Greetings, compared to even two years ago, cap rates have dropped a fair bit, much of the inventory on broker sites is listed as sold, and there are fewer listings here on the MHP store. It would seem the biz isn’t as lucrative financially as just a few years back… 12 caps have become 9s, 10s are 7s or 8s…
I can see two near-term trends, not sure how they will interact. (Some on this forum might see 10 trends that I’m not even thinking of)
TREND 1 is that the biz has been promoted a lot in recent years as the last RE mkt where there is still some decent money to be made. This has attracted a lot of buyers, including at least some folks who probably won’t know what they are doing, will screw up, and have to sell down the road. This would possibly mean that some better cap rates are available in the years to come.
TREND 2, however, is that institutional ownership is increasing and this might snap up so many parks that there will never again be a large number available for individual investors, at least not at decent cap rates. e.g. think about the apartment business…
Is it time to sit out for a while, and wait for better cap rates (which if trend 2 is stronger, may never come)?? Be it stocks or duplexes or now MHPs, I’ve never liked paying a premium and chasing prices, I prefer to “buy at the sound of canon fire and sell at the sound of trumpets” as one old saying goes…(I sold out of tech stocks in 1999 and bought my rental RE between '08 and '13…)
I’m always grateful for the thoughts and advice from this group…