Mobile Home Park Mastery: Episode 152

Are Mobile Home Parks Really A “Predatory” Business Model?

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Despite providing a terrific housing product to thousands of Americans, we continue to hear from the media that mobile home parks are a “predatory” business model. But is this true? In this episode of the Mobile Home Park Mastery podcast, we’re going to try to put this issue to bed once and for all, breaking down what “predatory” means and then applying those definitions to the actual methodology of mobile home park ownership and management. Here’s a spoiler: the media is horrendously off-base, based on sheer ignorance, and nobody ever calls them out on it. In this podcast we will.

Episode 152: Are Mobile Home Parks Really A “Predatory” Business Model? Transcript

Mobile home park owners have to put up with a lot. We are clearly the most mistreated of all real estate asset classes. Nothing we do is ever good enough for anyone, nothing we do ever garners any respect. But one thing that's particularly frustrating is when the media says that the mobile home park industry, that our very business model, is predatory. This is Frank Rolfe, the Mobile Home Park Mastery podcast. We're going to go over, in depth, in granular analysis once and for all, and decide whether or not mobile home parks are a predatory business model. So, how do you do that? Well, let's first start off with the definition of predatory. It reads, seeking to exploit or oppress others. So there's really two key words in that definition, exploit and oppress. So, let's first look into exploit. The definition to exploit is to make full use of and derive benefit from a resource.

That's all it is. All the time, for some reason, we're given in the media this negative connotation regarding exploit. And yes, you can certainly exploit some things improperly, no doubt about that. You can exploit animals for testing of products. But the very word exploit simply means trying to basically maximize the benefit from that resource. Using that resource to its utmost to create something profitable. And of course, that is exactly what mobile home park owners do. At least we try to. Good owners do make full use of the affordable housing resource, but who doesn't? Who would not want to maximize their profits by raising rents and filling vacant lots and cutting costs? And why is that bad? That's simply good business. It's not evil to seek to maximize profitability. I know right now in the strange cage fight we have in America between capitalism and socialism, some people say, "Wait a minute. Making money is bad. Making money is harmful."

I would counter that argument with everything you have around you is only there from people who are able to make the profit to do it. The streets out in front of your house, the house that you live in, all those big buildings in downtown, all the many things we take for granted today. Telecommunications, the medical industry. Those are all created from those seeking profit. Read some early biographies of [inaudible 00:03:03] of Henry Ford, William Kaiser. All these things today that we so much depend on in our life to bring us happiness, to bring us freedom from pain, all of these started off as a money making venture. They all started off with somebody who was out there trying to maximize their resource. So as far as the word exploit, as far as the capitalist concept of trying to maximize what you have, yes. Anyone would. Not just mobile home park owners, apartment owners, office building, retail, any form of real estate out there.

If someone was not trying to make full use of it, within their own circles of their certain real estate niche they would be criticized for being a bad owner and a bad operator. So I don't think it's really fair to put a negative stigma on the concept of trying to maximize what you've got, but let's move on to the other. Let's now look at the definition of oppress. So oppress means, keep someone in subservience and hardship, especially by the unjust exercise of authority. So when you put the two together, I guess what they're saying, that predatory means is where you exploit people or exploit the ability to keep people subservient and in hardship, and use your authority to do so. Now there, it completely misses the mark. Mobile home parks are certainly not in any possible way going to meet the definition of oppress. But let's break that into bite sized pieces.

Let's look at first off the subservience. Mobile home park customers always are the boss in the mobile home park. It is not the owner. Yes. I know people will say, "Well, what about your waffle house quote?" The waffle house quote was nothing more than an explanation to a writer of Bloomberg of basic economics. They could not understand why restaurants fail so much, and yet mobile home parks fail so infrequently. I explained to them the difference was, a regular waffle house, customers would just come in or not come in. And any day that you open the restaurant you're not sure if anyone will come in at all. But if the waffle house was the mobile home park the customers would effectively be chained to the booths. You know exactly each day, how many customers you would have. But it doesn't mean that the customers are actually chained in the booths, nor does it mean that the customers in the mobile home park are chained to their homes.

So what are their options then? If they're not chained to the home, what can you do? If you own a mobile home park, if you own a mobile home in a mobile home park? Well, let's think about that for a moment. Well, number one, you could always sell your home if you want to leave. Number two, you can always rent your home if you wanted to leave. And number three, in most cases, if your home is post HUD, so 1976 and newer, and capable of being transported and you've kept it in good condition, typically other park owners will pay to move you for free, from the park that you are so enormously unhappy with to their property. So in those three methods, nobody is stuck in the mobile home park. They're free to go whenever they want. If they find something that they like better than they can most certainly take advantage of that.

