Mobile Home Park News Briefing

The moral of this article is simple: DON’T RENT MOBILE HOMES: SELL THEM. It’ something we learned 30 years ago and it’s as true today as it was in the 1990s. You want to be in the parking lot business, not the car repair business.

"Our top priority was keeping housing affordable for the people here," said Ben Ward, president of Olga Dor Homeowners Cooperative. "Without this opportunity, many residents couldn't afford another rent increase. Cooperative ownership lets us manage our community - setting our own rules, overseeing the budget and securing a stable future. Achieving this goal brings financial stability and peace of mind. We're deeply grateful to everyone who helped make this possible." 

Here's the problem with this narrative, which is a darling of the Free Rent Movement folks:

1. The loan payment is the same for non-profits and for-profits, namely the amount borrowed at the prevailing interest rate, plus principal reduction. So the residents have no advantage there.
2. The operating cost of a mobile home park (water, sewer, electric, insurance, property tax, etc.) are the same with a non-profit or a for-profit. So the residents have no advantage there.
3. As a result, the lot rent to the residents is going to be the same whether it’s bought by a non-profit or a for-profit. This is just a mathematical fact.
4. The for-profit has a huge advantage, however, over the non-profit in operations. The residents will never vote for the necessary lot rent increases, invest in required cap-x, or even collect money from their friends. So the quality of the park goes down the drain rapidly.
5. In the end, the residents are actually better off NOT owning the park. Just ask the residents of the park called Sans Souci as described in this article.

The whole “tenant owned” initiative is – for the most part – nothing more than smoke and mirrors.

I always find these articles confusing. The park looks very nice in the photos yet somehow the residents claim they are living in “deplorable” conditions. The rent hike from $225 to $500 sounds like a lot until you take the five seconds to go to Bestplaces.net and see that the Princeton, West Virginia single-family home price averages $141,000 and the average apartment is $1,010 per month – so the lot rent has gone from ridiculously low to only just spectacularly low based on all competing housing options. And then there’s the fact that the residents complain that at $525 they’ve had to move back in with family members and can’t afford to live which means – based on the Federal Government’s claim that 33% of income is a reasonable housing cost – they must earn less than $1,500 per month, despite the fact that the minimum wage in West Viginia is $9 an hour. $9 per hour works out to exactly $1,500 per month, so these folks must be earning less than minimum wage and should immediately report that to the employment commission.

What’s also confusing is why there is such a fury in the article about “the purchase of the Mercer County mobile home community by out-of-state companies”. Is there something wrong with being an “out-of-state” company vs. an in-state? If that’s indeed a bad thing then there must be real problems in Princeton because a quick review of just about every business there – from McDonald’s to the Hampton Inn – is owned by an “out-of-state” group.

So, let’s just be honest. The former mom-and-pop owners of this park were out of their minds charging $225 per month in lot rent. That was the typical rent back in the 1970s. The rent should always have been $500 per month or higher for the last decade. The residents surely know this but, gosh darn it, it was a great scam while it lasted. So don’t pretend that it’s evil or that “out-of-state” ownership is the problem here. This is just another article promoted by the Free Rent Movement which simply wants all rent to be free. To them, even the $225 rent was too much.

Yes, this is the same park that, last week, the residents were demanding $40 million in compensation from, even though it appears that the law says they are entitled to nothing. To quell the rebellion the property owner has “offered $14,000 for those who leave by January 31, $7,000 by April 30, and $3,000 after that. Despite these offers, many residents, some of whom have lived there for decades, are protesting what they see as unfair treatment and an abrupt upheaval of their lives.”

So now the residents have apparently started to physically threaten the park’s management.

I’m sure the Free Rent Movement folks would say that all of this is warranted. But the fact remains that the park is shutting down. And why is it closing? To build apartments on the land, as usual, because the lot rents were too low to make it compelling to leave it as a mobile home park instead of an apartment complex.

Under the California Mobilehome Residency Law (MRL), senior parks are defined as those where at least 80% of the residents are 55 and older. In an October letter to the city, Dowdall Law stated that mobile home park owners have authority over the MRL after the U.S. Supreme Court ended 40 years of precedent set in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. earlier this year. The court’s June 2024 decision in Loper Bright Enterprises v. Raimondo states that courts are no longer required to defer to a federal agency’s interpretation of ambiguously written law and restores the right to the court to interpret these laws independently.

