Manufactured housing communities (MHCs) have compressed from cap rates near 8% a decade ago to a range closer to 5.5% to 6.5% in stabilized markets today, reflecting steady demand and the difficulty of building new supply. For investors focused on income that survives a recession, MHCs offer a structural advantage rooted in how the asset operates.
The Supply Story Behind Cap Rate Compression
The number of MHCs in the United States has been shrinking for years as communities are redeveloped into other uses, while almost no new parks receive zoning approval. That fixed supply meets rising demand for attainable housing, which supports occupancy and rent stability.
- National MHC occupancy commonly sits in the mid 90% range.
- Lot rents are a fraction of comparable apartment rents in most markets.
- Tenants own their homes, which raises the cost and friction of moving out.
Why MHCs Tend to Outperform in Downturns
When household budgets tighten, demand for the lowest cost housing rises rather than falls. This counter cyclical pull is the core reason MHCs hold value when class A multifamily faces concessions and vacancy.
Sticky Tenancy
Because residents own the home and rent only the lot, relocation can cost several thousand dollars to move a structure. That economic anchor produces tenure measured in years, not months.
Low Operating Volatility
Operators are responsible for the land and common infrastructure, not individual home interiors. That keeps capital expenditure predictable and turnover costs low relative to apartments.
An asset that gets more affordable in relative terms during a recession is positioned differently than one that depends on rising incomes.
What This Means for Allocation
Investors evaluating MHC exposure should weigh the durability of lot rent income against the operational work required to manage utilities, infrastructure, and resident relations. Reviewing financing structures early matters because the right mobile home park loan terms shape the return profile of a deal.
For passive allocation, the Income Fund targets a 10% return (a target, not a guarantee) by holding a diversified pool of these communities and the loans secured against them.
- Confirm lot rent benchmarks against the submarket.
- Stress test occupancy at recessionary levels.
- Model infrastructure capital needs over a five year hold.
Explore how MHC exposure could fit your portfolio by reviewing the investment options available today.