Mobile Home Park Mastery: Episode 227

Are Residents Ruled By Love Or Fear?


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The media will tell you that mobile home park residents are “trapped” in their homes. The truth is the exact opposite. The bonds that produce an average tenancy of 14 years are forged by the love of the product, not boundaries. In this Mobile Home Park Mastery podcast we’re going to explore the truth behind the myth that customers are “chained to the Waffle House booths”, and explore what makes them happy residents for decades.

Episode 227: Are Residents Ruled By Love Or Fear? Transcript

Over and over again, you hear the media narrative that mobile home park residents are trapped. They have no options. They are completely at the whims of mobile home park owners nationwide, trying to raise the rents up slightly towards market which they'll probably never even hit. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. I want to go over the issue -- are residents really trapped, or is there yet another reason why they stay so long and are so stable in their living in mobile home parks?

Let's first start off with a quote that always ties people to be with the idea that mobile home park customers are somehow trapped. And that is my quote given to Bloomberg years ago, trying to help a reporter, very young reporter just out of college, trying to write business articles not understanding why things default, and other things don't. They were fascinated why mobile home parks at that time, had the lowest loan default rate of any type of business. And I gave them the ultimate example, in my opinion at that time, number one, restaurants, which have the highest default rate of any business loan versus mobile home parks with the lowest. So I gave them the example of a Waffle House, where every day you buy all the food, and you open the doors and you have not a clue if anyone will walk in because that's true of all restaurants. And we all learned that after COVID, right? That restaurant is a very sketchy, very risky business.

On the other end of the spectrum, you have the mobile home park. And every day, when the sun rises in the mobile home park, we know exactly who will be there because they've typically been there for years or decades. We know they're there because their home is sitting there. We know they're there because it didn't leave and we have no notification of it having been gone. And that's why our revenue is so stable. So I explained to her it was like instead of the Waffle House, the typical Waffle House, it would be more like a waffle house where the customers are chained to the booths. And off that one stupid quote given to a young Bloomberg reporter years ago, media has endlessly tried to extrapolate that into all kinds of wild and farfetched meanings. Somehow that mobile home park residents, off that one statement to that Bloomberg reporter, just an illustration of business principles, somehow that was some kind of unusual tagline or something showing the great master plan that all mobile home park residents are actually handcuffed, chained to their mobile homes. And of course, those in the mobile home park business know this is absolute nonsense, but it's about time we spread the word to everybody else out there.

Now let's say you live in a mobile home in a mobile home park. And for whatever reasons you want to leave. What are your options? Well, option one, of course is you could sell your home. Option two is you could sub lease or rent your home out. Option number three is you could abandon your home. But yet, there's two other options. Option number four is you could sell your mobile home back to the owner of the park, who would buy it because he doesn't want it to leave. And then option number five is you can have another park owner pay the cost of the move to move it from that park to one that you'd prefer to live in, which is called an organic move. That means the average mobile home park resident has five options. Now let's compare that to everybody living in a stick built home or a condo, let's see what are their options. They could sell it. They could sublease it. They could abandon it. But they don't have the last two options. So basically, mobile home residents in mobile home parks have more options and are less trapped than anybody else in any other form of housing in America

 

who has an ownership stake in it.

So then why do they stay so long if they truly freely can move about? Then why does the average mobile home park resident live in that mobile home park for 14 years? That's what the industry claims is the norm. Is it true? I don't know. It looks right. If you talk to residents, many have been there sometimes for half a century since the park was built, others for a decade or two. It certainly looks like they've been there a long time. So then why do they live there? If they're not truly chained to the booth or they're not truly handcuffed, then what possible reason when you have living mobile home park, right? That's what the media would say. Well, let's just look at that for a moment. Let's first start off with a reality check on housing in America today. The average apartment rent in 2021 was $1,600 a month actually slightly higher than that. I can't remember the exact number I just know it's $1,600 and something. And the average stick built home United States sells for over $300,000. Now, let's assume that you are a working family or a retired person trying to live affordably. Do either of those options technically work? And the answer of course is no, that's a ludicrous concept. So then where can they live affordably? Well, affordably, they could live in a really, really horrible apartment. Or they could live in a nice mobile home park, because the average lot rent in a mobile home park in America is $280 a month. And that really horrible apartment that you would never even consider getting out of your car in front of, well, that thing is still probably about $800 a month.

