Nowadays, the single-family rental market is not the only niche area attracting investors, developers and lenders eager to capitalize on the sector’s explosive growth. Manufactured housing is also seeing unprecedented demand, which is fueling investments in this asset class.
In New York State, Cook Properties recently became the largest owner-operator of manufactured housing communities after purchasing a 2,300-pad portfolio. And CEO Jeff Cook told Multi-Housing News that he’s not planning on slowing down anytime soon. Cook revealed why he’s so comfortable investing in manufactured housing in New York, and he discussed his investment and development plans for the next few years.
Why did you decide to focus on this asset class in particular?
Cook: I got my start in real estate as an “accidental landlord,” renting out my single-family residence in the city of Rochester. After getting up to 100 units, I decided to sell them all and shifted my focus to commercial property. In 2008, I purchased my first manufactured housing community, and I fell in love with the business model.
What makes you say “yes” to an MHC deal? What factors do you take into consideration before buying a park?
Cook: One of the biggest factors for us is the potential to add value. We like to find communities with vacant pads and expansion opportunities. That’s where we can really add value with aggressive infill. We also look at the ages of the homes within the community and typical due diligence.
Is it difficult to get capital for MHC investments in the current lending environment?
Cook: Many of our acquisitions are funded through private investment. For example, in the spring of 2021 we had an opportunity to purchase a portfolio of 1,500 pads, requiring a raise of $26 million to make the deal. I made a lot of calls and we ended up raising the funds in eight months from 140 separate investors. Our most recent acquisition of a 2,300-pad portfolio was the first in which we partnered with an institutional investment partner.
What do you like about the New York State manufactured housing market?
Cook: We’re so familiar and used to the New York State business environment. As the largest owner-operator in the state, we’ve had continued success here over the last 15 years. There’s a lot of good things happening—we don’t have the explosive ups and downs that some other areas of the country can have. It’s extremely steady and stable in terms of generating cash flow.
You have 300 acres of land under contract in the Rochester area. Have you penciled out your plans for that parcel yet? How many manufactured housing homesites do you intend to build there?
Cook: We’re excited to get started on a new mixed-use project in Canandaigua, N.Y.—Uptown Landing, which will include 150+ new manufactured homes along with apartments, townhomes and retail space. The project will essentially create a neighborhood, complete with sidewalks, trails and green space. Additionally, we’ve been actively touring sites to pursue new MHC development in the New York state and the southeastern U.S.
How challenging is it to build new MHCs? What are the main issues impeding construction activity in this niche?
Cook: Building and zoning codes are one of the greatest ongoing challenges of new development. These obstacles stem from the deep-rooted stigma associated with the mobile homes of previous generations. Educating municipalities and policymakers is key to breaking down that negative perception.
I believe that seeing is believing. We’re doing everything we can to promote and showcase how new MHCs provide an amazing opportunity for quality housing at an attractive and attainable price point.
The biggest impediment for new development of MHCs in New York State is municipal zoning restrictions. To build a new community the land currently has to be specifically zoned for manufactured housing communities, or a variance is required.
With concerns about rising interest rates and inflation, as well as increasing prices, where do you see the MHC industry going? Also, where is Cook Properties headed?
Cook: I believe demand for manufactured housing will continue to increase. Manufactured housing as an asset class continues to perform well despite the changes in the market.
As we look to the future—we are not slowing down. In 2019 we had just 1,000 pads under our ownership and management. Today, we’re up to 6,500. My goal is to get to 20,000 pads in the next three years, including expansion down the East Coast.