing needs.

This case study offers a blueprint for investors considering opportunities in this asset class. While challenges exist, the Midwest’s affordability, demand, and room for growth make it a region worth exploring for mobile home park investments.

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Disclaimer:

The information provided is for informational purposes only and is not investment advice or a guarantee of any kind. We do not guarantee profitability. Make investment decisions based on your own research and consult registered financial and legal professionals. We are not registered financial or legal professionals and do not provide personalized investment recommendations.