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UMH Properties: Underappreciated Growth Prospects Make This Company A Strong Buy

Aug. 02, 2021 7:30 AM ETUMH Properties, Inc. (UMH)ELS, SUI, UMH.PC, UMH.PR.D6 Comments
Confoundedinterest profile picture


  • The manufactured housing industry has entered a period of sustainable growth that looks to be still in the early innings.
  • Rental home transition throughout the industry provides a durable vehicle for FFO growth along with disciplined community acquisitions.
  • UMH is cheaper than peers Sun Communities & Equity LifeStyle while having similar catalysts and tailwinds going forward. UMH is a strong buy.
Transporting a House Trailer Down a Highway on Flatbed Truck
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Scouring the stock market in search of reasonably priced growth names in times such as these can be quite a tiresome process. My goal? To find companies riding long term, durable tailwinds trading at attractive valuations. I believe I may have found just such

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Confoundedinterest profile picture
I work in the financial and property management industry for a well known, publicly traded "mini Berkshire" Insurance company. I focus on portfolio structure, value, reasonably priced growth, tech and biotech spaces. I passed the series 6 and 7 exams at age 18 but do not at this time have active licenses.My passion for investing and personal finance education began at a very early age. I opened my first brokerage account at the age of 12 and have invested through crashes, crises, recessions and bubbles. I have made many mistakes in both my personal and investing lives, however, each mistake I have made has taught me valuable lessons on my journey, both in life and towards financial independence. As of March 2023, my total portfolio has compounded at 10.2% per year since 1993, beating the S&P 500's return of 9.87% over the same time period. I do not currently hold active licenses and I am not a financial advisor and do not give out or publish investment advice. Articles I write are my opinion only and are not solicitations, please seek guidance from a licensed financial advisor before investing in any security. Opinions expressed in my articles are my own and do not reflect or indicate any positions or opinions held of my primary employer.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of UMH either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (6)

Thx, some nice info.

Nice at 13-15 p/ffo, I’m in! A quick look at the SA financials show 5 years for approximately 50% growth. So that growth came from the 2011-15 bargains as you stated how is that repeating? If it took 5 years for 50% growth in the best times how is that repeated in two years, in high priced high inflation times now?

Here’s the kicker, soon there be lots of sellers displaced by cv19 (stupid lock down Sweden was right), buyers are already shunning home prices while pensions and black rock buy up houses. I expect there will be a lot more competing in the rental biz. But manufacturered homes are less expensive so maybe that would be boom UHM?

You know future earnings are always skewed high. Just look at yearly SPX earnings estimates over a decade. That would be ten curves sloping down from the beginning of the year to the end, every year. My investing style precludes me from putting much emphasis on future estimates, guesses.

P/ffo =27. That boat has sailed, imho. Wait for a lower price.

Sun has always been expensive for years except for the 2020 sell off. Should be higher due the targeted demographic.
Confoundedinterest profile picture
@RWilliam It is notoriously difficult to operate MH parks efficiently (VC's are simply terrible) and the affordability advantage of MH's is only increasing. UMH has the luxury of 3500 currently vacant sites to fill with rentals that produce 14-16% CAP rates along with development opportunities to support substantial organic growth in the years ahead from a base of properties it purchased for bargain prices. In the current environment, if UMH is able to even come close to the 20% FFO growth analysts expect over the next 3 years then I see nice upside at the current valuation.

In addition, the MH industry as a whole benefits from the affordable housing crisis by attracting more qualified tenants and as a result, lowers turn and maintenance costs and delinquency rates. This trend should continue for quite some time to come increasing the profitability of the rental portion of the business as tenant quality improves.

IMO Sun and Equity have benefited from this trend at an outsized rate due to geographic focus and A+ rated communities however these trends, specifically in the last 3-5 years have begun to filter down market benefitting UMH and others that own B & C rated communities to perhaps a much greater extent going forward imo if this continues, which I expect it too.
This is a great REIT. I have owned since 2012 and very happy.
Extreme Income Plus profile picture
@Confounded Interest good article thank you. I like how you put your money where your keyboard is...you're long and I've entered a limit order to get long too.

Ex-div on Aug 13 per info I have.

Extreme Income Plus
Confoundedinterest profile picture
@Extreme Income Plus Thanks Jim, I really like this one and in fact just added another small chunk today.
Long time holder with a full position, big gains, and continue to be puzzled by the price differential between it and it’s peers. Always good to read a confirmation article with facts. Good risk/reward still.
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