Recently, the real estate market has seen a shift in attention to the types of investments that bring the greatest returns.
In the past, it has always been a combination of good design, convenient location and strong architecture that have been elements of a first class property. They still exist and there will always be a market and demand for this kind of property.
However, the shift in focus on these blue-chip real estate investments was well known in the market. Blackstone acquired 14 residential units, or trailer parks, for $ 172 million in 2018.… Apollo Global Management took a similar step when it acquired a majority stake in Inspire Communities, while the Carlyle Group owns several thousand of these properties. This is the golden age of alternative commercial real estate investments.
“The stunning properties that I consider to be the property of the hero have already paid off completely, as there are usually a dozen buyers who are fighting for a place and are willing to pay obscene maximum rates because they have such a low cost of capital,” explains Jeremiah Boucher, founder and CEO of the company. Patriot Holdings in Las Vegas, why he thinks the alternative real estate market is growing. “In these situations, the upside is limited by too much competitive pressure from buyers.”
Patriot Holdings specializes in investing and improving alternative commercial real estate assets, primarily mobile home parks and self-service warehouses. For the reasons he outlined above, Boucher avoids what he calls “sexual assets” and large corporate-style properties and instead offers exclusive services in this particular area of alternative real estate investment. Patriot strives to be highly discriminatory in their investments compared to large private equity firms due to their practical philosophy and exclusive access to deals, but their main feature is that they own and manage every property in which they invest. While larger private equity firms can outsource the management of these types of property, Patriot Holdings oversees everything from acquisition to development and end-customer service, which means fewer failures and higher customer satisfaction, which translates into more value for their clients. … In total, the group manages over $ 100 million in assets and plans to double its portfolio by the end of 2023.
“Alternative commercial real estate is in the spotlight right now due to an influx of complex large-cap private equity groups seeking to capitalize on prohibitive returns on an asset class,” Boucher says.
This time, the light was also impacted by the increased demand for mobile homes, which have become a vehicle for creating affordable, sustainable, community-centered housing as income inequality continues to rise. AAccording to a report by the National Low Income Housing Coalition cited in a New Yorker article, out of the entire 50 United States, there is not one where someone working full-time at the minimum wage can afford a one-bedroom apartment at market prices. This has led to an increase in demand for subsidized housing, which now far exceeds supply, and as a result, many low-income US residents have turned to mobile home parks in search of the most affordable, affordable options in the private market.
This dynamic has put a huge emphasis on customer satisfaction, especially in the mobile home parks area, where customer service has become critical to long-term growth and return on this type of investment. Mobile home park residents are often homeowners compared to subsidized housing residents and because homeowners have a vested interest in creating and maintaining safe and livable communities and neighborhoods. Investments by large funds have shown some erosion of the social aspect of life in the mobile home park due to the addition of corporate structures, a lack of personal attention and price increases. All of these aspects potentially reduce the long-term return on investment.
“Instead of hiring commercial brokers, we have created our own team to find, review and close new real estate acquisitions. Instead of hiring a property management team, we created our own because we just couldn’t wait weeks for maintenance requests to be resolved, ”Boucher explains his recipe for consistent profits in this market. “Finally, our construction projects are always managed in-house and not by an outside contractor.”
It is a long-term strategy based on a personalized approach to this fast-growing segment of the real estate market, to which Boucher says: “We focus exclusively on what end users need today and what will be required in ten years.”