This edition shares the highlights from our recent attendance at the 2024 annual Manufactured Housing Institute (MHI) conference in Las Vegas. We kicked off the trip playing in the annual MHI golf tournament at TPC Las Vegas. We played with a few real estate friends from the Bay Area and enjoyed the great event.

Over the following two days, we had the privilege to connect with industry leaders, including top owners, brokers, lenders, home builders, equity players, and more. As a growing capital group, this experience was priceless, providing us with a deeper understanding of industry trends and offering invaluable networking opportunities crucial for our company's growth. Let’s take a look at our top 3 takeaways from the event.

MHI Takeaways

Steady Cap Rates and Rising Competition

Currently, competition is intensifying as major institutional investors eagerly acquire 3 and 4-star 'on-market' properties, with many transactions completed entirely in cash. These properties are often obtained at cap rates of around 4-5%, despite interest rates exceeding 7%. This trend highlights the enduring appeal of the manufactured housing asset class to experienced investors seeking stable returns.

Furthermore, previously passive market players are now reentering the acquisition arena. To help navigate this competitive market, it remains critical to build a robust deal flow of off-market opportunities. Actively seeking off-market deals not only allows us to avoid bidding wars but also exposes us to unique investment opportunities not readily accessible through conventional channels. By further expanding our network of owners and brokers, we are positioning ourselves to seize opportunities and capture value in the current market.

Opportunity- New Capital

Besides the increased competition from institutions, we're seeing a significant influx of new capital into the manufactured housing (MH) and recreational vehicle (RV) sectors. Through our interactions with various equity players, we've observed a growing trend of entities that traditionally focused on other commercial real estate (CRE) asset classes now actively pursuing opportunities in MH and RV. This observation reaffirms our investment thesis that manufactured home communities (MHCs) located in areas with constrained housing supply and expensive alternative housing options are drawing considerable investor attention due to their consistent cash flows and potential for long-term appreciation.

Furthermore, our talks have highlighted a growing interest among established players to explore partnership and joint venture (JV) opportunities. As the landscape evolves with new entrants and collaborative joint ventures, staying flexible and proactive in identifying these strategic alliances will be key to our success and help us reach our full potential.

RV with Storage

At the conference, there was a growing buzz surrounding RV parks with storage facilities, as investors realized the untapped potential and appealing economics in these segments. While traveling across the country and exploring numerous opportunities, we have seen firsthand that many of these assets are still operated by small mom-and-pop businesses and have significant room for improvement. Unlike more established real estate sectors, RV parks have yet to undergo full institutionalization, presenting fertile ground for investors to capitalize on emerging opportunities by leveraging technology, SEO, and other value-add strategies. We're excited to incorporate RV properties into our portfolio.

Our recent road trip across the country has highlighted the array of opportunities available, with promising prospects in different regions. By actively scouting and assessing opportunities, we're strategically positioning ourselves to capitalize on the potential of these dynamic markets. We're on the brink of finalizing a contract for a portfolio comprising over 400+ RVs in central Missouri. We're excited to share the details in future articles.

Conclusion

As we continue to grow our company's portfolio, establishing relationships with key industry players remains crucial. The niche characteristics of the asset classes we invest in highlight these partnerships' significance, as they offer valuable opportunities and pave the way for strategic collaborations. In a competitive environment, it's our determination and focus on relationship-building that distinguish us from our competitors. By remaining proactive and dedicated, we are positioned to outperform our rivals and seize emerging market trends, driving sustained growth and value for our stakeholders.

Stay tuned for future editions where we'll explore various aspects of real estate investing. As always, feel free to reach out with any questions.

Greenside Gazette

Crow Holdings scoops 10K manufactured Home Sites in Six States

Crow Holdings is expanding its presence in the increasingly popular manufactured homes sector. The firm's investment management arm, Crow Holdings Capital, has acquired 46 properties with 10,000 homesites across several states, including Ohio, Missouri, Illinois, Indiana, Montana, and Florida. This acquisition is made on behalf of investors in Crow Holdings Realty Partners X LP, a value-add fund that closed in February with over $3 billion in commitments. According to a news release, Crow’s Kristin Millington states the portfolio “is just one example of the attractive investments we’re identifying across this underserved asset class”. This acquisition builds on the firm’s existing investment in manufactured homes; since 2018, Crow has assembled a portfolio of 20,000 homesites across 16 states. Crow Holdings Capital is also developing three manufactured housing communities in North Texas. The developments will provide a total of 1,000 new homes.

Source: TheRealDeal. (2024, March 21st) Crow Holdings scoops 10K manufactured home sites in six states. https://therealdeal.com/texas/dallas/2024/03/21/crow-holdings-buys-46-manufactured-home-properties/

Birdie Basics

MOIC (Multiple on Invested Capital): MOIC measures the overall return generated from a real estate investment compared to the initial capital investment. It's calculated by dividing the total distributions received by the initial investment amount.

Cash on Cash Return: The Cash on Cash Return is a ratio that assesses the yearly cash flow produced by an investment property in comparison to the total capital invested. It's expressed as a percentage and calculated by dividing the annual pre-tax cash flow by the total invested capital.

IRR (Internal Rate of Return): The Internal Rate of Return (IRR) is a measure used to evaluate how profitable an investment is over time. It calculates the annualized rate of return that an investor can expect from their investment. Essentially, IRR helps investors understand how efficiently their investment generates returns by determining the discount rate at which the present value of expected cash inflows matches the initial investment amount.

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