OK, this attorney is smarter than most. He’s exactly correct to attack the California law itself that is potentially no longer valid after the Chevron ruling by the Supreme Court. That needs to be fully litigated before any defense of the park owner is warranted.

I’m hoping that MHI and others are going to litigate everything from the HUD installation standards to OSHA, the CFPB and every other rule and regulation that were crammed down the throats of park owners in violation of the new Supreme Court ruling. One MHA insider told me that it may take at least a decade for all these key regulations to be shot down after all appeals are exhausted. Need to start that process now.

Cimarron Park and Golf Course has seen rents for the lots — the land that each mobile home sits on — rise by some 30% since 2020, according to Brey Mafi, a park resident and a member of the Residents Association. For residents living on a fixed income, each rent increase has left them with less money for groceries and other essentials. The next price hike of 6% takes effect on Jan. 1, she said. Resident John Murphy said the increases seem to be excessive when compared with inflation; the residents say services at the park haven’t improved significantly to match the price increases, either, citing problems ranging from inadequate lighting to restrictive hours at the park’s swimming pool and poor upkeep of the park’s golf course. A spokeswoman for park owner Equity Lifestyle Properties, based in Chicago, said rents have risen 5.6% each year over the past five years. The raises have been commensurate with what’s happening with apartment rents across Washington County, said spokesperson Jennifer Ludovice. The average price for a new home at Cimarron was $76,500, while the median price of a home in Lake Elmo was around $650,000 this year, based on numbers provided by Realtor.com,

The response by ELS says it all. This is just more Free Rent Movement insanity. Under Biden, everything in America has gone up just as much as the mobile home park rents have (20% to 30%). As I’ve written before, rent only ranks as 5th on the average American’s expenditures list, outranked by healthcare, childcare, transportation and taxes. Where’s the Free Health Movement, the Free Childcare Movement, the Free Transportation Movement or the Free from Taxation Movement?

But you gotta love the residents’ claim that the park is a mess due to “inadequate lighting, reduced hours at the swimming pool and poor upkeep of the golf course”. Is that seriously the best you could do to try to make your case? That would be like complaining to the Ritz Calton’s management that you should not have to pay for your hotel stay because the mint under your pillow was not large enough.

“I just don’t understand what would possess someone to do something like this, to people like this”

It’s a fact that it costs a mobile home park owner around $10,000 between lost rent, legal fees, home demolition, etc. when you evict a resident. Park owners only do this as a last resort. It all begins with unpaid rent or really bad rules violations and escalates when there’s no payment or property clean up after repeated warnings in-line with state law.

This is yet another article sponsored by the Free Rent Movement with no apparent basis in fact. I’m sure that if you flew out to the property right now and inspected the premises you would say in two seconds “OK, now I understand why they’re being evicted”. The property owner is too good-natured to expose the facts.

The classic manipulation in which you focus only on the percentage increase but not the actual price:

As of 2023, the average sales price of new mobile homes exceeded $124,000, while the average price of a new site-built home cost $409,872 during the same time. Between 2018 and 2023, mobile home prices increased by 58.34%, outpacing the 37.66% increase in site-built single-family home prices. 

So let me get this straight. Mobile homes are evil because they went up $72,000 while stick-built homes went up $160,000 during the same period? Well, that’s what the article is saying. Good thing for McDonald’s that they didn’t include the McChicken Sandwich because it’s the most evil of all at a 300% increase during that same period, going from $1 to $3. News flash: there’s more to cost than percentage. It’s the actual dollar amount of increase that is all-important.

Officials from the nonprofit Western Reserve Land Conservancy (WRLC), which owns the 28.5-acre mobile home park on the shores of Lake Erie in Cleveland’s North Collinwood neighborhood, announced in 2023 that the park would close this year. The grounds would be converted into green space and turned over to the Cleveland Metroparks as a part of a major redevelopment of adjacent Euclid Beach Park.

Now wait a minute – I thought non-profits were the folks that guaranteed safety from redevelopment in all those earlier articles? Well, apparently NOT.

