Mobile Home Park Mastery: Episode 214

Correcting The Record

Subscribe To Mobile Home Park Mastery On iTunes
Subscribe To Mobile Home Park Mastery On Google Play
Subscribe To Mobile Home Park Mastery On Stitcher

The mobile home park industry has an unusual public relations strategy. We seemingly let the media abuse us on a regular basis and never offer any pushback. So for all those fake articles that have hit the media of late, this Mobile Home Park Mastery podcast provides the actual stats that give conclusive evidence that mobile home parks are the sole solution to the affordable housing crisis.

Episode 214: Correcting The Record Transcript

On a regular basis, the mobile home park industry is attacked by the media. It's relentless these days. We turn the other cheek. We've turned the cheek so many times we've completely run out of cheeks at this point. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. I want to go ahead and talk about the media, mobile home parks, and try and correct the record since nobody really out there is in any way pushing forward to expose the truth about mobile home parks and what they accomplish.

Let's first admit that the media today falls into two camps: red and blue. What are those two colors mean? Well, red media basically likes to talk about business and entrepreneurship, and the benefits of capitalism. And blue media is the reverse. They despise anything that makes money. They are relentless in their attacks on anything that's based on capitalism. They want everything to be basically free and socialist in nature. And that creates a problem when you are a business, because businesses are built around the very concept of providing value and making money.

So what is the typical narrative that you find in the media regarding mobile home parks? Well, first that making money, particularly raising rents, is inherently evil which I find to be untrue. Number two, the people mobile home parks live in absolute squalor. Once again, untrue. Sure, there are bad mobile home parks out there. There are bad mobile home parks in every state in the United States, but they're in by far the minority. Most of the parks more resemble high density subdivisions. Number three, that having some unhappy customers is in fact unnatural. Once again, untrue. Any business in the United States, every business in the United States, has some percentage of customers who whine and complain about what they do no matter what they do. Whether it's Coca Cola, or American Airlines, or ABC television, there's somebody out there, a small subset, that are unhappy at all times. A recent article that we appeared in, the whole point of the article is that we had 18 unhappy customers in an entire state. We have roughly 3,000 customers in that state. 18 is a very, very small number, roughly around one half of 1%. I think it would be hard pressed to find any business in the United States that does not have a half of a percent who are unhappy and it doesn't even have to be a red good old American capitalist business. I guarantee you there's plenty of people right now unhappy under many of these social programs that the Biden administration is doing, such as those who are supposed to be giving out housing assistance. As I recall, only 5% or 10% of all housing assistance has been distributed yet. So if we talk to those folks who are attached to that governmental program, I guarantee you'll find a lot more than a half of 1% that are very unhappy with the way things are going.

Now, let's go over the facts about mobile home parks for a moment, just to clear the air. Number one, the median single family rental in the United States is $1,405 a month. The average two bedroom apartment in the United States is $1,175 a month. And the average lot rent in the United States is $280 a month. That's a brutal stat. That's a stat that no media publication wants to even pretend that they know because to actually acknowledge that puts an end to any condemnation of mobile home parks. If mobile home parks can provide housing for $1,000 a month under every other housing type, there is certainly no way you could ever criticize that. And everyone knows it. And that's why they never ever, ever put those stats in any of their stories.

Now, some people might say now, wait a minute though, that numbers is not fair. I could easily see some publications saying, "Oh, well that's comparing apples to oranges. Right? Because the apartment it includes the house." Well, right. Over 80% of mobile homes and mobile home parks in the United States are owned free and clear. So it does include the house. And on the other 20% who have their homes, those home mortgages are very, very low. If I want to throw in the most expensive new mobile home in the world, and add that mortgage to the lot rent. I'm still $300 to $800 a month under the single family and the apartment. So let's stop the nonsense of "Gosh, Well, yeah, but those include the housing structure." I'm talking including the housing structure and everyone knows that.

So why is mobile home lot rent so low in the Us? Well, it's pretty simple to explain. Mom and Pop owners never raised their rents. They never raised them in line with inflation or with the CPI. If you look back at the history books, what were the lot rents back in the 1950s and the '60s? The standard mobile home lot rent  in the 1960s was $70 a month. If you inflation adjust that you will be at $568 a month today, which is almost exactly twice of the actual current US average lot rent of $280 a month. So how did that happen? How did mobile home park lot rents end up so darn low? It's simple, it's what we call mom and pop quantitative easing. They either made the choice not to increase them along with inflation. Or they just didn't even understand the concept of raising them with inflation. Many of your mobile home park original early builders, they were not sophisticated business people. They saw that mobile home park as a hobby, as a side income, as a side hustle. They never made that the focus of their life. So they didn't really pay attention a lot to what was going on out there in America with those increasing rates of inflation. They never tracked the rents of all of those other housing types. So they just stuck with that one number.

