HOW THE OBAMA PRESIDENCY WILL EFFECT THE MOBILE HOME PARK INDUSTRY
By Frank Rolfe

 

The election is over and the President-elect is Barrack Obama. While that ends a lot of uncertainty over the general direction of the government, it only opens new worries over what this means to the economy and, on the micro scale, the mobile home park industry. Will Obama help improve the mobile home and mobile home park industry? Or will he further damage the already anemic manufacturing part of the industry, and cause new problems for the still resilient mobile home park part of the business?

These are the potential effects of the Obama presidency on the mobile home and mobile home park industries: 

• Improved conditions for financing.  Obama appears poised to aggressively attack the still horrible environment for getting a loan. If he can accomplish this, it will make it easier to buy a mobile home and to buy a mobile home park. It is always easier for the new guy to heap the blame on the old leader and then come up with a radical plan to fix the problem. With $700 billion already at his disposal, and some great thinkers on the staff, there is new hope that the problem can be eased (but not eliminated). That's good news for both mobile home parks and manufacturing.
   

• Improved Odds of Solving the Auto Industry Meltdown and Saving Their Workers.  Obama appears to have an appetite to try and save the millions of manufacturing jobs that will be lost if the nation's auto makers shut down. Since such workers are heavy users of mobile homes and mobile home parks, this is a plus for both segments of the industry. Although he may not be able to pull it off, at least he appears willing to give it a chance. The failure to solve the U.S. auto industry problem is definitely bad for both mobile home manufacturers and mobile home parks located in states such as Michigan.
   

•  More Money in Lower-Income Workers Pockets.  Since most mobile home customers are the lower earning part of the workforce, Obama's initiatives to reduce taxes and increase supplements for this segment of the population is a great thing for mobile home parks and manufacturers. A $2,000 annual savings from a family of four under Obama represents, in some parks, lot rent for a year, as well as a down payment on a new mobile home.
   

• Hope May Lead to Better Consumer Spending.  Since consumers are the biggest part of our economy, and since Obama seems to inspire hope in the average American, perhaps they will keep on spending rather than pulling back. This may lead to a more mild recession, and that is good for both mobile home parks and manufacturers.
   

• Reduction of Military Spending May Allow For Stimulating Other Parts of the Economy.   One of Obama's campaign stances was to end the war in Iraq and bring the troops home. If he accomplishes this, it will save billions of dollars that can be put into productive programs, and potentially improve the economy. And a better economy is good for both mobile home parks and manufacturers. In addition, bringing home troops will be a boon for parks located near army bases. These parks have seen a lot of vacancy issues as a result of troops deploying to Iraq. When they come home, they have to have somewhere to live, and the parks are more than happy to accommodate that.
   

• Elimination of the Captial Gains Tax.   This is one of Obama's tax strategies, according to some experts. Clearly, this would be devastating for the real estate industry, as it has been built into all budgets and proformas for years, and was seen as one of the big advantages to real estate investing. However, one factor that will mitigate this for park owners is the fact that most parks have a positive cash flow (the industry norm would be 10%), so unlike raw land and other non-income producting assets, or ones that produce little cash flow like office buildings, mobile home park owners will at least be able to wait out if the tax is reinstated, or hold out for a better price while the ramifications are digested.

In summary, the net effect of the Obama presidency is generally good for the mobile home park and manufacturing industries. Although many business leaders championed McCain as the solution for near-term problems, it may just be that Obama can deliver more economic solutions than McCain could have. Franklin Roosevelt was able to lead America out of the depression offering a message of hope. Now it's Obama's turn to give it a try.

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