Santa’s take on this: Non-Profit Naughty

Yes, this is the same story from last week, in which a giant 900-space mobile home park is being torn down to build apartments. The fact is that mobile home park lot rents average $300 per month in the U.S while apartments average $2,000 per month. And you can stack apartments three stories high while mobile homes can’t be stacked. As a result, every mobile home park in America has a constant risk of redevelopment into apartments. And why not? Mobile home parks have great locations on major streets with easy access to water, sewer and electricity. Plus, city government hates their existence and would do anything to get rid of them, including granting any zoning a developer wants. The only thing holding back redevelopment is the amount of lot rent the mobile home park charges. In this case, the amount of lot rent was too low to not make redevelopment the better option. But it seems crazy that nobody has figured out yet that LOW LOT RENTS = REDEVELOPMENT. It’s not rocket science. Articles such as this one would be much more productive if they explored this key issue and figured out what the lot rent should have been for none of this to have happened.

You also have to love the pathetic response from the Mayor:

“My administration and the city commissioners are diligently exploring every available resource while we continue to stand by our community to help these troubling times and transition."

Talk about a “Kamala word salad”. It’s similar to Teddy Roosevelt’s classic “we shall endeavor to persevere” – which means absolutely nothing.

SHAWNEE, Okla. (KFOR) – Several families in Shawnee will be faced with tough decisions come January—up and move or potentially fall into financial ruin. The families have leased land from the Commissioners of the Land Office (CLO) around the Shawnee Twin Lakes area. They received a letter in the mail in November that said the yearly lease fees were going up by more than 500 percent.

Kind of negates all the positive PR that was spun in those earlier articles about how non-profits keep mobile home park lot rents low and stable. Unless you consider a 500% annual increase low and stable. Not sure I’ve ever seen a professional owner go up 500% in the past 30 years. Maybe 501C3 stands for “501% cash from thee”.

Santa’s take on this: Non-Profit Naughty

Last summer, more than 30 families lived in the RV community at Green Oak Ranch. Then in July, the nonprofit Solutions for Change was chosen to take the property over in a lease-to-own deal. That takeover doesn’t happen until Jan. 1, but eviction notices have already gone out.

There’s not a lot of detail in this article, but here we have a non-profit kicking out the residents of an RV park they have just taken over to supposedly “help” the residents. You see the Golden Rule is that “he who has the gold makes the rules”. And if the non-profits are required to personally guarantee the debt or the mortgage defaults, then the non-profit is really the owner and can do whatever it likes. The residents have simply traded a private-sector owner for a non-profit owner. They are no more in control of their destiny with a non-profit than they are with a for-profit, contrary to how these groups may try to spin it.

Here we go again:

"We are looking mainly at keeping a trailer park a mobile home park. Maybe if they want to see the first option could be the tenants, give them the opportunity to purchase their land," said Schwarzburg, "If not, it would be good to offer the next buy to demand that it stay a mobile home park," The Texas Organizing Project says they hope Harris County can find a way to help country road mobile home tenants. 

The residents have no money but want to “buy” the mobile home park. Do you see the problem with that? These deals revolve around two things: 1) find a non-profit to provide the down payment and 2) find a non-profit to personally guarantee the mortgage. Then repeat every five years or so for 30 years. That’s just not going to happen. How many of these tenant-owned deals have ever made it to the final payoff of the mortgage? Any?

It would be more honest to simply call the “resident-owned” park concept what it truly is: the “non-profit-owned”. And, like any private sector owner, these non-profits can later simply sell the park off to another buyer when they lose interest in guaranteeing the debt or want their down-payment money back. I have showcased that exact outcome in many of these article reviews in the past.

Apparently, the media that raves over the tenant-owned mobile home park model doesn’t bother to read their own articles. Let’s start off with the myth that the resident-owned model means that rents won’t go up. Here’s the reality, right here from the source that puts these deals together:

That doesn’t mean rents won’t ever increase, but they will become more stable over time…

What does that even mean?

Well, here’s the bad news for these folks. When a private owner raises rents, it’s typically only to catch up to market levels and then increases go into a “stable” period which pretty much tracks inflation. Since the mortgage payment and all other costs are the same under private or non-profit ownership, you’re going to end up at the same monthly rent regardless. But, unlike the professional owner, the residents are typically lousy operators and have no clue on how to collect rents or manage maintenance. And that leads to the following bombshell stat that appears later in the article:

Nine manufactured home communities with 451 homes in Colorado have become ROC USA resident-owned communities, according to ROC USA. The process is complicated and wouldn’t have been possible without Thistle’s guidance, LaVern Schafer said. Two ROCs have since defaulted on their loans, which the nonprofits are working to help resolve by providing them with more resources and support, but none have dissolved or reverted to private ownership.

