No mobile home park in history has generated as much undeserved negative publicity as North Lamar in Austin, Texas. Nothing we did was good enough for the Austin media. We saved the park from the wrecking ball. We brought the park back to life with new streets, entrance and lot-by-lot TLC. We made its ongoing operation possible by raising rents and fixing resident abuse of water and sewer. Finally, we allowed the residents to buy the park from us and gave them a huge amount of time to put the deal together with the non-profit group ROC. But even after selling it we are still hounded by the Austin media who can’t get over the fact that a capitalist approach succeeded where the city failed and that our business model was so well structured that they could not mess it up despite their endless efforts.
Episode 147: Lessons Learned From North Lamar Transcript
Phineas T. Barnum, the founder of Barnum and Bailey Circus, a famous showman from the 19th century once said, "Any press is good press." But clearly, Phineas Barnum had never been to Austin and had never heard of North Lamar Mobile Home Park. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. We're going to talk about North Lamar, the mobile home park that has brought us more bad publicity, unfair bad publicity, and just generally bad information, and bad thoughts than perhaps any other mobile home park we've ever heard of. In 2015, we were approached about a mobile home park for sale in Austin called North Lamar. There were really only two people in buying this place, us and another group that wanted to bulldoze it and make it into a different use. You see, the land is on the highway and it could not have been in more bad condition.
It had potholes so large, you couldn't really drive a car down the street. And it was carpeted in just litter. There was just junk everywhere, household trash, appliances, all forms of debris. The park had completely lost all of its sense of purpose and all pride of ownership. It could not possibly show worse than it did. As a result, no one wanted to tackle the seemingly impossible concept of bringing it back to life other than us. We ran the numbers, looked at the location. We thought we could make the thing come back to life, but it was going to be very difficult. It would require lots of rent increases. It would require some metering water/sewer and billing it back to the tenants. It would require instilling a pride of ownership back in the property, as well as replacing or enhancing all the common areas. So we bought it and we paid roughly $2 million.
The only reason I'll tell you the price on this is all of the media over the years has given all the prices, both what we paid for it originally, then what we just sold for it recently. So we bought the property. We immediately brought in about 20 container loads and started filling them up with trash and debris. Nobody helped us at all. Residents didn't care. The city of Austin didn't care. So we cleaned up all the junk. We redid the roads. We redid the entry. We put in a new sign. We beautified everything that we owned. Bear in mind, we didn't own any of the homes at this point, we only own the common areas. Got all that completed and we announced we were going to have to raise the rent. The rent back then was roughly about 370 a month, including unlimited water and sewer.
And for this thing just to even have a prayer of breaking even, we had to get it up to about 450 a month with the residents pay their own water and sewer. Now, is that asking too much? Well, I don't think so, because at that time in history, the lot rents in Austin were running about $600 a month, not including water or sewer. So we thought we were doing a very fair and just thing for the residents. And no sooner had we done that, that rent increase and some metered water and sewer, and the city was all over us, nothing but nonstop, negative story after the other. People said that we had ruined the environment for the residents and we were bad for Austin, they should run us out of town.
They couldn't get over the fact that we'd raise the rent. They couldn't get over the fact that we had made the residents for the first time ever have to pay for their own utilities and perhaps conserve water/sewer. They took nothing into account of all of the CapEx we had spent, all the good things that we had done. And it just continued on, never-ending saga, taunted by the city Councilman, the frequent appears in the Austin Statesman's newspaper. It wouldn't have mattered what we had done in North Lamar, nothing was good enough for Austin or for the residents. But we stuck with the program even when they hired a free legal aid attorney to file a nuisance lawsuit against us, which was later dropped because it didn't really have any reason to exist. Even when they called us all kinds of names and other problems, we hung in there cleaning up the property door-by-door, going in and painting fences, replacing fences, painting people's homes, not charging them back, anything for this, of course, but still, no one was ever happy.
So we made the place a nice place to live. We brought back pride of ownership. And along the way, we raised the rents all the way up to $585 a month. Some would say, "My gosh, that seems high." Not in Austin, at this point, Austin rents are up in the sixes and $700 a month. And then finally, after we got all of this done, the residents asked, "Can we buy the mobile home park?" Now you would think based on all of the terrible negative trauma and strain we'd endured for all those years, we would have said, "No, we're not going to let you buy this mobile home park. You have driven us nuts for half a decade." But we thought it was the right thing to do. The residents wanted to own it. They'd ask about owning it all the way back since 2015. Finally, it was in a condition where possibly the deal could be done.
