Nearly three years after buying their community, residents find themselves confronting infrastructure, governance and management challenges

I’ve been preaching about the fact that residents owning their own mobile home parks was a recipe for disaster for years. There’s nobody less suited on earth to manage a mobile home park than a committee of residents – they will always vote “no” on raising rents and, as a result, the condition of the park will go down the drain. I’m glad this writer was brave enough to expose the truth, and I’m betting that a bunch of non-profits that have been hit up to personally guarantee the debt on these deals (which is the only way they happen) are breathing a sigh of relief that they refused to sign on.

One bill sponsored by Senator Cameron Reny (D-Lincoln County) - LD 1276 An Act to Create and Sustain Jobs and Affordable Housing Through the Development of Cooperatives and Employee-owned Businesses – is promising.  It takes a hard look at the potential for mobile home parks to be part of the solution, especially for Resident Owned Communities (ROCs).

Maybe Senator Reny should call those residents at Sans Souci in the article above before he makes a fool of himself.

I have been preaching this narrative for years now, and if mobile home park lot rents don’t go up substantially this will be the story of every mobile home park in the U.S. with a good location. Based on a standard mobile home density of 10 units per acre, this park has the capacity of about 220 mobile homes (it’s on 22 acres). But the apartment developer is going to build 5-story towers and that creates 978 apartments on that same tract. At $2,000 per month rent, the apartments are a no-brainer to be a more valuable use of this land. The sooner the American public realizes that the only defense available against re-development of mobile home parks is significantly higher rents, the sooner that residents of parks like this don’t become homeless.

Great business model, right?

“Our goal here is to not let one resident have to move because they can’t afford to stay here,” she said “That’s why it got so critical for us to assure that we stay the community we are.”

Translation: “We’re not going to evict anyone for non-payment and we’re also going to vote “no” on any rent increase so this park will go bankrupt at record speed”.

This is the next Sans Souci just waiting for an idiotic non-profit to guarantee their loan.

I’m sure the park owner will appeal and the next jury may come to a different conclusion. The writer, of course, does not mention that the park owner can appeal until the final sentence. It’s not over until it’s over.

Classic quote by a resident:

“We live there because we don’t have no choice”

That quote sums up the new “victim” society we live in where everybody is not in control of their life but simply a victim of some other evil individual or group.

As for the article, hopefully the city council will not be swayed by the eloquent tenant quoted above and realize that rent control results in wrecking balls tearing mobile home parks down.

Can an old dilapidated mobile home break apart in transport? Sure, I’ve had it happen myself on an old home I was moving in to fill a vacant lot. The moral is simple: don’t move old mobile homes in poor condition. When a tenant can’t afford the rent they need to sell their home in its current position and move to somewhere they can afford. Mobile homes were meant to be moved one time only – straight from the factory to the vacant park lot. After that you have to be very careful. Looking at the photo you can see that this home was not in a condition to be moved.

A 44-story office buildng in St. Louis recently sold for $3.5 million. A 500,000 square foot regional mall just sold for $7 million., And here’s a mobile home park selling for $70 million. How can a mobile home park be worth 20 times more than an office building and ten times more than a regional mall? Several reasons:

1. Mobile home parks are based on affordable housing, which is the most in-demand form of real estate in the U.S. Meanwhile, nobody wants office space or retail space today.
2. Mobile home parks have no risk due to technology – you can’t live in the “cloud”. The internet is what killed office and retail.
3. Mobile home park rents have plenty of room to double and triple in the years ahead as they are ridiculously low ($300/mo. average lot rent vs. $2,000/mo. for apartments). Meanwhile office and retail rents per square foot are plunging.
4. Mobile home parks never become obsolete or require big capital expenditures as they are just a parking lot for mobile homes. Office and retail properties become dated and need giant, continual investments on such things as roofs and foundations.

Who would have ever thought that mobile home parks would be more valuable than office towers and regional malls? Pretty much any mobile home park owner.

