We are all familiar with the general pros and cons of either model. We are also aware that the desirability of either approach varies with specific micro markets, with the philosophy and goals of the individual investor, as well as with our national economic conditions.
I enjoy the benefits of selling the homes and of retaining the land. This model worked well in the past, especially for park owners. But is it equally as desirable for the present and the foreseeable future? To retain the land for perhaps a higher and better use in the future seems beneficial, especially if one believes that a “normal,” that is a stable political and economic climate, will grace us in a few years. We don’t have the gift of prescience, but the present economic/ political atmosphere does not bode well for positive expectations during the next few years.
Inflationary expectations favor the borrower at the expense of the lender, the seller of M.H.
The landlord is not locked into a contractual return on his money. He can adjust (increase) his rents within the constraints of the economic base of his tenants and the local market. He also retains the option to sell or not to sell.
It seems to me that in uncertain times, landlording, managing tenants and property while servicing the forever- needed affordable housing market, may be a reasonable way to prepare for and weather the coming storm.
I sincerely hope that this topic will be discussed in depth at Tony’s and Scott’s bootcamp by wiser and more experienced minds than mine.
Bernd, this topic and your other recent post RE: speculation are certainly thought provoking. I feel they overlook the most significant business factor in all market conditions - opportunity - and how well a given business is positioned to exploit that opportunity.
Rental can work great, but it is not for everyone or every MHP. Same can be said for LD’s in park- in reading many posts on this site it seems that some operations customers “buy” their homes as surely as a cash buyer, while other LD operations are more akin to rental.
I also could use some words of wisdom from you and others - in Lonnie’s writings he states that his biz model works in all political/ economical climates - I really like that thought. I wonder if going forward this holds true as it seems that politicians and gov’t agencies are willing to go to any length to keep our population living beyond their means.
Two excellent post from Bernd and Shawn. I do land home packages in central Florida. I do a mix of holding mortgages, rentals on quarter acres and have lots for sale. The one thing I cannot plan on or account for is the Federal and local governments actions to do just what Shawn stated. The people who should be buying, renting or to put it in prespective, living within their means are in homes they cannot afford . Why rent, or live in a mobile when you can live beyond your means? I am holding a mortgage for a young couple who with PITI come in about $675 a month. That is what they can afford. They feel lucky and are living within their means, building equity, sleeping well, doing good. The majority of young people their age are either sharing expenses, living at home, been or going to be bankrupt, or living on borrowed time. Why? Because they refuse to live within their means and will not live in a mobile because they want a “real house” even tho they can barely afford a mobile. We enable 40% of our population to live beyond their means. It is tough to build a business model in the present climate. I have to admit by now I thought all my lots would be gone and I would be cashed out (by holding mortgages and some cash deals). It would be so except young and old alike refuse to accept the hard facts of reality, they can affort a mobile on a quarter acre for between 50 and 80K or a 600 month rental and that is their limit. Now I am not moaning or complaining. I have 15 rentals that provide cash flow and feed me. I know in a 2to 3 year span my market (Central Florida) is going to be back. Housing fuel bill alone will move the people here. What will it take to get the American people to face reality. Our country was built on work hard, save, live within your means and leave your children better off than you (if possible). That is not even a thought anyone. Shawn you are right, Lonnies or anyones plan always has to be tweaked, changed, adapted but the princiiple remains the same. Bernd, to answer your quiery I say it is a combination of “Whaterver Works”. Thanks for letting me get it off my chest. By the way, by the grace of God and the knowing that all comes from him, I sit here far better in this point in my life because of “mobiles” on land and doing it. I am a lurker but some you inspire me, cause I know it works.
Shawn, you are very perceptive and always stimulate a re-evaluation of my own thoughts, although I am, as you know from our personal conversations, as opinionated as one can be.
My appraisal of renting vs. selling was supposed to address the general business model within the present inflationary times (our $ has lost 50% of its value during the past 6-7 years), which could conceivably be the victim of a hyperinflationary future. The post was conceived on the premise that during inflationary times, assets are more desirable than devalued paper currency. At the present 10% inflationary rate, any lender