Newsletter: January 2025
We hope this message finds you in great spirits as we step into 2025.
As we prepare to welcome a new President and administration on Monday, we anticipate a renewed focus on business and economic growth. Reflecting on 2024, we are proud to share that it was one of our strongest years yet, with over $8.8 million distributed to our valued investors – that’s a lot of Cash Flow! Together, we’ve not only made a meaningful financial impact on our investors who trust us with their capital but also improved the lives of our residents by enhancing the quality and standard of the communities they live in (see Country Villa’s recent transformation below!). Your trust and support have been instrumental in achieving this milestone, and we are profoundly grateful.
Looking ahead, 2025 is poised to be another outstanding year. We are just two weeks away from closing on Casa Piena, our second deal in Dallas, TX, and are preparing to enter into a contract on another fantastic property, which we will announce in the coming weeks. With a strong economic landscape and carefully aligned strategies, we are confident in our ability to continue delivering exceptional value and growth.
Comfort is firing on all cylinders, and we couldn’t feel more optimistic about our ability to execute for our investors and capitalize on the opportunities that 2025 will bring. We hope this newsletter inspires you to share in our excitement and make this the best year for your business, family, and personal life.
Three Key Economic Developments for 2025
Now, let’s dive into three key economic developments I’m closely monitoring as we step into this promising year and discuss their impacts on Manufactured Housing Communities:
1. 2025 Tax Bills: The Most Important Focus for Many Investors
Taxes will play a pivotal role in shaping the economic and investment landscape in 2025. President Trump’s ambitious agenda includes making the 2017 tax cuts permanent and introducing new reforms, such as removing taxes on tips, increasing SALT deductions, and potentially lowering corporate tax rates further for companies producing in America.
Whether it’s one “Big Beautiful Bill” inclusive of immigration, defense, debt ceiling increases, etc., or a multitude of bills, it seems all but certain that passing a tax bill will be a major priority. For our purposes, this would include bringing back 100% bonus depreciation (fingers crossed!), which is a massive tax savings for many (if not all) of our investors.
These changes could significantly impact market dynamics by boosting disposable income, encouraging domestic production, and creating favorable conditions for businesses. For investors, these shifts could mean increased after-tax returns and enhanced opportunities for growth.
2. Deregulation: An Underrated Catalyst for Growth
The incoming administration’s focus on deregulation has the potential to spur economic growth by reducing inefficiencies and fostering a more competitive financial environment. The duplication of oversight among regulatory agencies has historically increased costs and stifled innovation.
Streamlining regulations in 2025 could enhance return on equity (ROE) and unlock value for investors. It can also increase competition, economic output, and put downward pressure on prices, which could support the reduction in inflation.
Take energy as an example: should the U.S. “Drill Baby Drill,” we could reduce energy costs, which not only helps everyday people but spurs growth, leads to more hires, reduces inflation, lowers interest rates, and so forth. Smart and measured deregulation not only promotes risk-taking and entrepreneurial activity but also increases speed of getting things done by eliminating outdated bureaucratic measures.
3. The 10-Year Treasury Yield
The 10-year Treasury yield remains one of the most critical metrics in finance, reflecting expectations for GDP growth and influencing valuations across asset classes. The Federal Reserve has cut the Fed Funds Rate (benchmark interest rate) by 100 basis points (1%) since September, yet during that time, the 10-year Treasury yield has increased almost exactly 100bps—not what you would expect to happen.
Understanding the movement and magnitude of changes in the 10-year yield will be essential for navigating risk assets and making informed investment decisions in 2025.
At Comfort, we do not aim to predict markets—especially something as complex as Treasury yields. Instead, we focus on making sound real estate investment decisions rooted in strong fundamentals and our 15-year history of success in Mobile Home Park investments. By utilizing fixed-rate loan products, we de-risk our investments and protect investors’ capital from the impact of unexpected rate increases. This disciplined approach ensures stability and confidence in the face of market fluctuations.
Implications for Mobile Home Park Investments
Tax regulations, shifting Treasury yields, and deregulation all have direct and indirect implications for mobile home park investments. Higher or lower Treasury yields typically lead to increased or lower borrowing costs and impact financing structures for acquisitions and expansions. However, mobile home parks remain an attractive asset class due to their stability and recession-resilient nature.
New tax regulations can significantly improve the depreciation (i.e., tax savings) from investing in mobile home parks, and deregulation can spur economic growth – driving wage and job growth, which supports residents who live at our parks while also putting downward pressure on inflation (impacting treasuries positively).
In periods of economic uncertainty, the demand for affordable housing solutions intensifies, bolstering occupancy rates and rental income. Additionally, the supply-demand imbalance in the sector continues to support long-term growth potential, even as capital markets adjust to higher interest rates.
Our strategic focus remains on optimizing operational efficiencies, leveraging our expertise to navigate changing economic conditions, and identifying opportunities that align with our investors’ goals. One thing is certain: real estate is not about timing the market but rather time in the market.
We remain committed to our philosophy of investing in great properties that deliver consistent cash flow and returns to our investors. As always, our focus is on executing sound strategies and seizing opportunities that align with our collective long-term goals. By acquiring deals that make economic sense, we aim to provide consistent cash flow to investors while protecting and growing their capital over time. We are hard at work to continue doing just that.
Country Villa Transformation
Before Improvement
After Improvement
Our strategy is to optimize the communities we own while improving resident satisfaction. Leveraging our value-add expertise, we were able to modernize countless amenities within our community, Country Villa. Our strategic initiatives included a complete renovation of the clubhouse with brand-new furniture, improved entrance signage to boost curb appeal, and installed a modern playground.
New Episode Released!
Episode 12: The Definitive Guide to Active vs. Passive Mobile Home Park Management
We’re passionate about creating wealth and financial freedom for real people and are excited about the promise of 2025!
Here’s to a successful and impactful 2025,
Ben Schuster
Head of Capital Formation
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