That’s pretty much an INCREDIBLY BAD performance. So we’re saying that out of nine tenant-owned properties with mortgages, TWO HAVE ALREADY DEFAULTED. That’s more than 20%. If that was the track-record of a professional owner, they would be shunned by lenders and could never get a loan again.

And then there’s the other elephant in the room that nobody ever wants to talk about: THE RESIDENTS DON’T ACTUALLY OWN THE THING, NON-PROFITS DO. So the actual name of these deals should NOT be “resident owned” but actually “non-profit owned”. That’s who is putting up the down payment and guaranteeing the mortgage. And that means the residents – regardless of what B.S. is strewn about – have no control over their destiny at all. When the loan comes due on the park (typically five years in term) the non-profit can sell the park off (it already has happened).

Check out this article about the resident-owned business model: https://coloradosun.com/2024/04/22/sans-souci-boulder-county-mobile-home-park-challenges/. Wow, sounds like paradise, right?

Santa’s take on this: Non-Profit Naughty

The parks are closing and the land is being redeveloped BECAUSE THE LOT RENTS ARE NOT HIGH ENOUGH. It‘s not any more complicated than that. The same people that complain that rents rise too quickly are also the ones that then whine when the park is torn down to make way for a more profitable use. Surely, this can’t be that hard to grasp: THE SOLUTION IS TO FOCUS ON HOW HIGH LOT RENTS NEED TO BE FOR THESE PARKS TO CONTINUE TO BE MORE ATTRACTIVE AS MOBILE HOME PARKS RATHER THAN A DIFFERENT USE. Here’s an analogy. Tom is the best salesman at Ajax Tire company. He tells his boss “you know I’m getting a lot of other job offers at a higher salary than I get at Ajax so I’m going to maybe quit” to which the owner says “how dare you ask for more money, can’t you see how hard my life is?” So Tom resigns, goes to ABC Tire and Ajax later goes bankrupt. Wouldn’t it have been smarter for Tom’s boss to say “OK Tom, we don’t want to lose you, so how much more do we need to pay you?” Yes, obviously.

Another “non-profit-purchased” mobile home park which will probably limp along until later resold to a professional owner for all the reasons stated earlier.

Santa’s take on this: Non-Profit Naughty

The residents of Swiss Village Mobile Home Park in Ouray have reached a stalemate in their effort to buy the land underneath their homes, potentially casting doubt on the future of the park.

See, told you so. These deals are not about tenants buying the land but instead about finding non-profits to pony up the down-payment and guarantee the mortgage. And then there’s the small problem that a typical mobile home park mortgage has a 25 or 30-year amortization yet the non-profits only want to go about 5 years before jumping ship – just long enough to get the media attention and headlines. When long-term debt and short-term commitment collide the end result is disastrous.

I love how the disclaimer shows the real price of the “Casita” is $60,000 and not $10,000. Talk about “bait and switch” tactics. I was actually interested in this article until I realized I had been scammed.

This article is similar to the one above – and equally misguided. In this case, the residents acknowledge that the rents will pretty much be the same as if a professional owner bought it, but somehow what really matters is this false sense of security that this situation will yield lifetime safety from re-development:

“To know that our neighborhood will be here long-term with reasonable costs … We will still have monthly (lot) fees because we must pay the loan, our operating costs and build our reserve, but to know that it is going towards just securing our long-term housing — that makes it worth it.”

But if anyone had bothered to read their own articles – or use a calculator – they’d quickly figure out the problem with this concept. In this case, the non-profit (who really owns this) is paying nearly $200,000 per lot.

The Milner Park Community cooperative, a group that includes Stewart and five other residents representing the 40 homes, offered $7.75 million for the property.

There’s no way that they will ever be able to handle that debt load. This is a guaranteed foreclosure down the road, unless the rents go into the stratosphere (like $1,500 per month or so).

Santa’s take on this: Non-Profit Naughty

No, to “save affordable housing” you need higher lot rents. Rents high enough that redevelopment is not as attractive. The “resident-owned” mobile home park model does nothing to reduce lot rent nor to save the park from the wrecking ball – in fact it creates higher rents and increases later redevelopment. Why? Because the residents are lousy at managing the property, collecting rents, and holding costs down. As the income declines, the non-profits that guarantee the debt retract their support, and the property goes back on the open market as a tear-down. Just read about the plight of the “resident-owned” park called Sans Souci in Colorado. This is only the tip of the iceberg.

