At A Glance

Investment Details

The fund objective is to acquire, add value, and reposition under-valued, under-managed, under-performing, and improperly capitalized -- but income-generating -- mobile home parks in the United States. The Sponsor of the fund, MHP Funds ("MHPF"), is looking to assemble a diversified portfolio of cash-flowing mobile home parks to generate income and equity growth.  The exit strategy for this fund is to groom parks to maximize cash flow and appreciation and sell the properties in 1-10 years when the park values have been maximized and market conditions are favorable. ​ 

MHPF will handle all aspects of the investment including identifying the properties to purchase, completing due diligence, and coordinating the closing. MHPF will also be responsible for overseeing the day to day management of the properties, enacting the turnaround plans, handling the accounting, and developing appropriate exit strategies. Investors are projected to receive quarterly updates and quarterly distributions, with the first distribution expected after the first quarter of 2016.

Investment Highlights

• Experienced Sponsor with Significant Market Presence: The principals of MHPF have an extensive 20-year track record in the mobile home park industry and have more than 55 years of experience in the real estate industry. With over 145 parks and 15,600 lots in 22 states the principals and their affiliated entities are estimated to own and/or manage the 3rd largest number of mobile home parks, and the 6th largest number of mobile home lots in the country⁽¹⁾. 
• High Demand for Affordable Housing: According to the 2008 American Community Survey by the U.S. Census Bureau, 6.6% of all housing units in the United States were mobile homes.​ MHPF believes that the increasing demand for mobile home parks has been driven by a fundamental shift in the U.S. towards creation of lower paying jobs, increased immigration, and increased numbers of retirees downsizing their homes.
• Minimal Capital Investment and Lower Maintenance Costs: MHPF's primary business plan consists of acquiring mobile home parks and renting the lots to tenants who own their homes. Under this plan, MHPF is primarily responsible for maintaining the land, not the mobile homes on the land.  This strategy serves to limit the required upfront capital investment and reduces ongoing maintenance costs.  This strategy also helps enable the tenants to enjoy the pride of owning their own homes, and since the residents are responsible for maintaining their own homes and lots, MHPF does not project needing any major renovation costs to upgrade facilities to attract customers over time.  This does not, however, preclude MHPF from acquiring mobile homes themselves (with the intent to have the new tenant become the owner) in order to increase the occupancy in a park. 
• Stable Tenant Base with Limited Rollover: In the typical mobile home park, the resident base usually has an annual income lower than national average. In a study conducted by Foremost Insurance Company, 55% of mobile home owners reported an annual household income less than $30,000.  Due to the high cost of moving a mobile home, which MHPF estimates to be approximately $5,000, tenants are less likely to move and therefore reducing turnover.
• Ability to Maximize Revenue: MHPF believes that when residents own their homes in a mobile home park, the ability to increase rents or pass-through utility expenses and retain them as residents is much higher.  For example, an effective rental increase of $20 would cost a resident an additional $240 per year.  Compared to the cost of moving the home, this increase is much less.  
• Limited Competition: MHPF believes the supply of mobile home parks is limited in the U.S. due to high entry costs, adverse regulations, government restrictions, and limited access to water and sewer connections. In many areas of the U.S., it is difficult to obtain the proper zoning and meet all the requirements to build a new community. Once the permits are in place and licenses have been obtained, the curbs, roads, driveways, utilities, and other infrastructure improvements need to be built out, increasing a potential developer's costs.  A potential mobile home park developer also needs to cover the carrying costs until enough homes have been brought into the community to cover expenses.  Furthermore, mobile home parks are often perceived negatively and can meet resistance from nearby homeowners and business owners.
• Strong Pipeline: MHPF continues to maintain a strong investment pipeline and is able to source transactions through several channels: direct marketing using a large internal database of parks and owners across the country (many of which have not efficiently operated or have improperly capitalized their properties), strong agent and broker relationships, foreclosures, and referrals (often from former attendees of the MHP "Boot Camp" educational seminar held by the principles of the sponsor).  
• Dislocation in the Capital Markets: MHPF believes that more buyers for mobile home parks have recently entered the market, and although the credit markets have loosened up on higher-priced properties, financing is still often difficult to obtain for properties in need of repositioning.  This has created an opportunity for all-cash purchases coupled with a refinance after the repositioning work is near completion or has been completed. Furthermore, lenders prefer and often demand only seasoned, credible borrowers, which often precludes new entrants from investing in the mobile home park space. 
• Accelerated Depreciation (Potential Tax Benefit): Mobile home parks have more favorable tax treatment than other investment properties.  As an example, apartment buildings typically have a large portion of their value attributable to the building itself that can be depreciated over a 27.5-year period. However, for mobile home parks, the depreciable costs are typically the roads, water lines, sewer lines, electric poles, and other infrastructure improvements.  Since these are considered land improvements for tax purposes, the IRS allows for them to be depreciated over a much shorter period of 15 years.  This accelerated depreciation over the first 15 years of ownership can be a major tax benefit for some investors.
• Experienced Property Management with a National Presence: MHPF intends to work with RV Horizons, Inc. ("RVH"), an experienced mobile home park property management firm owned by one of the principals of MHPF, Dave Reynolds, to enact turn-around plans and perform the day-to-day operations for properties acquired by AHCF 6.  RV Horizons employs more than 450 people nationwide with more than 100 managers and supervisors in the field.  The team at RVH includes a corporate office staff, district managers and rehab crews that work with the onsite managers as described below. 
  • Onsite Managers: Each MHP typically has an onsite manager and maintenance personnel. The onsite manager is responsible for record keeping, collecting and depositing rent, property maintenance, showing available lots and homes to prospective residents, enforcing rules and regulations of the community, handling resident problems and questions, and all duties involved with managing the property.
  • Corporate Office: The corporate office consists of four departments: Accounting, Corporate Operations, Legal, and Human Resources. There are five full-time Park Relations Coordinators who are in charge of working with District Managers and onsite MHP managers to oversee paperwork, leases and licenses for each MHP, as well as dedicated staff for sales, titles and deposits. There is also a team of four people in the accounts payable and billing departments who ensure payments are reconciled, approved, and made on time.
  • District Mangers: There are currently 17 full-time district managers who oversee approximately 10-15 parks each. They are in charge of communications between the corporate office and onsite managers. In addition, they typically make bi-monthly visits (more if necessary) to each property to check on the property and its management. The district managers are also in charge of overseeing rehab crews.
  • Rehab Crews: There are typically 10 full-time rehabbers on payroll plus at least five (5) independent full-time contractors who travel from park to park and stay approximately two (2) weeks to three (3) months to aid in turnaround after MHPF purchases it.  They also rehab mobile homes which can be sold to future residents.

