Cap Rate Compression, 0% interest rates coming

Looking for some advice from experienced investors/operators out there…

  1. The last 10 years, interest rates have been super low which has caused cap rates to compress in all assets. I believe we are headed to 0% again or possibly negative (germany, europe, etc already there). Will this cause asset prices to rise even further? OR will this cause a recession because of the uncertainty in the markets? Your thoughts
  2. With the above mentioned, do you wait to buy in the next recession or jump in now at low cap rates?
  3. During a recession, (08, 09) did cap rates go up for parks? Do you see that happening again in the next recession?
  4. I am currently making 2% in a money market (will go back to 0% soon), am I better off buying now at 5 to 6% cap rates, or waiting for next recession and scoring great deals on parks then? I would like to generate income off this cash I have. Seems to me everything is in a bubble these days getting ready to pop! Will this happen in parks as well, or are they recession/depression proof?

It was a buyer’s market during the great recession for all asset classes. Over leveraged investors needed to cash out and would sacrifice their basis for liquidity, and others were foreclosed on. MHP occupancy was hurt by job losses requiring tenants to move to where they could find new work, so valuations went down and made purchase more attractive for those able to buy.

There is no perfect answer on when you should buy or sell - but you’re thinking the right way. If you’re very patient and not over leveraged you can find some great deals.

But realize the coming recession probably won’t be as bad as the last one, and the nature of the recession being based on a trade war and geopolitical tensions is a lot different than widespread negligent mortgage underwriting…which means you will see fewer defaults in this recession.

Still. There will be deals, but not like 10 years ago.