What does the mobile home park industry have to be thankful for in 2019? In this episode of the Mobile Home Park Mastery podcast series we’re going to explore what the positive factors for the industry are in 2019.
Thanksgiving is the national holiday for giving thanks for the blessings of the harvest. Now, pilgrims never knew what a mobile home park was. So are mobile home park owners included in the Thanksgiving festivities? Of course the answer is yes. We have plenty to be thankful for. This is Frank Rolfe Mobile Home Mastery Podcast Series, wanting to talk about Thanksgiving and wish everyone a happy Thanksgiving this year.
So let's talk about what we have to be happy about. What is their special in 2019 that we should all give thanks for? Well, the first is mom and pop sellers. Now mom and pop sellers is a very generic term. It can mean a lot of things. It can mean unsophisticated people, but really to me what a mom and pop seller is, these are the greatest generation, the silent generation, the people that really created the industry. I didn't build any mobile home parks.
I've only bought existing. I've kind of done additions occasionally, but the true pioneers who went out there and built these things pretty much were born back in the 1920s, 1930s, 1940s, and these people all through their own hard work and effort at a time when you could really not obtain lending, would go out there and take a raw field and make that into this new thing called a mobile home park. And for that we are all obviously very thankful because that was a lot of effort, and a lot of risks. And bear in mind back in those days, getting lending to build a mobile home park was virtually nonexistent. You would literally have to mortgage everything you owned, your house, your car, everything, and roll the dice and gamble at all to build something that at that time no one even knew it would work. Just kind of a new thought.
So at the mom and pop sellers, to me, those are the early pioneers. Those are the folks who really made the industry possible. And yes, by buying from people who've owned mobile home parks for half a century or sometimes longer, there are some other benefits. The first of course is that they can carry the financing, and we love mom and pop seller financing more than any other financing product. Another item is you can get really good pricing. Often they like to help you. They like to help the next generation. They don't price the things too high because they want you to succeed. They're very nice like that. Also, they're very giving of their time. When you go and buy the park from mom and pop they'll often tell you the truth, and tell you where this is and that is located at. Make the transition very, very easy compared to what it could be otherwise.
And of course there are some things that mom and pop do that we probably don't want to replicate. So there's some things we can do and we can make the property better, and that's always good because often we can buy the mobile home park at a fair price and then immediately set apart, making additional value by doing such things as increasing the lot rents and filling lots and things of that matter. So that's the mom and pop portion of my Thanksgiving thanks. But let's also move on to the demand for affordable house. The demand has never been higher. Right now in the U S there is so much going on out there causing home prices to be very, very expensive. And we all know all people out there who struggle to make ends meet when it comes to housing. I myself cannot even understand the pricing of some parts of America.
I don't know all these developers who are building these stick build homes and apartments who actually can afford to live in these things. Kind of mind boggling. So when in time when our nation has a huge demand for affordable housing, yet no one seems to want to provide it, we're about the only game in town. So as long as that demand for affordable housing remains high, the mobile home park industry will do incredibly well simply because we were lucky and smart enough to be in the one segment of American economy that has huge unbridled demand and that's affordable housing. I don't really see that ever ending. I only see things getting worse in fact, as there are more households formations and more people who want to downsize, thanks to the greatest generation retiring. The demand for inexpensive places to live is only going to grow by leaps and bounds.
I'm very thankful that I'm well positioned for the future. It makes me feel good to go to sleep at night knowing that if the next great recession happens tomorrow, I'm in the right industry for that, because I'm in the industry that provides things at a lower cost and people can otherwise obtain and therefore everyone will always want exactly what I have to sell. Third item, low interest rates on debt. I've never seen interest rates this low. I was an economics major at Stanford and we never discussed this at college. All my old professors have died of old age by now, but if they were alive, they would look at these times in American history and be absolutely amazed. Who would have ever thought we would see interest rates this low. Back in 1776 interest rates were seven, 8%. all the way through my entire working life up until recent times, that's about what they always were, that 7% 8%.
Then suddenly the great recession happens in 2007, we have quantitative easing. Interest rates get almost way all the way down to zero, and today you can still get loans on mobile home parks, sometimes with a three on the front, often with a four on the front, and certainly with a five on the front, and you never saw three or four or 5% interest rates ever before, so that's another huge issue. Is wonderful living in a time with very low interest rates for those who were alive back in the days of Ronald Reagan, although he was a great president, that little period they did to try and jumpstart the economy, bring it back to life, it was very painful with interest rates as high as 17%. I much prefer it this way. Next, just strong lending.
Back in the 1990s there were so many mobile home park deals that died because no one could find a bank. I would say it was harder to find a bank back in the 90s and almost any other part of the industry. You could find deals all day long, but you couldn't get anything financed. Today is the reverse. You rarely hear about a mobile home park deal dying for lack of finding a bank and that's great. I think it's wonderful people can go ahead, find parks they want to buy, then obtain debt for it. It's a win win. People need to put money to work with getting good interest rate. People need to buy and bring old mobile home parks back to life, so it's a win win for everybody. Very thankful that not only banks but conduit lenders and now even Fannie Mae and Freddie Mac which we'll talk about in minute, they've all come on the scene and their lending and business is wide open and open as usual and they're really aggressively tried to make those loans.
