Amer­i­cans with bad credit, crim­i­nal his­to­ries live in trailer homes

Daily Trust - - PROPERTY - By Ni­cole Goodkind

Some of Wall Street and Sil­i­con Val­ley’s best minds are pack­ing it all in for greener pas­tures. And they’ve found those pas­tures in…trailer parks.

“Trailer parks have un­usual eco­nom­ics,” says Anthony Effin­ger, the au­thor of an ar­ti­cle on the topic for Bloomberg Mar­kets. “It’s a sup­ply and de­mand curve that’s su­per at­trac­tive to in­vestors.”

There cer­tainly is de­mand for trailer homes— they’re of­ten the cheap­est form of hous­ing which means a lot in an econ­omy with ever-grow­ing wage dis­par­ity-- roughly 6% of Amer­i­can’s lived in trailer homes as of 2012. The sup­ply of des­ig­nated trailer parks is also quite low be­cause, “no­body wants a trailer park in their town or county,” says Effin­ger.

Dan Weiss­man, who pre­vi­ously worked at Gold­man Sachs and a pri­vate hedge fund, now owns five mo­bile home parks. “The great­est part of the busi­ness is that we go to sleep at night not ever wor­ry­ing about de­mand for our prod­uct. It’s the best de­ci­sion I’ve ever made,” he tells Bloomberg Mar­kets.

“What’s at work here,” says Effin­ger, “is the shrink­ing mid­dle class.” People with bad credit and crim­i­nal his­to­ries are of­ten un­able to rent or buy homes, and are forced into trailer parks—where own­ers are usu­ally will­ing to over­look credit and crim­i­nal ac­tiv­ity (the aver­age trailer home in Amer­ica rents at $390 a month).

It’s not all a walk in the park. In­vestors go into these parks and of­ten have to fix de­crepit homes, deal with crim­i­nals, and in some cases even meth labs.

Weiss­man and his part­ner, David Shlachter (who has a mas­ter’s de­gree in de­vel­op­ment eco­nom­ics from Har­vard), bought a park with 159 mo­bile homes in 2013 for $485,000 and made $250,000 in im­prove­ments. They ex­pect to earn $150,000 in rent for 2014 and the park is only at 40% ca­pac­ity right now.

“There are so many people crowd­ing into tech­nol­ogy,” says Effin­ger. “They’re all su­per bright, ev­ery­body’s mak­ing a new app for the iPhone and in New York there are su­per-tal­ented MBAs scram­bling for a limited num­ber of fi­nan­cial jobs…what these guys wanted was some­thing where they didn’t have to bump up against those folks.”

They’re will­ing to en­ter a hairy in­dus­try to avoid that com­pe­ti­tion.

So should you look to in­vest in mo­bile homes? “I sus­pect you’d need a lot of pa­tience and a lot of time to deal with some of this stuff,” says Effin­ger Ya­hoo Homes.

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