Many people get excited about college football. We get excited about college-town manufactured home
communities. These properties display unique characteristics that provide greater stability and investment quality
than virtually any other attribute. Warren Buffett owns only one commercial real estate property: a strip center
across from NYU. He has said many times that the main reason he bought it was that college towns have
superior real estate performance. So why do we love investing in college towns so much?
If you look at the unemployment rate and general economic condition of college towns following the 2007 Great
Recession – when U.S. unemployment rose to around 10% — you’ll find that most college towns had around half
the national average. How did they do so well? It’s because colleges are not really affected by economic cycles.
Most parents are going to send their kids to college regardless of whether or not the stock market is booming or
collapsing. And there are plenty of student loan programs in case parents are struggling. Meanwhile, students
are subsidized from home so it isn’t a necessity to spend money – they are insulated from the real world and so
are those businesses that cater to them. In our opinion, there are three main employment drivers to a recessionresistant
market: 1) education 2) healthcare and 3) government (federal, state, county and city). And if we could
pick just one, it would be education, as colleges are catalysts for economic vitality.
Create Employment by Association
Colleges provide well-trained labor for some specialty industries. Many high-tech companies are located in close
proximity to major colleges with superior computer and engineering departments (such as Stanford and Google
as well as Hewlett Packard). Similarly, many healthcare concerns are located next to colleges to take advantage
of trained medical students (such as Barnes Hospital and Washington University in St. Louis). Equally important
is that many of these industries are high-growth and represent cutting edge technology, which has the power to
potentially shape an entire region (such as Silicon Valley). College towns are basically strong job creators that
are extremely prolific.
Stable Housing Markets
College towns are strong economic engines; therefore, housing prices are extremely stable and typically high.
Elevated median home prices and apartment rents create a strong need for affordable housing, making the
mobile home park one of the few solutions. Additionally, college towns are typically upscale, which creates a
living environment that offers superior public schools and other attributes that make people want to live in the
area, even if they work elsewhere in the metro. University Park, Texas – where Southern Methodist University is
located – has a median home price of $1,427,000. For those who think that’s the most extreme example in the
U.S., you will find that the median home price in Palo Alto, California (where Stanford is located) is $2,562,600.
GI Bill Legacy
At the end of World War II, the U.S. government offered returning soldiers the “G.I. Bill” which
essentially provided college at low or no cost. As a result, the government relocated the roughly
500,000 mobile homes they had purchased during the war (and used for base housing) to college
campuses nationwide. Mobile home parks became common fixtures that, over time, transitioned
from G.I. Bill to simple affordable housing. Virtually every college town in the U.S. has a selection
of mobile home parks, many of which have all the right features as far as city utilities, paved roads
large lots and strong locations are concerned.
We are the largest owner of mobile home communities in Champaign-Urbana, Illinois. We have a
large investment there because Urbana is the home of the University of Illinois, one of the largest
public universities in the U.S., with over 44,000 students. The metro area has a population of
238,984, a median home price of $129,000 and an average three-bedroom apartment rent of
$1,038 per month. And that’s why these properties do extremely well. We also have large holdings
in Austin, which is the home of the massive University of Texas, with over 50,000 students and
24,000 faculty and staff. The Austin metro is 931,830, with a median home price of $299,400 and
an average three-bedroom apartment rent of $1,610 per month. Again, this is the perfect market
for mobile home parks. But even in markets with smaller colleges, these same fundamentals will
often be found.
College towns are great locations for mobile home parks. When you see properties located in
these areas, you should definitely stop and take a further look. While college football is fun to
watch, college-town mobile home park checks are fun to deposit. That’s why we love college
Dave Reynolds has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. He is also the founder of the largest listing site for manufactured home communities, MobileHomeParkStore.com. To learn more about Dave’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.