So we agreed to let them go to the nonprofit called ROC, resident-owned communities, they were able to put together a transaction. They were able to find nonprofits that would guarantee the debt. They were even able to get the city of Austin to chip in $2.5 million in the form of a grant to get the deal done. And just recently the deal finally closed for a little less than $6.5 million.
Now, is everyone happy in the transaction? Well, we're certainly happy. And I think the residents are happy. The city of Austin seems happy. But really what happened here in the story, why were we subject is so much public shaming for so long? Why was North Lamar such a tough deal to do? And why did we never get any credit for our efforts? I think the big problem people do not understand and maybe will never understand is there's this thing in the world, it's called just basic economics. Two plus two equals four. You can't wish and hope your way to four if you only have a one and a two to work with. And we had been the ones that had been the shepherds, the stewards of that park economically in reality world.
Let's face it, that mobile home park could never have been purchased by the residents if it was not for us. They could have never found a group like ROC, a nonprofit, who would have touched that deal back when it was in such poor condition. Someone had to step in and bring that thing back to life. Someone had to write big checks for all those capital improvements. Someone had to endure all the negative pressures of residents who were unhappy with paying their own water and sewer and unhappy with paying higher rents. The city of Austin never did it. Under the city of Austin's watch, that park was run down to a level that it's just shameful. They should have never allowed that property to ever be in that condition, but yet they did.
Under the residents' watch, they certainly never had any pride of ownership as far as fixing it up. It looked like no one had ever attempted to paint anything, or fix anything, or fix the broken porch, or even get the trash to the dumpster until we showed up on the scene. Mom and pop prior owner, they didn't seem to get the job done either. Really, nobody did. We were the ones who did all the heavy lifting. If it wasn't for us, the nonprofit would have never been able to try and find institutional debt for the property and there would have never been any other nonprofit like the Ford Foundation or the Rockefeller Foundation that would have ever personally guaranteed the loan.
And I guarantee you, the city of Austin would have never contributed $2.5 million to putting the deal together if anyone on that entire city council had ever driven through the property in the old days. Now an interesting side note to all this is, what was the first order of business after the residents bought the property? Yes, that's right, they raised the rent. They took the rent from 585 up into the 600s, the very first thing they did. Why? Well, they said they had to raise the rent to make the numbers tie together. The very same thing we had said all the way back in 2015.
So finally, someone learned the lesson of economics, that it costs real money to make a property function. You have to raise so much in revenue to cover all of your fixed and variable costs and then service the debt. That's the realities of life. But we were criticized the entire time, basically for the one doing all the heavy lifting, all the realities of life. We did the job that the city could never do, the residents could never do, the former owner could never do. It's also worthy of note that we saved that property from being destroyed. Had it not been for us, it would most certainly have been destroyed, eradicated, the wrecking ball would have come in and everything in there, every darn trailer, every concrete pad, every piece of fencing, all torn away to a big pile of debris as it was totally razed to the ground and redeveloped into a different use.
So what made North Lamar possible? What made it possible for this to be a nice place to live, offering people a high quality of life within the boundaries of Austin, Texas at an insanely low amount? Who was it that had the foresight to take a property that was on its last legs and bring it back to life? Of course, it was us. Did we ever get a thanks for it? Not a one. Even in the end on the very final articles that have appeared or will appear in Austin media, the final headline that I saw said that, "Trailer Park Mobile Gets Owned by Their Tenants." So apparently, even at the end of the movie, after everything we did, never a pat on the back, never a thank you, nothing whatsoever, just continual taunting. But are we okay with that? Yes, we're okay with that.
We understand basically where people come from, we all have our own political agendas. We're all just trying to get our five minutes of fame, perhaps. We're all trying to do what we think is best for ourselves, for our careers, but it's not always fair and it's not always right. And I think anyone who ever looked at the situation in North Lamar factually would see there was only one hero in the story from beginning to the end. And that was us. Because without us, none of these events would have transpired and the property would not today be in the ownership of the residents, where they can live and future generations can live till the end of time. But it would have never happened if someone had not gone in and brought it back to life, written big checks, taken big risks, and hung in there despite endless negative publicity. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.