Manufactured housing is one of the largest sources of naturally occurring affordable housing in America. Industry sources estimate that nearly 20 million Americans in households earning less than $28,000 annually live in a manufactured home.
As in other sectors of the housing market, spiking costs threaten this critical source of shelter for lower- income American households. Pad rents are on the rise—a benefit for investors who see rent growth and mobile home park occupancy rates as attractive. But pad renters are increasingly turning these factors into an advantage by embarking on the process of converting their communities to resident owned—creating opportunity not only for them but also for well-equipped lenders that are versed in the best financing options.
READ ALSO: Why Texas Makes Sense for Manufactured Housing Investment
Most residents of manufactured housing communities (MHCs) own the home in which they live but not the land on which it is affixed, commonly known as a “pad.” Instead, they lease the pad at a monthly rent and maintenance fee from a privately-owned and -managed MHC.
Historically, the growth of pad rents was moderate and stable. According to industry organization ROC USA, pad rents grew at a 3.9 percent average annual rate over the 30 years ending in 2019, mirroring apartment rent trends; however, the cost of pad rents, like all types of housing in America, has increased significantly in the past year, in…
