The Evolution of Real Estate Investing: Why Manufactured Housing Communities Are the Next Blue Ocean
A History of Saturation in Traditional Real Estate Investing
Over the past several decades, real estate investors have continually sought new opportunities to generate attractive, risk-adjusted returns. However, as each asset class matures and attracts more capital, it inevitably becomes saturated, leading to increased competition, compressed yields, and diminishing returns.
Single-Family Homes
In the 1980s, single-family home investing surged in popularity due to its accessibility and perceived safety. As more investors entered the space, competition intensified. The result was higher prices, lower yields, and significant management burdens for those seeking to scale their portfolios.
Many investors eventually realized that the time, capital, and effort required to build meaningful cash flow from single-family rentals posed significant barriers to achieving their financial goals.
Multifamily Properties
As single-family investing became crowded, attention shifted to multifamily properties. For years, apartments were considered a timeless asset class, providing stable cash flow and benefiting from economies of scale.
However, the multifamily sector has also become saturated, with institutional capital flooding the market, driving up prices and reducing available opportunities for outsized returns. Expense ratios in multifamily properties are high, and turnover rates can be significant, further eroding profitability.
Parking Lots and Self-Storage
Investors then turned to alternative asset classes like paid parking lots and self-storage facilities. These sectors offered attractive returns in their early days, but as their popularity grew, so did competition.
The influx of capital led to overbuilding in some markets, especially in sunbelt markets, compressing yields and making it increasingly difficult to find undervalued opportunities.
MANUFACTURED HOUSING COMMUNITIES:
THE UNCROWDED BLUE OCEAN
Unlike these saturated markets, MHC investing remains a true blue ocean, an underexplored sector with less competition and significant upside potential.
Neglected by Most Investors
For decades, MHCs were overlooked by mainstream investors. This neglect has left the sector with abundant value-add opportunities and less institutional competition.
Superior Economics
MHCs consistently outperform other real estate sectors, offering higher capitalization rates, lower operating expenses (typically 35-45% of gross income versus 50-60% for apartments), and extremely low tenant turnover, homes often remain in place for 25 years or more.
Supply Constraints
Stringent zoning regulations and limited new development have artificially constrained the supply of MHCs, increasing their scarcity and value over time.
Recession-Resistant Demand
As affordable housing becomes increasingly scarce, demand for manufactured housing continues to rise, especially during economic downturns, when more Americans seek cost-effective living options.
Blue Ocean Opportunity
The combination of high barriers to entry, limited new supply, and steady demand creates a unique environment where investors can still find attractive deals, add value, and achieve superior risk-adjusted returns.
Unlike the red oceans of single-family, multifamily, parking, and self-storage, where competition is fierce and margins are thin, MHCs remain a blue ocean of opportunity.
BOTTOM LINE: If you’re seeking an investment opportunity that offers stability, attractive returns, and less competition, MHCs represent the next frontier. At RiseCOMM, we specialize in unlocking value in this under-appreciated sector, helping our investors build passive income and generational wealth in a true blue ocean market.
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"Manufactured housing communities have outperformed every other real estate sector for the last several decades, and they are projected to continue to outperform other sectors for as far as the eye can see."
"Ali" Nasir Ali
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"Trailer parks are the best real estate investment that has ever existed. High barriers to entry, solid demographics, a tenant base that remains with you for life, and tiny capex requirements."
Sam Zell, $5.5 Billion Net Worth
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