I’ve seen responses from these companies saying, “If tenants were genuinely concerned with the price of the lot, they would move.” This shows a complete disregard of the cost to move a manufactured home. If tenants try to move, it can be expected to cost anywhere from $1,500 to $10,000 depending on the home, and this is only if they are lucky enough to find an available lot elsewhere.

Wow, this reporter must be reading my weekly news reviews as I’m the person that said “if you can’t afford to live in the park you need to move”. But I never said to “move the home”. In fact, I regularly say that you should NEVER move the home but, instead, sell the home to someone that CAN afford to live in the park (just like all single-family and condo owners do). When I say that you “should move” I am talking about the inherent common sense of moving to a city or region that meets your budget. It blows my mind when people appear in articles complaining that they can’t afford to live in that city, as though it’s society’s responsibility to ensure they can afford to live wherever they want. That’s as stupid as somebody with $10 in their pocket complaining they can’t eat at the local steakhouse – just go to McDonald’s like everybody else does. Maine is an extremely expensive state to live in – among the most costly in the U.S. If you don’t have a large income in retirement you should move to a cheaper state like Arkansas. It’s not rocket science.

The title says it all. As I’ve said every week, if you retire in California, you do so with full knowledge that it’s one of the most expensive places to live on earth. If you can’t afford to pay absurdly high prices for everything from mobile home park lot rent to hamburger meat, you need to sell your home and move to a cheaper state, which abound but mostly not in the American west.

The park owner got a legitimate offer of around $40 million for his 370-lot park. The tenants mistakenly thought that simply by saying they would match the price the park owner would opt to sell to them. But here’s the catch:

1. The park residents have no money.
2. The park residents have no experience in buying or operating parks.
3. For the tenants to buy the park will require non-profit subsidies and loan guarantees.
4. Putting all this together will take a year.
5. he corporate buyer can probably close in 60 days with no time, effort or risk to the seller.

There is a thing in life called “time urgency” and if the seller waits a year for the tenants to buy the park and they then fail miserably (which is a 99.9999% certainty) the seller will lose the good corporate buyer who will have moved on. Once again, any sane person would understand that.

There are two sides to every story and this article only presents one. I’m pretty sure that any sane adult can guess that the reason these twelve leases were terminated is for plenty of factors that are conveniently not discussed (such as the homes being in poor condition, rules enforcement, non-payment of rent, etc.).

When a park owner non-renews a lease it costs them around $10,000+ in lost rent and lot preparation for a new home, not to mention the pain and suffering of bringing in a home and getting it sold. The last thing a park owner wants to do is to non-renew a good, paying tenant. I’m betting these were anything BUT good, paying customers and there’ no way the owner could keep the business functioning with these folks as residents so they bit the bullet and are going to sacrifice around $120,000 to get rid of the people that are ruining the quality of life for all the other residents.

If the reporter had bothered to show pictures of the homes of the people that were interviewed the cause of the non-renewals would probably be clear.

Some park residents have a real knack for taking advantage of gullible reporters. When I was filming with National Geographic, a resident saw the camera crew and told them that the evil landlord had turned off their gas. They filmed a segment with that resdient but then had to delete it when, in fact-checking the story, they found that the truth was that the resident had not paid the gas company, not the landlord.

I’m willing to bet $100 that there are some really good reasons these tenants are being evicted and that it’s not just some whim of the park owner – but the reporter did not bother to explore what those issues might be. Shocker.

Since our theme is “Fantasy vs. Reality” I had to include this idiotic article about young people speculating on homes in Austin, Texas. Yes, the same place that makes every list of the cities with the greatest odds for home price collapse, with articles such as this one: https://www.sfgate.com/realestate/article/austin-house-prices-are-falling-but-experts-say-19378718.php. Want to destroy yourself financially? Buy a single-family home with maximum debt load in a declining market. I know that HGTV had on all these shows like “Flipping Vegas” BUT ARE YOU AWARE THAT THE SHOW STOPPED FILMING IN 2014? ALL THOSE EPISODES ARE REPEATS. The single-family home flipping ship sailed years ago when 3% mortgages walked the earth and I’m sure you’ll revisit this article three years from now and the ending will not be the fantasy that was suggested. Before any young person follows this article’s advice, they need to talk to an old person who saw what happened to Austin real estate in 1990 and again in 2000. Heck, you can just call me!