Next thing I'm thankful for is the rise of agency debt. Fannie Mae and Freddie Mac, US government money, it's fantastic the way they have changed our financing in the industry. Out of nearly nowhere today, agency debt accounts for roughly 50% or more of all by dollar mobile home transactions each year. Unbelievable performance. In fact, we're the only form of Fannie Mae, Freddie Mac lending, which has no ceiling. Under the duty to serve act, they're trying to make up for lost time and aggressively do mobile home park loans and that's again great if you're a mobile home park owner. So very, very thankful for Fannie Mae, Freddie Mac and agency debt. Also very thankful this season for state mobile home associations. There's been a lot of controversy in the industry and throughout America recently.
We're all kind of in this cage fight of socialism versus capitalism, and you really need someone to watch over your interests if you own property, not just mobile home parks, any kind of real estate. And in our industry for mobile home parks, there's nothing more effective than the State Mobile Home Associations. There's one in every state except for Hawaii. Who knows, maybe there'll be one in Hawaii someday too. There is now at least one mobile home park in Hawaii, but those state associations are always canvasing what's going on in the state government, are there any pending laws or things. They're going behind the scenes, talking to all the elected officials, trying to spur them on to do the right thing, to maintain affordable housing and protect property rights and they do a tremendous job. This year alone, there were many States that attempted or discussed some form of rent control and it only got passed in a few States.
Thankfully none that were located in, Oregon, New York. Those were the key ones. And of course some things happening in California, but by a large all the other States maintain normalcy, maintain the regular things that were going on and that's fantastic. All the other property laws also remained in full force in effect. So The State Mobile Home Associations, even though people don't often know the name, even of the leaders of them, they probably should. We're on the board of the Iowa State Mobile Home Association, run by a guy named Joe Kelly, does a phenomenal job. Unbelievable. This guy is so active, so on top of every law that goes on in the state of Iowa. It's amazing. He should get just a giant almost Olympic size metal that he should wear around every day because he's protecting everyone's interest and he's not the only one doing that.
There's a lot of state associations that are really the unsung heroes of the industry, everyday out in the trenches, making sure the laws are being favorable for park owners and that's a wonderful thing that they do. Also just the fact that our US laws remain very strong for property owners and our industry in particular under the thing called grandfathering. Very thankful that there's been no successful challenges to grandfathering in mobile home parks. There's been no less than five state Supreme court rulings, and mobile home park owners are now winning five to zero. In each case typically in a lower court, the city contested the ability of the park owner to use their vacant lots. Park owner said, "You can't do that under grandfathering." And city said, "Yes we can." They went to court, and whether the city won or lost, it always ends up getting appealed all the way to The State Supreme Court.
And in all five cases, The State Supreme Court has ruled that the park owner was exactly correct, that under grandfathering the city cannot shut them down. And there's other forms of property law too that we see constantly that are being supported in the court system, everything from evictions to condemnations. So we're very, very thankful that even though our American maybe has some degree of instability right now with politics and things going on, that our court system remains very stable and very supportive of property rights here in the US. And it's not just mobile home parks, any form of real estate, but can you imagine the anarchy if we did not have stable property rights? Can imagine what that would do? The average Americans number one asset that they have in their portfolio is their house. Can you imagine if we destabilized the ability for people to feel safe in their investment in their house, what would occur?
Yes, it would be an absolute disaster. So I'm thankful we can keep all those laws strong. Finally, I'm very thankful this year for all of my fellow mobile home park owners. It's really a strange fraternity. It's like a fraternal organization of park owners. We feel like we're all part of a club, but we're not really competitors. It's a very strange business. Everything else I've ever been involved in on the business side, any of these groupings of owners. I used to be in the billboard business. Back in those days, billboard owners hated each other. We saw every other person in the industry as a direct competitor, someone who threatened our livelihood, someone that was trying to undermine us, so we would never talk to each other. This industry is entirely different. Park owners are a very, very happy, friendly group and they're very inclusive.
I can literally pick up the phone and call a park owner just down the street. Ask him, "Who's doing your renovations right now? Who's doing your evictions work right now?" they'll give me a complete and honest answer. We've even gotten other park owners and said, "Hey, park owner, I'm having a problem with the city. They're charging too much for the permits." They say, "Yeah, I think it's wrong." And then we'll join forces to go in there and try and get our rights, hire an attorney collectively to try and get what we want. It's just amazing how friendly they are. I've never really felt that kind of kinship with anyone outside of my hobby of collecting cars. I used to have a Corvair. It's a very odd automobile. It's a rear engine, air cooled engine, almost like a Volkswagen for an American car.
I bought it because it has enormous backseat room as a convertible. It's a great family convertible from the 60s, but it's a very strange car. Most people are not into that hobby. If you go to order a part for a Corvair, there's only like two people in America who sell them. They used to send me boxes, not only the part I needed, but all these other parts I didn't need now, with a note saying, "You'll need these eventually." Who does that in the modern world? Nobody. Only hobbyists. Only people that truly care about their fellow man. And that's where you are with most mobile home park owners, the friendliest people you'll ever meet. Super nice to each other, super nice to you, extremely supportive. So I'm very, very happy to be in an industry where everyone is so darn friendly. So for this Thanksgiving 2019, I think we as mobile home park owners have quite a bit to be thankful for. And of course, I'm also thankful for everyone listening in. Really appreciate all the support we've had on all the podcasts, seeing people seem to like the content of what we're doing. We have a huge amount of fun producing these podcasts every week. So again, I'm very thankful for you and I'd like to wish everybody out there a very happy Thanksgiving. This is Frank Rolfe the mobile home park mastery podcast series. Hope you enjoy this and talk to you again soon.