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How nine manufactured-housing communities became a disciplined, multi-stage return of capital — and why the final chapter, the DST V acquisition, has been worth the wait.
MHC Stable Income Fund I, LLC was formed as a Delaware limited liability company (Certificate of Formation filed March 6, 2017) with a single, durable idea: buy underutilized "mom-and-pop" manufactured-housing communities at attractive cap rates, professionalize them, and fill their vacant lots with affordable homes.
Managed by MHC Stable Income Fund Management, LLC — four partners, each holding a 25% interest in the manager.
By April 2018 the Fund had acquired all nine communities — concentrated in Ohio with footholds in Pennsylvania, Michigan and Indiana — every one purchased at better than a 9 cap. Use the filter to see which assets were sold into DST III in 2021 and which were deliberately held back.
Note: the exact community-by-community allocation between DST III and the held-back group is shown per management's account; the held-back assets are Town & Country and the Arrowhead Lake (Toledo-area) portfolio. Final allocation reconciles to the DST III / DST V closing binders.
In 2021 the seasoned, stabilized communities were sold into DST III. Two positions were intentionally not sold — not because they were troubled, but because selling them then would have destroyed value. Holding them was the disciplined choice.
Town & Country (Evansville, IN) carried a recently-obtained Fannie Mae loan. Prepaying it in 2021 would have triggered a substantial defeasance prepayment penalty. The economically correct move was to let that penalty burn off before transferring the asset — protecting investor value rather than paying a needless penalty.
The Arrowhead Lake portfolio still required substantial infrastructure work and lot infill. Selling a half-finished repositioning would have handed the upside to a buyer. Completing the work first means that value accrues to Fund I investors.
The headline for investors: at the 2021 DST III transaction, all of the original investor equity was returned — plus a modest profit on top. From that point forward, the two held-back communities represent additional upside still owed to you, not capital at risk.
The Tax Cuts and Jobs Act of 2017 unlocked 100% "bonus" depreciation on qualifying shorter-life property — roads, utility infrastructure, home pads, site improvements and personal property — placed in service after September 27, 2017. To capture it, we commissioned cost segregation studies on the communities, reclassifying assets out of the 27.5-year bucket into 5-, 7- and 15-year classes that qualify for bonus depreciation. Because the Fund is a pass-through partnership, those accelerated, front-loaded deductions flow straight to investors on their K-1s — a sizable first-year paper loss that can shelter passive income and lift after-tax returns.
Illustration only — not tax advice. Figures assume the illustrative deduction shown and the selected federal bracket; they exclude state taxes and do not reflect passive-activity-loss limitations, which may defer some of the benefit. Accelerated depreciation is generally subject to recapture upon sale. Every investor's situation differs — please consult your own tax advisor.
Repositioning Arrowhead Lake took real capital: roads and site infrastructure, utility work, and the steady infill of fully-entitled vacant lots. Faced with that bill, management made a clear choice on your behalf.
Rather than issue capital calls and ask the partnership for more money, management funded the Arrowhead Lake work through partner loans, partner-guaranteed lines of credit, and a secured bank line of credit. The risk of carrying the work sat with the partners and lenders — not the investor base.
The wait is now converting into a defined exit. In March 2026 the remaining properties were acquired by MHC Affordable Housing DST V.
DST V acquired the remaining Fund I communities using the same structure as the original DST III transaction. And just as in DST III, Fund I investors are cashed out as the DST V equity is raised — in exactly the same manner. The defeasance has run its course, the Arrowhead Lake work has earned its value, and the final distribution is a function of equity coming in the door.
Town & Country + Arrowhead Lake acquired by DST V, March 2026.
New investor equity is raised into the DST V offering.
Proceeds flow to Fund I investors as equity is raised — same as DST III.
Hold-back value (defeasance avoided + infill completed) accrues to you.
MHC Stable Income Fund I, LLC organized in Delaware; $15M Reg D raise launched.
All nine communities acquired at 9+ caps; ~$13M equity raised; monthly distributions begin.
Windsor Private Capital line of credit (~$1.59M) put in place to fund community improvements — not a capital call.
Stabilized communities sold to DST III. 112% of original investor capital returned — full equity plus a ~12% upside. Town & Country and Arrowhead Lake held back.
Fannie Mae defeasance penalty burns off at Town & Country; Arrowhead Lake infrastructure and infill completed — funded by partner loans & guarantees, no capital calls.
Remaining properties acquired by DST V on the same structure as DST III; Fund I investors cashed out as equity is raised.