⁽¹⁾ MHU Top 100 U.S. Manufactured Home Community Owners

Risks and Risk Mitigation*

• Forward-Looking Statements: Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated,” “projected,” “forecasted,” “estimated,” “prospective,” “believes,” “expects,” ”plans,” “future,” “intends,” “should,” “can,” “could,” “might,” “potential,” “continue,” “may,” “will,” and similar expressions to identify these forward-looking statements.
• Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 41, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
• Management Risk: Investors will be relying solely on the manager of Affordable Housing Community Fund 6, LLC for the execution of its business plan. That manager in turn may rely on other key personnel with relevant experience and knowledge, including contractors and consultants.  Members of Affordable Housing Community Fund 6, LLC (including Realty Mogul 41, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the manager of Affordable Housing Community Fund 6, LLC has significant operating experience, Affordable Housing Community Fund 6, LLC  is a newly formed company and has no operating history or record of performance.   Realty Mogul 41, LLC is pursuing a venture capital strategy through an investment in an operating company that manages and develops real estate; RM Manager, LLC, the manager of Realty Mogul 41, LLC, is expected to be treated as an investment adviser exempt from federal or state registration under this strategy. 
• Uncertain Distributions: The manager of Affordable Housing Community Fund 6, LLC  cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 41, LLC) from either net cash from operations or proceeds from the sale of the asset. That manager, in its discretion, may retain any portion of such funds for property operations or capital improvements. 
• General Economic and Market Risks: While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not investor sentiment and the capital markets will be favorable to the property at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the manager of Affordable Housing Community Fund 6, LLC.
• Concentration Risk:  While MHPF's stated objective is to assemble a diversified portfolio, there can be no assurances that AHCF 6 will not be subject to substantial concentration risk.  The real estate market generally, and MHPF's strategy in particular, may result in certain opportunities representing an outsized proportion of the total fund. For instance, the proposed acquisition of the WI Portfolio represents approximately 42% of the anticipated total fund size of AHCF 6.   The success or failure of this and other transactions may have a correspondingly outsized effect on the rates of return for investors in AHCF 6.  Additionally, there can be no assurances regarding the extent of any correlation among all or any set of the fund's acquisitions.
• Adverse Market and Economic Conditions: Local conditions in the market of each mobile home park may significantly affect occupancy, rental rates, and the operating performance of each property.  These risks include plant closings, industry slowdowns, and other factors that could potentially affect the local economy. Rent control or rent stabilization laws, or other laws regulating mobile home parks, could also prevent MHPF from raising lot rents or selling mobile homes.  Adverse economic conditions such as increases in property taxes, utilities, compensation for on-site associates and routine maintenance could cause an increase in MHPF's operating expenses, which could potentially negatively affect the fund's financial performance.  MHPF has more than 20 years of experience buying and selling mobile homes, with over 145 mobile home parks and 15,600 lots owned and operated by its affiliates.  The company also undergoes an extensive underwriting process prior to each acquisition.  With their experience and rigorous diligence process, MHPF is able to partially mitigate this risk.
• Competitive Housing Alternatives: Properties owned by the fund will compete with other housing alternatives to attract residents, including other mobile home parks, condominiums, and single-family homes which are available for rent or sale.  Competitive residential housing in a particular area could affect MHPF's ability to sell its mobile homes, rent its mobile home lots for occupancy, and/or to increase or maintain lot rental rates.  Improvements to each investment property planned by MHPF will be designed to make them more attractive to new and existing occupants, in hopes of creating a competitive advantage as compared to other housing alternatives in the marketplace.

*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.  We recommend that you consult with a Financial Adviser, Attorney, Accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity.  All investment involves risk of loss, and therefore cannot be guaranteed.  As with any investment, past performance is no guarantee of future results.