I once bought a mobile home park in Grapevine, Texas, which is a McMansion neighborhood, where the lot rent was only $100 a month. Even though at that time every other mobile home park was in the $350 to $400 variety. I asked the person "Why is your rent so low? This is a mobile home park tucked up against literally million dollar homes, one block from a brand new school. Why? Why are you so low?" And the guy told me, "Well, you know, I haven't raised the rent in like about 30 years, I just didn't want to because I was on the city council, then I became the mayor, I thought if I raised the rent, people might come to a city council meeting and catcall me or something. And I didn't want to be embarrassed like that. So I never raised my rent." That doesn't mean the rent should be $100 clearly. It means there are other reasons why people kept them artificially low. But those reasons no longer exist. The new buyer of the park isn't the mayor, isn't on the city council, and isn't afraid of somebody showing up at the council and yelling at them. The problem is that mom and pops are transitioning from being owned by those early individuals, to companies now, more sophisticated people. And those more sophisticated people are not going to go on and continue with this hoax, with this joke of having rents that are simply this low.

Now, you know, in many other industries, people are happy, excited with the news story of the undervalued asset that someone buys, and rise it until it becomes valued at the correct level. That's what stock market investing is all about. That's where all the early books on Warren Buffett and value investing, they're all made up of that simple principle. Find a really good business that's undervalued, invest in that business, and let the values ride to market. And that's really what mobile home park owners are doing at this point. They found a niche, congratulations to them, they found the right spot to invest, something that was under appreciated for decades, and now suddenly is being appreciated again. But don't for a minute think that being a part of an industry that is perfectly positioned, given all of the mega trends in America, is evil or wrong or bad because that's not true. That's just called simply good investing, smart business, and it's a win-win as these values and these rents go up. I've yet to see a mobile home park that transition from a mom and pop to more of a professional owner which has not benefited from it.

For every media article that talks about the plight of the poor resident in the mobile home park, there's 99% of the residents who are thrilled about the value that the park is now giving them for their dollar. Nobody wants to live in a nasty old broken down and dying mobile home park. And I'll tell you what, one more item, if people don't raise the rent significantly in America in the years ahead all those parks will cease to exist. You cannot bring these old mobile home park backs to life unless you raise the rent significantly to make sense of doing it. Why would you do it? Why would you inject capital into an old mobile home park, an old broken down park where the roads are shot, water sewer lines aren't working, grass is chest high? Well, you wouldn't. Nobody would. No one's going to go into that mobile home park and Grapevine and buy and bring that back to life for $100 a month lot rent. People need to embrace mobile home park owners and what they do, and quit criticizing them.

Now, if you want to criticize mobile home park owners, well, then you go out and do it yourself and show us a better way to do it. I'm yet to see any of these publications go ahead and start a subsidiary to actually provide affordable housing for next to nothing a month. If someone thinks they can buy a mobile home park, make it profitable, pay the bills, and do it all for $100 a month or hey, even better yet, why doesn't somebody go out and buy a mobile home park at a $400 lot rent and drop it down to $200? Why? Because they can't. Recently a nonprofit tried to build an affordable house in subdivision. The homes came in at around $200,000. By the time they wasted all of the taxpayer's money, what did they have to show for it? Nothing but homes that were 900 square feet that cost more than larger homes in that same area. The answer is you cannot replicate what mobile home park owners do. Our industry is perfectly positioned. There's plenty of money to be made, but it's not at the expense of the residents, it's to the benefit of the residents.

The bottom line to all this is, is ignore these media articles that are so negative on the industry, so negative on the park owners, because they're wildly skewed. They're not based on facts. They're not based on statistics. They're simply based on entertainment value. Every publication today falls either into a red or blue camp, and they try and entertain their red or blue customers. It is no longer journalism as we knew it. It is no longer the news, it's no longer reporting on the reality and the facts. They're simply trying to make people smile, to support their feelings about the world and where they fit into it. But there's nothing to do with the hard cold truth about business and housing in general.

The bottom line to it all is if we're going to continue to have a fair narrative in America, there has to be more respect given towards mobile home park owners and what they do. Somebody needs to step in and start talking about the truth. Talking about the fact that mobile home parks provide the only nonsubsidized affordable housing in the US. That mobile home parks provide the only affordable detached housing in the United States. The fact that rents must go up significantly in the years ahead to allow owners to put money back into these properties to bring them back to life. The simple fact that it's economics at the end of the day that rules the roost, people will not invest in something that they can't make good, healthy profit margins in.

The bottom line to it all is that we all need to get serious and realistic about what's really going on out there. Enough of the nonsense of red versus blue. Let's all knuckle down just on the concept of trying to provide affordable housing at a time when the nation has never needed it more. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.