But yet, there's another reason. Mobile home parks really offer an amazing quality of life and here's why. No one knocking on your walls and ceilings, the ability to park in front of your home, having your own yard, having homeownership and having very, very stable neighbors. These are things that apartments can never offer, never provide. So what does it mean? It means people really prefer our product. They're not trapped. They're there because they love the product. They live the quality of life that it has. They certainly love the price. So when you talk about people living in a mobile home park simply because they have to, only someone who's very ignorant on the realities of life could make such a statement. Only someone that has never, ever been in a mobile home park. A reporter interviewed me recently and then he reveals during the interview that his relative lives in a mobile home park. And I say well, gosh, then I guess, are they somehow trapped? Oh, no, no, no. They have the ability to live anywhere. They're retired. Well, then why did they live in the mobile home park? Oh, well, you know, it's a different kind of park. I bet if we went out there with a camera and took some photos, it would look just like probably every other mobile home park in the world. So no, the problem is everyone knows better.

But people just like making and portraying mobile home park owners as being evil. Isn't that fun? Let's make every mobile home park owner in America evil, let's make every landlord evil. That's kind of what's been going on with the Biden administration as far as landlords are concerned. I look no further than the CDC evictions moratorium which he extended even after the Supreme Court said no, you can't do it. And he did it anyway. And then they came in and they shot it down. That's because our nation loves right now in this moment in American history, the political narrative that people who own property are evil. And those who don't own property are the good guys. I instead would throw out the other alternative ending, that the good guys are the people who own the property and provide those living options. Case in point, when you look across America and all the options people have to live in, nobody even approximates our cost, our quality of product. Nobody does, not a single soul. So therefore mobile home park owners on that one fact alone should get accolades, slapped on the back, patted on the back. Good job. But yet, sadly, we get none.

On top of that, every mobile home park owner in America knows that the best way to bring these old parks back to life is to inject capital, make the basic repairs that have not been done for half a century. And in so doing, they elevate the quality of life of the residents. When you talk about rents going up, it's never the rent went up and nothing else happened. The storyline is the rent went up, and all these wonderful things happen and the value to the resident went up many fold. That's the true story. People want to focus just on the one aspect of bringing old things back to life. They never want to talk about the benefits. I've never seen a development in American history, whether it be a hotel or a retail center, anything that was brought back to life without A the injection of capital and B an increase in the rents. Never seen it. I've never seen anyone buy an old rundown beat up hotel that was a flophouse that's renting out rooms for, I don't know, $5 or $10 a night. And then they'd go and they take that property and they bring it back to life, back to its original 1920s glory. Those room rates go up to like 200 $300 a night, and yet people pay it and the hotel remains full because it offers a great value.

The bottom line to it all is what really keeps people in mobile home park for super long tenancies is not because they're trapped, not because they're chained or handcuffed, not because there's any blockades from them having to live there. It's for the simple fact that they love it. They like it. There was a journalist years ago named Gary Rivlin at The New York Times. He had the bravery to go and live in one of our mobile home parks out in Pontoon Beach, Illinois. He went around that mobile home park living there for a week talking to everyone. And then he wrote a very glowing article, and he did so because he could not find one unhappy resident in the park, and that really bugged him because since we'd purchased the property the rents had nearly doubled over all those many years. How is it possible you might say that you could have double the rents and still universal consumer happiness? That's because even with the rents increase, it was still a phenomenal value.

The bottom line to it all is our residents love mobile home park living. I don't think they really care what the media says. Probably you shouldn't care what the media says either because it's not even fact anymore. It's not even, there's no journalistic effort in it. But it's about time the mobile home park owners stand up when people throw out this stupid, ridiculous narrative that our customers are trapped and say no, they're not. They've got at least two additional ways if they are unhappy to move to somewhere else, which no one in a home or a condo shares. This is Frank Rolfe, a Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.