In Cities Like Austin, Redevelopment of Mobile Home Parks is Almost Inevitable
We hear it all the time in real estate investing: location, location, location. Understanding that for mobile home park success and longevity is somewhat counter-intuitive from the norm.
For instance, in a city like Austin, Texas many mobile home parks are being sold off for redevelopment. Why is that?
Photo: An Austin, Texas mobile home park, sourced from Bing.com
Austin is a successful city, and a growing city, but it is very trendy. If you've ever been to Austin, it's like the little Los Angeles (if you've been to LA then really Austin is more like the Silverlake neighborhood and certainly not like the entire city of LA) of Texas. Progressive, prides themselves on being culturally and socioeconomically sensitive yet at the same time hipster, yuppy, and expensive, and getting more and more expensive. Mobile home parks are not hipster or yuppy.
Austin has the most overvalued real estate housing market in the US. The unfortunate thing for these MHP residents is that they are likely not savvy about city dynamics and don't think gentrification will happen at their MHP. Austin is a high demand area with big West Coast operated organizations moving in to get into a better position regarding lower taxes and lower cost of living, than what they are used to. But, as they move in, the cost of living goes up. Land is in demand. The culture changes. In a city like Austin, redevelopment is almost inevitable. And, as socioeconomically sensitive as many Austinites claim to be, think "Feel the Bern" and gender-neutral bathrooms at Starbucks and a lot of Prius', they know a money making deal when they see one and aren't saying no to the opportunity. We aren't seeing the residents of the city uprising and demanding that these mobile home parks stay on valuable land, except for those who actually live in the mobile home park. Austin has an interesting dynamic.
This is why "location, location, location" is at times counter intuitive in the mobile home park investing world if you are in it for the long term investment opportunity as an income producing asset. The average investor of real estate, not necessarily educated in mobile home parks, might think Austin is a great place to own an MHP with the abundant employment and service positions. But, for the long term, it's terrible. In our business, "location, location, location" means having employment and enough people living in the area, and affordability factors for single family housing, but not too nice. Like everything, there is a balance.
However, to buy a mobile home park in Austin simply for the opportunity to flip it over to a developer is a different story.
We were inspired by the recent article presented at mystatesman.com where the author highlighted the following:
* UT analysis identifies 16 mobile home parks in Austin at risk of redevelopment.
* Families worry they’ll be displaced out of Austin after receiving eviction notices at their mobile home park.
Another issue facing mobile home park residents in rapidly expanding and ever-gentrifying cities like Austin is that if a MHP resident is able to afford having their mobile home relocated to an MHP on the outskirts of the city, not only will the rent likely be higher but many MHPs are only accepting tenants who bring new manufactured homes with them. Even mobile home parks themselves, those that are staying and on the outskirts, are gentrifying in their own way in the city of Austin.
Is there demand in Austin for mobile home park living? Absolutely. But, Austin isn't having any of it when there is more money to be made with class-A apartments or single family homes. And there's the Austin rub. What happened to "Feel the Bern?" It's a problem we don't see, if ever, in North Carolina, South Carolina, or Georgia.
One Austin mobile home park owner relays that even though he wants to stay as a mobile home park, it's getting to be outrageously expensive and nearly impossible. “It’s not economically feasible anymore to operate mobile home parks within the city,” he said.
To read more about this from thestateman.com, please visit here.
Another related article on Austin and mobile home parks is here.
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