Geography

The southern regions of California, Arizona, New Mexico, and Texas that border Mexico have a unique two nation economic base. These predominately Hispanic communities are fast growing relative to other ethnic groups and the cross border dynamics are generally healthy for the local towns.

Although the current global economic contraction affects everyone, the Mexican economy still benefits the US due to an overall lower cost structure. Major international companies continue their capital investments in Mexico. There are good working relations between the two countries as well as transportation crossings.

The net cost of goods production in Mexico is less than Asia due to lower transportation costs. No overseas shipping. This is good for jobs in the border regions.

We also like California in general due to the continued quality of life as compared to many other states. People will always want to live in California. The rules and regulations that govern mobile home parks originate with the state agency called Housing and Community Development (HCD).

Areas such as Calexico CA and Yuma AZ are relatively near San Diego. Both areas are seeing increased commercial activity. Imperial County is the upcoming solar and geothermal energy capital of the world. In the quest for alternative power, this region has unique and plentiful resources.

Government regulation from the local planning and building departments is also quite important. Coastal areas with high density and more affluent populations often give mobile park owners frustrations. These challenges show up as ‘rent control,’ and regulations more suited to single family home subdivisions. Fighting city hall is never productive. Getting to know which locales work with park owners is critical. The police department also provides useful feedback about a given community.


Economics

The economics of mobile home park affordability are compelling. Where else can you live for as low as $500 monthly that includes your own home?

Since parks range in quality and amenities, the monthly budget does range both higher and lower. However, we’re looking for the median price point. That is where the majority of all monthly budgets will occur. Parks at this price point will have the highest demand.

The competition for mobile home parks is apartments. If a two bedroom mobile home costs $500 monthly and a comparable apartment has a market price of $695 there is a significant cost savings. This is part of market analysis required for any new park acquisition.

NOTE: – excludes utilities.

From an operators perspective, there is a reduced workload and expenses. With homeowners who maintain and insure their homes, the park owners expense ratio from operations is lower that any other income property. For instance apartment owners may see expense ratios as high as 60% of gross income plus the time and trouble of those expenditure. A well running park is 30% expense ratio with much less headache.

The customer (resident) profile is generally better since they own their home. Any rents in arrears that become seriously delinquent will result in the homeowner forced to move their home out. This is very expensive to move a home and people who live in parks are generally on a tight budget. Generally the worst that happens is that the homeowner will forfeit or abandon the home to the park owner. It is then resold on easy terms to the next resident who again takes care of repairs and maintence of the home.

When the cost of home ownership and space rent start pushing $950–1000 monthly, prospective residents have single family homes as alternatives. Although apartments are used in comparison, the lifestyle comparison are single family homes.

Each region has its own unique economy and values based upon local factors. As is often said about location in real estate, the same is true for the economy. Population growth is a factor yet stable jobs are more important.

Unlike companies in a competitive industry like clothing, automobiles, computers, movies, computers, mobile parks are very stable. They never require research & development budgets. They never require a big product launch. They never require a large staff. They are simple and predictable.

Parks are simple, clean affordable living. People will always need a place to live.