Pending home sales rose sharply in May. Low mortgage rates and increasing inventories helped. All four regions of the country saw increases. The Pending Home Sales Index increased by 6.1% in May. This is the largest monthly gain since April, 2010.
Minimum Wage Increases Make the Day for Mobile Home Park Owners
A statistic overlooked by many investors is the relationship between mobile home park values and the minimum wage. With the minimum wage at $7.25, a monthly income of around $1,200 mandates rent of roughly 38%, or $456 per month. While apartment project and single family landlords can rarely get their rents down to this range, it’s common for mobile home parks to provide housing for around $500/month.
With a cap rate of around 10%, the value of the park rises by $10 for every $1 in increased rent to the bottom line. If the minimum wage is raised by 30%, then that $500 rent can be raised to as much as $650. If it all goes to increased net income, then that’s an extra $1,500 per rental unit in value of the park.
Non-bank Mortgage Servicers under Microscope
Led of course by new regulations being considered in CA, the federal government is also scrutinizing mortgage servicers that aren’t major banks. Increased scrutiny normally brings increased regulation and higher costs of doing business. It may be the start of a trend of fewer but larger servicers.
Pending Home Sales Up
Pending home sales rose sharply in May. Low mortgage rates and increasing inventories helped. All four regions of the country saw increases. The Pending Home Sales Index increased by 6.1% in May. This is the largest monthly gain since April, 2010.
Minimum Wage Increases Make the Day for Mobile Home Park Owners
A statistic overlooked by many investors is the relationship between mobile home park values and the minimum wage. With the minimum wage at $7.25, a monthly income of around $1,200 mandates rent of roughly 38%, or $456 per month. While apartment project and single family landlords can rarely get their rents down to this range, it’s common for mobile home parks to provide housing for around $500/month.
With a cap rate of around 10%, the value of the park rises by $10 for every $1 in increased rent to the bottom line. If the minimum wage is raised by 30%, then that $500 rent can be raised to as much as $650. If it all goes to increased net income, then that’s an extra $1,500 per rental unit in value of the park.
Non-bank Mortgage Servicers under Microscope
Led of course by new regulations being considered in CA, the federal government is also scrutinizing mortgage servicers that aren’t major banks. Increased scrutiny normally brings increased regulation and higher costs of doing business. It may be the start of a trend of fewer but larger servicers.