Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why You Should Buy Trailer Park Stocks

Companies / Investing 2019 Nov 28, 2019 - 05:35 PM GMT

By: Robert_Ross

Companies

10,000 baby boomers retire every day.

But retirement won’t mean endless rounds of golf or trips to Tuscany for a lot of these folks, who are now 55–75 years old.

In fact, retirement will lower the living standards of 40% of boomers, according to The Wall Street Journal. That translates to a lifestyle downgrade for 15 million American households.

It gets worse: One in three boomers has zero money saved for retirement. Zilch. Nothing. And 6 in 10 have less than $10,000.

Then there’s the debt problem. The average boomer is $99,000 in debt, according to the Wharton School.


This is all pushing boomers to rethink their retirement plans. For many, that means trailer parks…

They’re Called “Manufactured Homes” Now

The trailer parks I’m talking about look more like budget resorts. At least, that’s what I’d been told. And they’re called “manufactured homes” now.

Still, I had to see for myself. So I drove up to Napa to see one of these communities.

After parking at the entrance, I walked over to a perfectly manicured mini-golf course. Behind me, kids splashed around in an Olympic-size swimming pool. About 100 yards away, a community library sat in the shade of giant palm trees.

This certainly wasn’t a “trailer park” in the traditional sense. It was downright pleasant. The allure started to make sense.

For one, manufactured homes cost nearly $300,000 less than traditional houses. For retirees worried their nest egg won’t last as long as they need, it can be the perfect fit.

John Mauldin calls this problem longevity risk. And it’s something many retirees are coming to terms with.

Most retirees simply can’t afford their dream beach house. Far from it. So they’re turning to plan B: manufactured home communities like the one I visited.

4X the S&P 500

Investing in manufactured home real estate investment trusts (REITs) is a great way to ride this trend.

REITs own and operate real estate—everything from hospitals to warehouses to trailer parks. They trade just like stocks, but they’re required pay out 90% of their profits as dividends. So they’re great for income investors like us.

Last November, we talked about investing in two manufactured home REITsSun Communities (SUI) and Equity LifeStyle Properties (ELS). Since then, they’ve surged 53% and 42%, respectively. (The S&P 500 has risen 12.3% over the same period.)

Sun Communities and Equity LifeStyle have more or less quadrupled the S&P 500 over the last 12 months. But I think these stocks are just getting started.

The Great Downsizing Is Coming

Remember, 10,000 boomers are retiring every day with nowhere near enough money. But there’s a solution: 60% of US households own a home.

Duke University economics professor Charles M. Becker thinks many retirees will sell their traditional houses and move into manufactured homes.

"Trailer parks can be thought of as gated communities for people who aren't so wealthy,” says Becker.

In fact, manufactured homes have been the largest source of affordable housing in the US for 30 years.

Meanwhile, US home prices are at all-time highs:

This means two things:

  • Retiring boomers can sell their homes on the highs; and
  • They can buy a much cheaper manufactured home and use the rest of the money for retirement.

This trend is already in motion. Sales of manufactured homes are surging:

It’s no fluke that manufactured home sales started rising in 2011. That’s around the time boomers started to retire.

I’m not the only one connecting the dots here. Legendary investor Warren Buffett was an early mover in the manufactured homes space.

Buffett’s holding company, Berkshire Hathaway, bought Clayton Homes for $1.3 billion in 2003. Clayton is the largest builder of manufactured homes in the US.

Another Recession-Proof Trend

One of the best parts about manufactured home stocks is they’re incredibly resilient—just like Walmart (WMT).

Remember when the S&P 500 plunged 20% over three months late last year?

Sun Communities and Equity Lifestyle held up remarkably well during the freefall. Their respective stocks only dipped 2.7% and 1.5%.

Retirees will continue downsizing into manufactured homes for at least the next decade. Meanwhile, manufactured home REITs pay fat dividends. And they’ve been rising over three-times faster than the S&P 500.

Ever better, they also hold their value during a downturn—making them a good fit for any income investor’s portfolio.

The Sin Stock Anomaly: Collect Big, Safe Profits with These 3 Hated Stocks

My brand-new special report tells you everything about profiting from “sin stocks” (gambling, tobacco, and alcohol). These stocks are much safer and do twice as well as other stocks simply because most investors try to avoid them. Claim your free copy.

By Robert Ross

© 2019 Copyright Robert Ross. - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in