Mobile Home Park Mastery: Episode 173

What's Really Happening to Our Costumers?

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Economic upheaval. Shuttered businesses. Broken dreams. What’s the impact of what’s happening in America right now on mobile home park residents? In this episode of the Mobile home Park Mastery podcast, we’re going to look into the typical mobile home park residents and how they’re faring in one of America’s most difficult times. As you’ll see, mobile home park residents may just be the best positioned economic group in the U.S. today.

Episode 173: What's Really Happening to Our Costumers? Transcript

COVID-19 economic upheaval. What's really going on with our Mobile Home Park customers today. This is Frank Rolfe, Mobile Home Park Mastery Podcast. We're going to delve into the truth behind what's really affecting and the current status of the typical customer in a Mobile Home Park. Let me start off by saying that when you talk typical Mobile Home Park customer, you are really casting a gigantic net. There are millionaires living in Mobile Home Parks in California, in Malibu for instance. There are billionaires living in a Mobile Home Park in Montauk up near the Hamptons. But for the most part, I'm talking about the good hardworking folk that typically earn in the bottom third of labor amounts in the United States, which are the benchmark of the affordable housing industry. These are people who earn anywhere from minimum wage to about $15 per hour. So what's going on with them right now.

We see in the news, all these layoffs and all these issues going on. Well, let's break it down into realistic factual bite-sized pieces. First off, most of your residents in Mobile Home Parks are in two forms or fashions. One, they're retired. We have lots of retired customers who do not hold a job. Therefore, it's not impacted by COVID or any type of upheaval, or they're in a lot of essential industries. If you go to the typical Mobile Home Park and you were to interview each person as they leave for the day as to what they do, a whole lot of people working in food production, fast food, all kinds of essential industries, mechanics, all the things that make America work. In fact, our customer base reads just like the list of essential industries for the most part, not completely. We have some people in non-essential industries, probably the largest of that, I would say people who work in stores in the retail trade. But by and large, the majority of residents in Mobile Home Parks are either going to be retired, or they're going to work in an essential job.

Now, what's happened to them as far as COVID-19 and the stimulus. Well, that's turned out to many of them to be a wonderful opportunity to buy a home. As we all know, when the COVID first hit and they gave out those stimulus checks, they were fairly large for some families. Some families were receiving 3,000 or $4,000. At the very moment, those checks started to go out our sales broke all records. That's because many people took that opportunity when they gathered that cash to do something productive with it. So they've decided to buy a mobile home. Bear in mind at the same time, most Americans were very unhappy with their living arrangements in apartments. They wanted a yard. They wanted to have a sense of community, the ability to just get out and walk and not be around people.

And so the Mobile Home Park was the attractive alternative to the apartment and they just happen to have that stimulus money that they could use as a down payment. Now, what's going on with them, as far as technology, we read all kinds of things in technology that are happening out there that jeopardize certain careers. Well, I don't think it's really going to impact Mobile Home Park residents too much. Sure there'll be some jobs that will be displaced and some employers who will narrow their number of people they have on the payroll, but I don't think it's going to be really very significant. I think most of the jobs that our residents hold are the ones that you can't really replace with technology.

You cannot really replace someone who cleans a property for example, with technology, it's not going to work. You can't have a robot come in and do the laundry in the hotel, make the bed, vacuum, it's not going to happen. So, technology is going to impact our American labor force, but I think it's the next level up. I don't think it's going to be our typical resident for the most part. And then what about the trends on minimum wage coming up? Well, I think it'll be good for our residents. They're going to be earning more money potentially. It's possibly those people at the lowest levels of minimum wage, well they may get huge spikes in what they earn, which will be great. Great for them. Now they'll have more disposable cash. So, I really don't see any mega trends that are really endangering the typical Mobile Home Park customer.

