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The Money Tree

So, I was driving through a manufactured housing community (aka, mobile homepark or MHP) in Portage, Michigan about a week ago. I have been intrigued for several decades by the economics of the MHP property category. Essentially, tenants of the “park” rent asmallparcelfrom a landlord, paying around $200 per month on average. On top of that, the tenant typically pays for all utilities and maintains the site in terms of basic landscaping. Mobile home parks are known for sustainable cash flows. There are many external reasons why these properties ooze cash (e.g., zoning andunfriendly suburban neighbors limit supply). And there are a number of factors particular to the property type that promote healthy cash flows; for example, it is particularly difficult and expensive to move a home once it is placed on the site. But this MHP in Portage takes the whole sustainability of cash flowconcept to a new level. In front of every single sited home, a fast growing tree was planted. So, if the landlord raises monthly rental rates, the tenants are kind of stuck…there is a tree (or two or three) in front oftheir houses. Guess they will just have to pay the rent…

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