In ten years, there will be a ton of articles like Sans Souci and many of those parks will have already been torn down. Just watch. This is a non-profit, virtue signaling fad that has no hope of long-term success. That’s why there are so few of these deals in America – the non-profits that personally guarantee the residents’ debt realize that this is not viable over a 30-year mortgage horizon.

Now we come to the next part of the problem with tenant-owned communities:

“Our top priority was keeping housing affordable for the people here,” said Ben Ward, president of Olga Dor Homeowners Cooperative in a statement regarding the transaction. “Without this opportunity, many residents couldn’t afford another rent increase. Cooperative ownership lets us manage our community — setting our own rules, overseeing the budget and securing a stable future.”

If the tenants buy the park from the owner at the market price, they have the same debt load as the private sector, right? And the cost of water, sewer, insurance, property tax – and every other expense line item at the park – costs just the same if the tenants own it or the private sector, right? And these costs inflate at the same pace whether you’re a non-profit or not, right? OK, then explain to me how the resident-owned model saves these folks even a penny in monthly lot rent over an outside owner? Of course, you can’t because they don’t.

The only people who benefit from the tenants buying the park are the non-profits who pocket the fees from the transaction and get their five-minutes of fame. The residents are screwed as their own mismanagement yields rents that are as high or higher than a professional owner would charge, but the quality of life is greatly reduced due to poor operations. I again urge you to read about Sans Souci in Colorado for verification of this.

“neighbors appeal to the "goodwill" of the owner…”

The owner of this park in Sweetwater, Florida wants to redevelop the land into another use. He has apparently taken all the correct legal steps. But the residents want him to chip in 45 MILLION DOLLARS to them as an act of goodwill – plus give them another 6 months to get out. Gee, that’s not asking for much, right?

I know that there used to be an America that had common sense. Deep down, surely it still exists. How did people get this insane? I guess that watching the Biden administration continually violate Supreme Court rulings (the evictions moratorium, student debt forgiveness, etc.) has empowered them to simply ask for whatever meets their fancy and hope that they can coerce it out of good-natured business people without any ramifications.

But, at the end of the day, there’s this one obstacle they will have to contend with: the actual law. I know it’s no fun, but that’s one line of defense they will not prevail on. So, they better start packing.

The Urban Group did confirm that tenants of the park will have priority access to apartments in Li’l Abner III, the adjacent building that’s currently under construction, as well as any future affordable housing built on the park, “including the first month free,” the company added. Li’l Abner’s closure comes as mobile home parks throughout Miami-Dade are being shuttered. They generally occupy large pieces of land and are relatively cheap to buy out, making them sought-after targets for developers looking to build denser, multi-family units or commercial projects.

This is the same article as above (there were no less than 9 similar articles on this same topic) but what’s interesting in this one is that it’s revealed that the Sweetwater park is being torn down to build apartments. I’ve been writing forever that LOW LOT RENTS = REDEVELOPMENT and that’s exactly what’s happening here. What would the lot rent have needed to be to keep the park from being torn down? I’m not sure. But America is going to have to realize that mobile home park land can be used for many other things and that the insanely low lot rents (around $300 per month on average versus $2,000 per month for apartments) means that every park in the U.S. is a potential target for a different use.

According to the complaint, filed on Nov. 8, Del Cielo’s owners claim that the park has operated “de facto as an ‘older persons’ park,’”—meaning that the park had acted as a senior park without any formal legal recognition—and the park’s leases and rules do not guarantee that the park would remain a senior park in perpetuity. 

We’ve seen a lot of these deals over the decades, in which a “senior” park does not have the legal designation and was literally nothing more than the owner pretending to be a 55+ property. Sounds like the city is screwed in this case, and they better back off before they all get sued.

“What they are doing now, they are going around and collecting data. They’ll take that data and plug it into a system called crisis track,” said Bradenton Beach Building Department’s Darin Cushing. He said that this data will then be used to determine if the home meets the threshold of suffering substantial damage, which means it would cost 50% or more of the structure’s market value to get it back to its normal condition. If that is the case, Cushing said, “The owners are required to bring that building into compliance with flood code, building code, and fire code as well.”

From the same FEMA that brought you the classic “don’t render aid to anyone with a Trump sign in their yard” now comes a new hit that is at least egalitarian “don’t render aid to anyone period”. How can FEMA take this moment to suddenly change the rules of the game and start declaring properties unworthy of aid when the whole point is to help people out that got flooded? This is the cruelest policy I’ve ever seen.