The mobile homes or "double wides" you remember from "back in the day" have gone the way of the dodo bird. Since 1976, they have been replaced by modern manufactured homes, according to the Department of Housing and Urban Development (HUD).
What are manufactured homes, exactly? They're prefabricated homes built in factories and then transported to a specific home site, assembled on a permanent chassis or steel frame.
Why consider manufactured housing stocks to add to your portfolio? Four words: tumultuous real estate prices.
A few housing market trends expected for 2022: You'll see a lower inventory of available homes and rising prices will still remain an issue for many who want to buy. Interest rates will rise. The rental market will see continued growth, but likely stabilize. New home construction will face labor and supply issues.
Why Invest in Manufactured Housing?
Manufactured homes are cheaper for consumers to buy. Since real estate prices have reached historic highs over the past year, manufactured housing means consumers can tap into lower-per-unit pricing, fewer maintenance costs and high cap rates, which also makes manufactured housing investing attractive to investors. Manufactured housing has the lowest cost per unit of any real estate asset class.
Furthermore, the allure of manufactured home communities is undeniable for baby boomers, who often need to downgrade their style of living in retirement because they haven't saved enough money. In fact, according to a survey by the Insurance Retirement Institute, older workers have under-saved — 51% have less than $50,000 saved for retirement and only 44% think they will have enough income throughout their retirement.
Let's take a look at a few stocks and manufactured community real estate investment trusts (REITS) you may want to consider adding to your portfolio.
UMH Properties, Inc., headquartered in Freehold, New Jersey, operates as a REIT and owns and operates manufactured home communities. The company leases manufactured home sites to private manufactured home owners and designs detached, single-family manufactured homes, produced off-site by manufacturers and installed on sites within the communities.
The company owns and operates a portfolio of 127 manufactured home communities with approximately 24,000 developed homesites, in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Alabama and South Carolina. UMH also owns and operates one community in Florida. The Florida community contains 219 sites, through a joint venture with Nuveen Real Estate. UMH also owns approximately 1,800 acres of land to develop new sites.
UMH Properties, Inc. reported total income for the quarter ended September 30, 2021 of $48 million (compared to $43.1 million) for Q3. Net Loss Attributable to Common Shareholders amounted to $3.4 million ($0.07 per diluted share) for the quarter ended September 30, 2021, compared to $12.7 million ($0.31 per diluted share) for the quarter ended September 30, 2020.
Funds from operations attributable to common shareholders was $10.8 million ($0.22 per diluted share) for the quarter ended September 30, 2021, compared to $4.5 million ($0.11 per diluted share) for the quarter ended September 30, 2020. Normalized funds from operations attributable to common shareholders was $11.1 million, ($0.23 per diluted share) for Q3, compared to $7.4 million ($0.18 per diluted share) for the quarter ended September 30, 2020.
UFP Industries Inc., headquartered in Grand Rapids, Michigan, was founded in 1955 as a lumber supplier to the manufactured housing industry. Today, it manufactures and distributes wood and wood alternative products through its retail, industrial and construction segments through national home center retailers, retail-oriented regional lumber yards and contractor-oriented lumber yards. It manufactures pallets, specialty crates, wooden boxes and other containers used for packaging, shipping and material handling purposes. The construction segment engages in factory-built housing, site-built residential construction, concrete forming and commercial construction, which represent the business units.
The company passed $8.6 billion in net sales for fiscal 2021 and reported record earnings per diluted share of $8.59, a 115% increase over the previous year. During Q4 of fiscal 2021, net sales were $2 billion, a 45% increase over Q4 2020. Earnings per diluted share were $2.21, a 117% increase over the Q4 2020.
Net sales of $2.02 billion increased 45% due to a 5% increase in organic unit sales, a 20% increase in unit sales from acquisitions, and a 20% increase in lumber prices. Earnings from operations of $195 million increased 121% and acquisitions contributed $19 million to earnings.
In fiscal year 2021, net sales increased a whopping 68% due to an increase in organic unit sales, totaling $8.64 billion, which includes a 24% increase in unit sales from acquisitions and a 40% increase in lumber prices. Earnings from operations of $737.6 million increased 113% and new product sales were $842 million, up 56%.
Sun Communities Inc., headquartered in Southfield, Michigan, provides real estate management services through several segments, including real property operations and home sales and rentals. The company owns, operates and develops manufactured housing communities and recreational vehicle communities throughout the United States. It also acquires, operates and expands manufactured housing and recreational vehicle communities.
Q3 results showed a total revenue increase of $283.8 million, or 70.9% to approximately $684.3 million. The company's revenue was $400.5 million for the same period in 2020. Net income attributable to common stockholders increased $150.6 million, or 185.4%, to approximately $231.8 million, or $2 per diluted common share, compared to net income attributable to common stockholders of $81.2 million, or $0.83 per diluted common share, for the same period in 2020.
For the nine months ended September 30, 2021, total revenues increased $716.1 million, or 70.6%, to $1.7 billion compared to approximately $1 billion for the same period in 2020. Net income attributable to common stockholders increased $243.3 million, or 196.2%, to approximately $367.3 million.
Consider Investing in Manufactured Homes and Communities
Investing in manufactured homes can be a great direction for your portfolio. Just consider investing in manufactured homes and communities as part of a diversified, balanced portfolio.
Before you consider Sun Communities, you'll want to hear this.
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