We recently announced that we anticipate the Wellings Real Estate Income Fund's (the "Fund") share pricing increasing moderately at the end of this month.

Friday, June 28th is the last day to invest at the original share price.

Reader, this paragraph from a 2023 housing report from Harvard surprised me:

"Between 2019 and 2021, the number of cost-burdened renters—defined as those spending more than 30 percent of their income on housing—increased by 1.2 million to a record 21.6 million households. Among these, 11.6 million were severely cost burdened, spending more than 50 percent of their income on housing."

Manufactured housing communities (sometimes called mobile home parks) present an affordable housing solution to cost-burdened renters, and we remain bullish on this sector for the foreseeable future.

We’ve often stated that manufactured housing communities are the only commercial real estate asset type we know of with decreasing supply and increasing demand annually.

Investing in this historically recession-resistant asset type can provide an excellent opportunity to create value in almost any economy.

An Offer Spurned

One of our Fund operators told us about their offer to buy a pair of Michigan mobile home parks from a mom-and-pop owner in 2023.

They offered $5 million for these two under-managed, under-performing properties with a combined 360 lots.

$5 million would have been a fantastic price for us (as investors), but the seller turned it down. He was understandably seeking a better price.

Which is why the seller decided to list the assets on an online auction site.

But some time had passed. It was now early spring 2024.

Real estate investors hoping for multiple rate cuts have been disappointed so far. Some operators now find it more difficult to acquire debt and harder to raise equity.

Our operator saw the parks on the auction site. Since they were already very familiar with the properties, they placed a bid. And won.

Here’s the crazy part...they won with a bid of ~$3.1 million and closed with all cash. Only $8,600 per lot! These properties are now in the Fund.

This is an unheard-of price, even before manufactured housing communities became a sought-after asset type. (According to the operator, similar underperforming parks in Michigan sell for $30,000-$40,000 per lot.)

Since lot rents were well below market at acquisition, the operator implemented a 30% lot rent increase shortly after acquisition.

They also started billing tenants for their actual utility expenses (standard practice in well-managed parks) and began repairing water leaks, resulting in an additional ~$184,000 in annual revenue.

Through this revenue growth, we estimate a value generated of approximately $6.1 million at an assumed 6.5% cap rate.*

Further value-add initiatives are underway, including:

• The pending delivery of five new homes and one tenant-occupied home being moved into the community, which we estimate will create approximately $508,000 in additional value at an assumed 6.5% cap rate if the new homes are sold*
• Capital improvement projects such as road repairs, tree trimming, and improving overall curb appeal*

Here’s the Point...

Here’s the point: mobile home parks owned and operated by experienced sponsors are generally performing as well or better than ever.

The shortage of affordable housing persists and will likely increase.

Macroeconomic factors (along with poor marketing and the heavy lift required for these properties) apparently kept other bidders away from this deal and allowed our operating partner to get a much better deal.

So our partner acquired a pair of assets that were unaffected by the economy...for a price that was affected by the economy.

This pair of assets is part of the Fund, and though they’ve already been acquired, your investment in our Fund gives you immediate access to these and hundreds of other properties across the United States with 13 operators.

If you're interested in investing this month, you can review documents and get started here: https://wellingscapital.investnext.com/portal/offerings/1589/​

You can also reply to this email with questions.

To ask detailed questions, you can get on our calendar here: https://calendly.com/wellings-capital/investment-call​

To Long-Term Investing in a Short-Sighted World,

Paul Moore and Ben Kahle

Wellings Capital | www.wellingscapital.com​

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P.S. You can review the Fund's most recent webinar recording here.

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Helpful Links

​​Our Goal to Free Human Trafficking​ Victims​​​

​Tax Strategist Recommendations​

​Self-Directed IRA and 401(k) Custodian Recommendations​​​

​Paul's Books on Self-Storage and Multifamily​

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* DISCLAIMER: Past performance is no guarantee of future results. There is no guarantee that any projected results will be achieved. Investors should consider the investment objectives, risks, charges, and expenses of the Wellings Real Estate Income Fund (the "Fund") before investing. For a Private Placement Memorandum (“PPM”) with this and other information about the Fund, please call 800-844-2188 or email invest@wellingscapital.com. Please read the PPM carefully before investing.

The information contained in this email communication is for information purposes, does not constitute a recommendation, and should not be regarded as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be in violation of any local laws. All investing involves the risk of loss, including a loss of principal. We do not provide tax, accounting, or legal advice, and all investors are advised to consult with their tax, accounting, or legal advisers before investing. Information and any opinions contained in this email communication have been obtained from sources that we consider reliable, but we do not represent that such information and opinions are accurate or complete and thus should not be relied upon as such.