Latest / The Buyout Show with Fexingo: Private Equity, Roll-Ups, and Business Acquisitions / How Private Equity Is Buying Up Mobile Home Parks
Transcript
- Lucas: So it's mid-2026, and private equity firms are sitting on roughly two and a half trillion dollars in dry powder. The question is where to deploy it. One answer that keeps coming up — mobile home parks. Luna: Manufactured housing communities. Roughly 22,000 parks across the US, home to about 22 million people. Lucas: Right. And the economics are kind of fascinating. You've got a tenant who owns their home — the trailer, the mobile home itself — but they rent the land it sits on. So the park owner collects rent on the lot, and if the tenant wants to leave, they can't exactly take their house with them without a huge expense. Moving a mobile home can cost between five and ten thousand dollars, sometimes more. Luna: That creates a captive customer base. Low tenant turnover, high rent growth potential. Lucas: Exactly. And the operating costs are lower than traditional apartments. The park owner isn't maintaining the unit — the tenant owns that. The owner maintains the roads, the water lines, the sewer system, maybe the common areas. But compared to a multi-family building with interior units, the capital expenditure is much lower. Luna: So you got a real estate asset with a built-in rent escalator and a sticky tenant base. I can see why PE is interested. Lucas: And they've been piling in. Since around 2015, we've seen a wave of consolidation. One of the biggest players is Havenpark Communities. They started in 2018, backed by a private equity firm called Pretium Partners. Luna: Pretium — they're huge in single-family rentals too, right? Lucas: Huge. Over a hundred thousand homes in their portfolio. With Havenpark, they went on a buying spree — acquired more than 60 mobile home parks in a few years, mostly in the Midwest and the Mountain West. Luna: And that's where the story gets interesting. Because residents started noticing steep rent hikes. Lucas: Yeah, in some cases, lot rents went up 30, 40, 50 percent over a couple of years. In Utah, Havenpark bought several parks and announced double-digit increases. Residents pushed back, went to the state legislature. Luna: And in 2020, Utah passed a law — Senate Bill 34 — that capped annual rent increases on manufactured housing communities at 5 percent plus the increase in the Consumer Price Index. It was a direct response to the Havenpark situation. Lucas: That's the regulatory risk that private equity has to weigh. The very thing that makes the model attractive — the ability to raise rents aggressively — also invites political backlash. Luna: It's the classic PE tension: you want to improve operations and drive returns, but in affordable housing, your tenant base has limited options. And when they organize, they can change the rules. Lucas: Let's back up and look at the broader market. Manufactured housing is a $20 billion industry. About 40 percent of parks are owned by large operators — investment funds, REITs — and the rest are mom and pop. So there's still a lot of fragmentation to consolidate. Luna: And the tailwind is huge. The US is short millions of affordable housing units. A new manufactured home costs roughly $70,000 to $100,000, compared to $300,000-plus for a site-built home. So demand for this product is strong. Lucas: But the supply of new parks is extremely limited. Zoning restrictions, NIMBY opposition, environmental regulations — it's tough to get approval for a new mobile home park. So the only way to grow is to buy existing parks. Luna: Which means the value is in the land, not the homes. And the land is scarce. Lucas: That's the thesis for firms like Havenpark. Buy the land, improve the infrastructure — new roads, better water systems — and then raise rents because your tenants are getting a better product. In theory, it's a win-win. Luna: In practice, the 'improvements' don't always materialize. There are stories of parks where infrastructure upgrades were minimal but rent increases were steep. That's where the reputational risk comes in. Lucas: Right. And that's why some PE firms are being more careful now. They're bringing in professional management, setting up resident advisory boards, capping rent increases voluntarily. Because once you get a reputation as a predatory owner, you can't buy parks anymore — sellers won't sell to you, and politicians will come after you. Luna: You mentioned REITs — the biggest publicly traded player is Sun Communities, which owns over 650 properties across the US and UK. They've been doing this for decades, and they have a different playbook. Lucas: Sun is interesting because they focus on 'lifestyle' and 'destination' parks — places where people want to live, not just cheap land. They've invested heavily in amenities: pools, clubhouses, fitness centers. They market to retirees, to snowbirds, to families who want a community feel. Luna: And they've been able to push rent growth without the backlash. Because residents feel they're getting value. Lucas: Exactly. The lesson might be that the model works best when you treat it like a premium product, not a necessity. But the reality is, most mobile home parks house low-income families who don't have a choice. The median household income in manufactured housing is about $40,000 a year. Luna: So you've got a fundamental tension. Private equity needs to generate a return. That typically means raising rents, cutting costs, or both. But in this asset class, the tenants are price-sensitive and politically potent. Lucas: And the exit strategy is important too. Most PE firms are looking to flip the parks within 5 to 7 years. They'll improve operations, push rents, then sell to a REIT or a larger operator. The buyer then has to maintain those rents, which can lead to further increases. Luna: So the cycle continues. And we've seen states besides Utah take action. California, Oregon, Colorado, New York — all have some form of rent regulation for mobile home parks. Lucas: And there's a bill in Congress — the Manufactured Housing Community Protection Act — that would require park owners to give tenants a right of first refusal when the park is sold. That would be a game changer. Luna: Let's talk about the tenant side. There are resident-owned communities, where the tenants form a cooperative and buy the park themselves. About 1,700 parks are now resident-owned, mostly through the ROC USA program. Lucas: That model has a lot of appeal. The residents control the rent, they make decisions about improvements, and they keep the land as a shared asset. But it requires capital and organization. Most tenants don't have the cash to buy a park, and they need to secure financing. Luna: Which is where nonprofits and CDFIs come in. The Ford Foundation, the Robert Wood Johnson Foundation — they've put money into resident ownership programs. But it's still a tiny fraction of the market. Lucas: So the dominant trend remains consolidation by private capital. And I think it's going to accelerate. We're seeing more family offices and high-net-worth individuals getting into this space too. Luna: What about the climate risk? Mobile homes are particularly vulnerable to hurricanes, tornadoes, wildfires. A lot of parks are in high-risk areas. Lucas: That's a real concern. After Hurricane Ian in 2022, many parks in Florida were destroyed. Insurance costs have spiked. Some PE firms are factoring climate risk into their underwriting, but others are betting that the housing shortage will outweigh it. Luna: If today's episode gave you a better handle on how private equity is reshaping affordable housing, we want to keep this kind of conversation going. The show stays ad-free thanks to listener support at buy me a coffee dot com slash fexingo. Even a small contribution goes a long way. Lucas: Yeah, it's a really simple way to help us keep digging into topics like this. So if you found it useful, that's the link. Luna: Alright, back to the parks. So where do you see this going over the next five years, Lucas? Lucas: I think we'll see more regulation, especially at the state level. But I also think the best operators will differentiate themselves by being good landlords. The ones that do it right will have a durable competitive advantage. Luna: And the ones that don't will face tenant revolts and legislative crackdowns. Lucas: Exactly. This is an asset class where reputation and community relations matter more than in, say, an office building or a data center. You're dealing with people's homes. If you treat them poorly, you'll pay the price. Luna: Any final takeaway for our listeners who might be thinking about investing in this space? Lucas: Do your due diligence on the regulatory environment. Look at the condition of the infrastructure. Talk to the residents. And don't assume you can just raise rents 10 percent a year without consequences. The easy money in mobile home parks might already be gone. Luna: Good advice. Thanks, Lucas. Lucas: Thanks, Luna. See you next time.