“This past legislative session, Democrats introduced House Bill 2114 in Olympia, seeking to limit rent increases by 7%. But opposition from Republicans and divided Democratic lawmakers stalled the bill. It passed the House, but didn’t make it out of committee in the Senate. Manufactured home owners are at the mercy of park owners who may raise their “space rent” each year with no limitations. It’s expensive, and sometimes impossible, to move a home. According to Forbes, moving a manufactured home costs $9,000 on average — even if the slight misnomer “mobile home” has stuck around.”

Yes, it’s expensive to move a mobile home, so don’t do it. Instead – if you can’t afford to live there – sell it like the owners of single-family homes and condos do. I mean you can move a brick house, too (I’ve seen it done on PBS) but why do it?

Obviously, people are mad that the State of Washington refused to enact rent control. That topic is now scuttled for a while. No offense, but it didn’t even come close to passing. The fact is that Washington is a really expensive state to live in. If you can’t afford to live there, then sell your home and move to a lesser expensive state. You can get a nice spot in a charming Missouri mobile home park for around $350 per month.

 “I watched what was happening [with the recent sale], and I thought—well, this is an investment company, they’re not in it to be your friend.”

Here’s the hard reality: Crozet, Virginia home prices are $498,400 and the apartment rent averages $1,940 per month. And let me get this straight -- $450 per month is unfair? No, the park owner is not in the business of making “friends”, they are in the business of making money. They bought the park because they spotted the rent was ridiculously low at $250 per month just as a smart stock investor buys Apple when the price seems low compared to book value. The former park owner – who held it for 40 years – clearly did not run the park as a business. But any modern buyer is going to make this a sustainable investment-grade asset and that means the rents are going to go up. It’s also interesting to note that, based on any semblance of realism, the rents at $450 are still absolutely, ridiculously low and it’s a miracle the new buyer has not already gone much higher. 

If you are paying $40 million for 370 lots, that’s over $100,000 per lot. No way those numbers are going to work at $552 per month lot rent. Whether it’s an institutional buyer or the residents buying it, that rent is going to double to justify that cost. This nonsense that residents can buy parks and somehow stop rent increases ends with a simple use of a calculator and spreadsheet. 

"During an independent analysis, the Park determined that in order to avoid continuing to run the Park at a loss given the ongoing expenses and costs, the Park was required to increase space rents. The Park’s analysis took into consideration the fair market values of rents, the expenses required to operate and maintain the amenities of the Park, and the Park’s ongoing and recurring expenses," Skyline Ranch Country Club Manager Chris Ingersoll said.

Well, the owner did not mince words in their accurate depiction of the situation. It’s just a cold hard fact that mobile home park lot rents are ridiculously low and unsustainable in most cases and will have to go up significantly to keep these properties alive. The alternative is to demolish the park and turn the land into a different use (apartments, of course) and in California that will not be hard to accomplish.

PALMDALE — The Housing Authority — which includes all members of the city council — on Wednesday approved a system for increasing rent at Palmdale’s three city-owned mobile home parks, as well as a method for assisting those most impacted by the increase. Rents on the spaces have not been increased since 2008, when a cap of $400 per month was set; most spaces reached that maximum by 2013. Operating costs have increased in the meantime, up 21% from 2022 to 2023 and 17% this year. With the cap on rents keeping revenue stable for about a decade, the revenue is not keeping up with the costs of maintaining and operating the parks, Director of Neighborhood Services Sofia Reyes said during the authority’s March 20 meeting, when the matter was first introduced.

Holy Cow, here’s the City of Palmdale, California pushing back on critics to their recent plan to significantly raise the rents on three parks that the city itself owns. I never figured I’d see that – what a turn of events in today’s political climate. Groundbreaking.

