Why I’d Rather Own a Property in Nebraska Than One in Nevada

There seems to be confusion on what makes for a good manufactured home community market. Investors who migrate in from the apartment and retail backgrounds
are focused on sexy regions that have high levels of population growth and flashy run-ups in housing prices (typically followed by an equally impressive collapse). Personally, I’d much rather own a manufactured home community in Lincoln, Nebraska than
Las Vegas, Nevada. Why? For a number of reasons.

Affordable housing supply vs. demand
A recent article in the Washington Post focused on the fact that the demand in Nebraska for affordable housing is so large that employers are unable to hire workers because they can’t find suitable housing https://www.washingtonpost.
com/news/wonk/wp/2018/06/06/we-try-to-solve-the-greatnebraska-mobile-home-mystery/?noredirect=on&utm_term=.4e6c0519df1f . While Nevada also shares a need for affordable housing, it’s no where near that hot. The housing vacancy rate, according to BestPlaces.net. is 5% in Lincoln but 14.33% in Las Vegas. That means that Lincoln housing has 70% less vacancy, and that means demand far exceeds supply compared to Las Vegas. This one statistic alone would make me favor Lincoln over Las Vegas. But there’s still much more.

Steady economy
Turn to the unemployment rate section of BestPlaces.net. The unemployment rate in Lincoln is 3% while Las Vegas is 7.2%. That’s a 100% difference. Why is Lincoln so much stronger economically? It’s the way that the economy is constructed (and this is true of virtually all parts of Nebraska). The top ten employers in Lincoln are 1) State of Nebraska 2) public school system 3) University of Nebraska 4) Bryan Health 5) the
Federal Government 6) City of Lincoln 7) St. Elizabeth Hospital 8) Burlington Northern Railroad 9) Madonna Hospital and 10) Duncan Aviation. This exactly fits with our ideal employment base, with the majority of jobs coming from the recession-resistant
industries of government, education and healthcare. Meanwhile, Las Vegas is built around tourism and gambling, which collapse at every recession. While the shows are better in Vegas than Lincoln, the folks in Nebraska are better suited to pay for the tickets.

Few peaks equal few valleys
There is no question that median home prices in Las Vegas are higher than Lincoln. The Las Vegas median is $201,000 and the Lincoln median is $154,200. And I would be the first to bet that Las Vegas homes will hit $300,000 before Lincoln ever will, But I also remember when, during the Great Recession, those same home prices fell by 50% in Vegas while they didn’t budge much in Lincoln. Just as a rocket plunges back to earth after liftoff, I prefer markets that are known for stability over fireworks.

Less Competition
Although I love watching a close NBA finals, I don’t appreciate competition in my business. Very few people ever think about investing in Lincoln, while few people don’t think about Las Vegas. One of the key reasons that Las Vegas has insanely high levels of competition is simple geography: Nevada is very near to California, which is where more real estate investors come from than any other state. At the same time, Nebraska is thought of as only having one investor: Warren Buffett. The cap rates are much lower in Las Vegas as a result – around 20%+ lower than in Lincoln. This translates to much
higher deal prices in the land of the Las Vegas strip.

More stable residents
And let’s not forget one of the big differences between manufactured home communities in Lincoln versus those of Las Vegas. We’ve owned both, and the residents are much
more transient in nature in Las Vegas. There are many possible causes for this. Lincoln is all about steady jobs in government, education, healthcare and basic industries like agriculture and manufacturing. In Las Vegas, on the other hand, here’s the list of top ten employers 1) MGM Resorts with 54,250 2) Caesar’s with 27,860 3) Station Casinos with 13,000 4) Wynn with 11,729 5) Boyd Gaming with 9,350 6) Sands Casino with 8,630 7) Walmart with 6,475 8) Cosmopolitan with 5,330 9) Valley Health System with 5,267 and 10) Supervalu with 4,024. That means that the Las Vegas economy is all about nothing more than tourism and gaming. Since the longevity of our customers is the hallmark of low operating costs and high levels of pride-of-ownership, then Lincoln beats Las Vegas on this point hands-down.

While it may seem odd to many, I would much prefer to own a manufactured home community in Lincoln, Nebraska over one in Las Vegas, Nevada. The market and residents are more stable, and the law of supply and demand is much more in your favor. While Rod Stewart may never do a show there, you can more than afford to buy a Vegas weekend from your higher Lincoln profits.


Frank Rolfe 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. To learn more about Frank’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.