A manufactured housing community rents land to residents who own the homes sitting on it. The operator therefore maintains roads, utilities and grounds rather than kitchens and roofs, which produces a lower expense ratio than apartments. Residents are unusually immobile because moving a home is expensive and often impractical, so turnover is low. Communities financed through Fannie Mae or Freddie Mac must provide tenant site lease protections under the Duty to Serve rule, including a renewable lease term, notice of rent increases and the right to sell the home in place. The homes themselves are federally regulated under the HUD code.

Asset classes

Manufactured housing communities as an asset class

Ricardo Sanabria, Founder & CEO

Published 24 August 2026 Last updated 24 August 2026

It is the only residential asset class where the operator does not own the dwellings. That single inversion changes the expense line, the turnover assumption, the tax profile and the politics.

Key takeaways

The operator rents land. Residents own their homes, so the landlord maintains infrastructure rather than dwellings.
Turnover is unusually low because moving a manufactured home is expensive and frequently impractical, which is the source of the stickiness the class is known for.
Homes are federally regulated. A manufactured home is defined by federal standard and built to the HUD code, not to local building code.
Communities financed by Fannie Mae or Freddie Mac must give tenant site lease protections under Duty to Serve, which do not exist in conventional multifamily.
Because the land is the asset, a large share of basis is land improvements in shorter depreciation classes rather than 27.5-year building.
Rent regulation and closure restrictions are a live political risk, precisely because residents cannot easily leave.
Grey Oaks does not sponsor manufactured housing communities.

The inversion at the center of the class

In an apartment community the landlord owns the building and the resident brings furniture. In a manufactured housing community the resident owns the home and the landlord owns everything under and between the homes: the pads, the roads, the water and sewer lines, the electrical distribution, the lighting, the common areas and the entrance.

That inversion is the whole thesis. The operator is not replacing water heaters, repainting units or re-flooring on turnover, because those are the homeowner's problem. What the operator maintains is infrastructure, which fails slowly and predictably rather than unit by unit. The resulting expense ratio is materially below an equivalent apartment community.

It also changes who bears capital risk. In apartments the owner funds the interior capital plan. Here the resident owns a depreciating asset they must maintain to community standards, and the operator's capital plan is roads, utility systems and, in older communities, infrastructure that may be at the end of its life.

The homes themselves are a federally regulated product. Under 24 CFR 3280.2, a manufactured home is "a structure, transportable in one or more sections, which in the traveling mode is 8 body feet or more in width or 40 body feet or more in length or which when erected on-site is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling". Those homes are built to the federal HUD code rather than to local building code, under the National Manufactured Housing Construction and Safety Standards Act, in which Congress found that manufactured housing "plays a vital role in meeting the housing needs of the Nation" and provides "a significant resource for affordable homeownership and rental housing".

Why residents stay, and why that cuts both ways

The stickiness of this class is real and it has a physical cause. Moving a manufactured home is not like moving out of an apartment. It requires transport permits, a tow, disconnection and reconnection of utilities, new skirting and setup, and frequently a receiving community with a vacant pad willing to accept a home of that age. The cost runs to many thousands of dollars and for older homes it is often more than the home is worth.

The commercial consequence is that turnover is low, vacancy is low in a stabilized community, and a rent increase produces far less move-out than the same increase in apartments. That is why the class is described as recession resistant, and the description has some basis: the resident's alternative is not another community, it is losing the home.

That last sentence is also the reason this class carries political risk that apartments do not. A resident who cannot practically leave is a resident with very little bargaining power, and legislatures notice. Rent stabilization aimed specifically at manufactured housing, notice requirements on sale or closure, and rights of first refusal for resident associations exist in a number of states and are proposed in more.

An investor should hold both facts at once. The immobility that produces the low turnover is the same immobility that attracts regulation. A model that projects sustained above-market rent growth is implicitly projecting that no legislature reacts.

The federal tenant protections most investors have never read

This is the part of the class that has changed materially and is still poorly understood.

Fannie Mae and Freddie Mac are subject to a Duty to Serve obligation covering underserved markets, and manufactured housing is one of them. The FHFA rule requires each enterprise to adopt plans covering the market, and among the activities it credits is the financing of communities that provide, at a minimum, certain tenant pad lease protections.

The practical result is that a community financed through the agencies operates under a set of resident protections that a conventionally financed community may not. As Fannie Mae sets them out, these cover the site lease term, rent increases, payment, sublease and sale rights, and notice of a planned sale or closure of the community: a one-year renewable lease term at the tenant's election absent good cause, a minimum thirty days written notice of rent increases, a five-day grace period for non-payment, the right to sublease or assign the pad to a qualifying buyer, the right to post a for sale sign subject to community rules, and the right to sell the home within a period after eviction.