So, then who is getting damaged? We've already see in the media, all of these stories about huge layoffs and industries in complete turmoil. Well, I can tell you who that is, it's the kind of the next level up from Mobile Home Parks. If our typical customer is earning roughly $30,000 household income, 30, $40,000. Is the grouping up from that, who I think is taking most of the damage. When American Airlines lays off 10 or 20,000 people. I don't think most of those people working in American Airlines live in Mobile Home Parks. I think they all live in apartments and single-family homes. I think that's just really taking the brunt of it. And if you even look at the stimulus and where that's gone, they exempted people, they got no money, if they made more than what, $75,000 a year. I think that's the market who's really getting hammered.

These are people that they cannot pay the bills, earning unemployment benefits of 45% of that amount. They just can't do it. The average apartment in the U.S. is about $1,200 per month. That means if you have to have three times that to qualify, you're talking people who are making around 50,000, $60,000 of household income. And I think those are the people who are really getting the worst impact. Often they additionally try and make side income with things such as driving for Uber, bartending, waiting tables, kind of as a side gig to tie all the numbers together, and now that's been denied them. So once again, they're underwater because that additional line of income isn't going to come in the door. So, when people talk about Mobile Home Park residents as being endangered, I don't really think that's accurate. In fact, all around me, I see signs in basic industries, essential industries that say, "Help wanted." Right here in my small town of Missouri, there's probably 10 of those signs up. They're not high paying jobs, but they're jobs nevertheless. And with what they're paying, you can definitely afford to live in a Mobile Home Park.

So, really Mobile Home Park customers to me are one of the best-insulated groups from all of the craziness that's going on in America today. The group, I feel the most, sorry for are the folks who are earning that little bit more, that next level up, because they can't find any jobs that pay 50 and $60,000 when they're displaced from that job at American Airlines, or wherever they are, they can't just run out and find another. Those jobs are very, very hard to come by. Additionally, that's the group who I believe will have the greatest technology problems going forward. Take, for example, truck drivers, truck drivers are very highly compensated. Most truck drivers in America are making between 50 and a hundred thousand dollars a year, but they're facing the onslaught of self-driving trucks.

Some would say that entire industry will become a thing of the past and the not too distant future. Some say that they'll have self-driving trucks before they have self-driving cars because that's where the real money is. And those are the folks who really are putting the big investment in, because if you can make a self-driving truck, well, it can run 24 hours a day. It can do the productivity of a shift of three different people. And it would cost you $300,000. If it's long road trucking, to move that freight, which you can replace with that self-driving truck. So, those are the industries, those are the people who I feel need the most protections. Those are the ones who are in most trouble, but it's not Mobile Home Park people. It's just not. That's why Mobile Home Park collections have remained so good. Most owners I talked to, and ourselves included are only slightly behind the pace of the past. Pre-COVID levels of collections are typically around 3% better than they are today. Most owners are still collecting over 90% every month.

Compare that to some other industries. Look at retail industry. I know people with retail centers that are not even collecting 30% of what they did pre-COVID. And I even know apartment people who aren't even collecting 60% of what they were doing pre-COVID. But in our industry, because of the unique structure of our residents, everything seems to be going A-Okay. So, when people are trying to tell you that there's problems out there with our resident base, we always get lumped in for some reason in every article, people always just assume that people who are out there earning 30, $40,000 a year and under, that those must be the ones who are taking the brunt of all the activity. I disagree with that. I don't see that myself in the field because of the unique construction of our customer base, because of the high availability of jobs that pay in the range of what our customers are used to earning. They seem to be the ones who are really the best suited for what we find as the New America. And that will always remain that way? I would say yes.

I think the mega trends are definitely in the favor of our customers. Minimum wage increases, definitely in favor, every other political item I've seen on the slate, all would benefit Mobile Home Park people. And I don't see those essential jobs ever going away, no matter what happens with the economy going forward. I think we are in the sweet spot of all employment. Case in point, 50% of every job created after the great recession has been $10 an hour or less, and the fastest growing industry in the United States since 2007, fast food, one of the largest employers of Mobile Home Park residents in the U.S. So again, I think it's very important that we all have clarity on our customers and where they're at. Great people, hardworking people that make America work. They are the gears that make the machinery turn and they're very well situated right now, despite COVID, despite all the upheaval. This is Frank Rolfe, the Mobile Home Park Mastery Podcast series. Hope you enjoyed this. Talk to you again soon.