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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 held-back assets are Town & Country (Evansville, IN) and the Arrowhead Portfolio — the Toledo-area communities of Arrowhead, Swanton, Sylvania and Grand Rapids. The balance — Rustic Pines, Four Seasons, Brady Hills and Watson — was sold to DST III in 2021. Allocation per management; final figures reconcile 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.
This strategic exit returned investor capital at exactly the right moment — a well-timed return of capital before interest rates skyrocketed. Selling into the 2021 market captured premium pricing and historically low cap rates, just ahead of the 2022 rate surge that repriced commercial real estate downward.
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.