In America, trailer parks have a reputation for being economically undesirable and are usually considered last-resort stops for poverty-line families and the elderly. Modern day TV shows and movies portray trailer parks in this light more often than not, which helps to perpetuate this mindset. Stigmas aside, as the middle class continues to shrink and affordable housing suffers, Americans are increasingly turning to mobile homes — and investors are loving it. All across the country, investors are remodeling old trailer parks and rebranding them as trendy “mobile home communities.”
Before we can understand this new trend, we must first understand the origin story of the trailer park. Facing job scarcity and housing shortages, many post-Depression era Americans built mobile trailers so they could follow different work opportunities. By the 1950s, trailers were considered a cheaper alternative to buying a house, and trailer owners started forming communities. As stability returned to people's financial situations, trailer parks came to be seen as undesirable. But could that be changing?
Today, the average home in the US costs $286k, while a manufactured home (the “modern incarnation” of a trailer) can be purchased at around $70k. Likewise, rent on one of these homes is about 30-50% lower than that of a typical 2-bedroom apartment. As housing prices continue to climb, median-income Americans are starting to change the demographics of trailer parks.
Seeing an opportunity, developers and investors (including Warren Buffett) are increasingly putting their money into run-down trailer parks and revamping them into attractive complexes, complete with swimming pools, clubhouses, and on-site maintenance. And thanks to Beyoncé and the popular desert getaway El Cosmico Hotel in Marfa, TX, millennials are flocking. This means investors' strategies are paying off: According to Quartz, mobile home parks investors are seeing some of the highest returns in the real estate investment game.
Hey, if it's good enough for Beyoncé, it's good enough for us