Two implications follow. First, the financing decision and the operating rulebook are linked here in a way they are not in conventional multifamily, so "how is this financed" is also a question about what the operator may do. Second, an underwriting model that assumes rapid, frequent rent increases needs to be read against a thirty-day notice requirement and a renewable lease term.

Ask directly: is this community agency financed, do the tenant site lease protections apply, and are they reflected in the rent growth assumptions?

The diligence is underground

The distinctive physical risk in this class is not the homes, it is what runs beneath them. Many communities were built decades ago with private water and sewer systems, and the condition of those systems is the single largest capital variable in the asset.

Private utility infrastructure that is at the end of its life can cost a very large sum to replace, and unlike a roof it cannot be deferred indefinitely or done a building at a time. Some communities operate their own wastewater treatment, which brings state environmental permitting and its own compliance exposure. Others are on septic, where a failure can take pads out of service.

The questions are concrete. Is the community on municipal water and sewer or private systems? If private, what is the age and condition, when was it last surveyed, and is there a state permit with compliance obligations? Are utilities master metered and, if so, is the operator reselling them and under what state rules? What proportion of pads are occupied by homes the community owns rather than residents, and why?

That last question matters more than it looks. Community-owned homes convert a land-lease business into a rental-home business, with the maintenance burden the class is supposed to avoid, and it is frequently how a struggling community fills pads.

The tax profile is unusually favorable, for a specific reason

Because the operator owns land and improvements rather than dwellings, the composition of basis is different from any other residential class. Roads, pads, utility distribution, lighting, fencing and landscaping are land improvements, and land improvements sit in a fifteen-year recovery class under the rules described in IRS Publication 946, rather than the 27.5 years applying to residential rental buildings.

A well-prepared cost segregation study on a community can therefore move a substantial share of depreciable basis into short-life classes, which is a stronger profile than an apartment building of the same price. The IRS sets out what a defensible study contains in its Cost Segregation Audit Techniques Guide, and the same warning applies here as anywhere: there are no prescribed qualifications for preparers, so the report should name its preparer and their credentials.

Combined with bonus depreciation, which IRS Notice 2026-11 records as a permanent 100 percent deduction for qualified property acquired and placed in service after 19 January 2025, the first-year deduction on a community can be large relative to the equity.

The limits are unchanged. Rental losses are generally passive under IRS Publication 925, so the deduction typically offsets passive income rather than salary, and it arrives on a Schedule K-1 with the timing and multi-state consequences described in reading your Schedule K-1. Land itself is never depreciable, and in this class land is a larger share of the purchase price than in most.

The same 15-year profile appears in RV parks, which are built from similar site work. What differs there is not the depreciation schedule but the occupancy: an RV guest may never become a tenant at all.

What actually goes wrong

Infrastructure that fails. Private water and sewer at the end of life is the capital event that defines this class, and it is discoverable in diligence if anyone looks.

Regulatory response. Rent stabilization specific to manufactured housing, closure and conversion restrictions, and resident right of first refusal statutes are all live. The immobility of residents makes this class politically visible.

Pad fill assumptions. A value-add plan that assumes filling vacant pads depends on sourcing homes, financing them for buyers and getting them installed. Each step is slower and more capital hungry than a lease-up model implies.

Home ownership drift. Communities that fill pads with community-owned homes quietly become rental-home operators, taking on the maintenance burden the class is supposed to avoid.

Capital structure. The same debt risks as any private real estate deal, covered in lender workouts and forbearance.

Where Grey Oaks stands

We do not sponsor manufactured housing communities. Grey Oaks buys and operates apartments. There is no Grey Oaks offering in this class and no track record in it. This page is here because investors ask how it compares with what we do.

Our honest read is that the tax profile is genuinely better than apartments, the expense ratio is genuinely lower, and the political risk is genuinely higher and is structurally tied to the same feature that produces the returns. Anyone presenting the low turnover without the regulatory exposure is presenting half of one mechanism.

If you are evaluating a sponsor in this class, the general method is how to vet a sponsor, their prior offerings are searchable through Form D filings on EDGAR, and what an exempt offering is and is not is set out by the SEC in its material on private placements.

Before you wire

What to ask a community operator

Is the community on municipal water and sewer, or on private systems? If private, what is their age, condition and permit status?
Is this agency financed, and do the tenant site lease protections apply?
How many pads are occupied by resident-owned homes versus community-owned homes?
If the plan involves filling vacant pads, where are the homes coming from and who finances the buyers?
What rent regulation, closure restriction or resident right of first refusal exists in this state?
What proportion of depreciable basis does the cost segregation study place in fifteen-year land improvements?
What are the loan terms: fixed or floating, maturity, rate cap strike and expiry?

Sources

What this is built on

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Ricardo Sanabria · Grey Oaks Multifamily

Answering

Follow-up questions people ask after reading this.

Who owns the homes?

The residents do, in a conventional community. The operator owns the land and the infrastructure and rents pads. That is the structural inversion that gives the class its low expense ratio and its low turnover.