There's no way that the mobile home park business model is keeping people in subservience. And now let's examine the word hardship. How in the world are people in mobile home parks enduring hardship? Anyone who thinks that is very ignorant. They've obviously never gone to a mobile home park. Sure. They might've driven through that one terrible one in town with dirt roads in terrible condition. But there's 44,000 mobile home parks in the US and those represent just a tiny, tiny fraction. All the rest have nice entries, nice common areas, nice streets, pride of ownership, sense of community. Don't believe me? Well, let's just forget me and my opinion. Let's look at somebody who would typically not give you a positive opinion. Let's go to the writer, Gary Rivlin of The New York Times. You see back in 2014, he asked to live in one of our mobile home parks for a week, no strings attached.

And we took an older mobile home that was sitting there vacant. We went to rent a center, put furniture in it, we let him live in that mobile home for a week. It was out in Pontoon Beach, Illinois, in the St. Louis Metro. He lived in that thing for a week and then he wrote his article. The article was glowing. He was very impressed at how happy the residents are. In fact, he could not find one unhappy resident in the entire property. He found they all loved everything about it. They loved being able to park by their front door, having a yard, not having neighbors knocking on their walls and ceilings. They loved the fact that their neighbors had been there for long periods of time, and there was such a strong sense of community and bond between the residents.

Now, how is it possible that Gary Rivlin, who's a very, very anti-business rider, look at the other books and articles he's written. Broke USA, How Payday Lenders Ruined America. He wrote a book on Katrina and how government had let people down with Katrina. So why would he be a big fan of mobile home parks? Well, it's because he did the research and realized that people loved the product. There's no way that you, as a mobile home park owner, are creating hardship for residents. Actually, it's the reverse. They're in hardship without the mobile home park, because they cannot afford to live in the other types of housing out there. Apartment rents are ridiculous in the US, about an average of about almost 1300 a month for an apartment in the United States. Single family homes today, the median is $200,000. These are out of the price range of people who earn anywhere from minimum wage to maybe $30,000 a year.

So how in the world can you call what we do, where we give people a tremendous product that they love so very much, that we are somehow launching them into hardship? That's absolutely untrue. It's absolutely unfair. And then let's go on from there. The last part of the definition. Unjust exercise of authority. Mobile home park owners have no authority. In fact, as a collective group we don't seem to have any say in government at all. Every year in many states we have to endure endless tirades from people who don't know our industry, talking about all the bad things that we supposedly do. People who've never even been in a mobile home park, never even talked to our customers. But they find it as a very simple narrative because they know that mobile home park owners don't really have much of a political voice. So we're easy to put down.

And right now with our socialist versus capitalism cage fight, we're the perfect poster child of everything bad in society to some people. But it's a simple fact that we provide probably the best housing product in the United States for what we do. We're the only non subsidized affordable housing product. And we're the most beloved of all the options for those who don't have a lot of money. Now, I will agree that our lobby could do more, certainly, to give us a little more authority. We'd love that. We love that we would get a little protection when we have problems with cities. Someone to watch our back, someone who would be out there pushing the media and say, "Wait a minute, this is a false narrative. What are you doing?" But sadly, we don't have that. Our industry has never been able to muster, for some sad reason ever, some kind of lobbying group on the national level, to go ahead and fight back this endless, unfair criticism.

Our state associations do a tremendous job, but you need somebody on a national level, somebody out there who can harness the power of the truth and educate people. Whenever they write an article that's unfair and untrue say, "Wait a minute, that's not true. What are you even talking about? Here's some photos. Here's some letters from residents. Here's some different parks in your area that you might go and visit." That's true. We don't have that. But to say that we have the ability to abuse authority right now is an absolute joke. We have absolutely no power at all, which is why we get so beaten down in the media, and so beaten down at City Hall, and so beaten down in the state capital so frequently. And it's really, really sad. People should be out there trying to foster mobile home park owners to fill their vacant lots, to bring these old communities back to life.

That's the best thing you could do for households that need affordable housing so bad. And we're not getting the job done on a governmental level. HUD's not getting it done. Their section eight program is effectively frozen. They don't really have any room for any more people to enter it. And it's never going to solve the problem because it's based completely on subsidies. You can't take a program like section eight and ever say it's a fix, when all you're doing is robbing Peter to pay Paul inside the government. So we're pretending to give people affordable housing but it's not truly affordable. And all the apartment owners know that. And all of your legislators and Congress know it as well. So the bottom line is there's absolutely no factual basis, no common sense, but just utter ignorance when people say that the mobile home park business model is predatory. It's absolutely not predatory.

And it's sad that nobody ever speaks out on that fact. The New York Times article, the one that declared that my partner, Dave Reynolds and I, were the best thing going in affordable housing at a time when the nation's need for low cost places to live had never been greater. It's about the last positive article that our industry ever written. And it was in 2014. That's six years ago. Maybe it's about time that people actually start writing positive articles on our industry, that are based, as Gary Rivlin did, on actual research and time spent out in the field inside the product. This is Frank Rolfe, the Mobile Home Park Mastery podcast series. Hope you enjoyed this. Talk to you again soon.