In an email to KING 5 Collective Communities said the rents are rising because they've already spent $650,000 on improvements and plan to invest another $1 million in 2024 for repairs and maintenance.
"The second part of our analysis is to compare our lot rents to the Federal Government's definition of affordable housing," the statement continued. "Every year HUD issues the average median income ("AMI") for every county in the country. For Snohomish County the AMI was $146K. HUD suggests that a household should spend no more than 30% of their income on rent/housing expenses. We've adjusted the AMI by two factors (50% of AMI and 30% of AMI) and compared what monthly rent should be based on those adjusted income limits. In Royalwood's case the new lot rent is 51% below the HUD suggested rent at 50% of AMI and 18% below the HUD suggested rent at 30% of AMI. While we understand the lot rents have increased we believe that Royalwood still provides a quality affordable housing option for our residents in the market as compared to other forms of housing in Snohomish County."

Bravo for the park owner putting it so accurately to the media and those who question the more than fair rent increases. Not all the residents in this park will be able to afford the necessary increases and those who can’t need to find an alternative housing option. That’s how an economy works. If you want the Wendy’s Baconator but don’t have $10 for it, you simply buy the less expensive burger – you can’t go to Wendy’s and say “you need to reduce the price of the Baconator so I can afford it”. If you have retired in California – the second most expensive state in the U.S. behind Hawaii – then high prices are part of the bargain. You can get this same housing option in Missouri for less than half that price. But it’s the resident’s responsibility to match their income to their location and not that of the property owner.

If you go to some of these over-the-top websites, you will find such novel items as 14K gold shotgun shells filled with 14k gold pellets, costing about $10,000 per shell. No way you can make sense of it, but apparently there are people so desperate for attention that they buy stuff like that. In this case, you have people spending $5 million to live in a trailer park. Not much difference.

STUPIDITY RATING ON A 1 TO 10 SCALE: 7

"When we last updated the community, we were developing plans to rebuild/rehabilitate the units. The planned approach was based on advice from OHCS’ consultants and informed by industry-standard best practices," said Delia Hernandez, OHCS public information officer.The mobile homes were brought to Phoenix from Idaho. On their arrival, many had mold and over 20 health code violations.

Can you imagine how much money is squandered by incompetent non-profits? Where do you find folks so bad at business skills that they bought a batch of mobile homes filled with mold?

STUPIDITY RATING ON A 1 TO 10 BASIS: 10

In a trend that has accelerated since the pandemic, over one in five mobile home parks in Maine are owned by out-of-state investors.

How exactly is an “out-of-state” owner any different from an “in-state” owner? Let’s look at America’s largest retailer: Walmart. Except for Arkansas, every single Walmart store is an “out-of-state” owner. Same is true for every McDonalds not located in Illinois and every Hilton Hotel not located in Virginia. The truth is that where the owner lives means absolutely nothing.

STUPIDITY RATING ON A 1 TO 10 SCALE: 8

“We are sorry to hear that Lakeway Mobile Estates (the ‘Park’) is being sold for approximately $41 million,” the city stated in an email to a constituent about the sale. “We understand that the purchase price could result in a significant increase in lot rent, which many low-income residents at the Park will be unable to afford.”

OK, so let me get this straight. The residents were unable to pull off the purchase of the property for $41 million. So somebody else bought it for $41 million. The city was willing to cough up $7 million down payment. The private-sector buyer probably put down a little more than that, but close. With either party buying the property for $41 million there would be an identical note with identical interest rate and identical monthly payment. So then how exactly would the non-profit be able to buy it without raising lot rents just as high – or higher – than the private sector group would? The answer, of course, is that they can’t.

STUPIDITY RATING ON A 1 TO 10 SCALE: 9

The city purchased the Marin Valley Mobile Country Club property for $20 million in 1997. Forty-one percent of the spaces are required to be occupied by low- or moderate-income residents, although a much higher percentage of the current residents have low incomes.The city intended the neighborhood to be financially self-sufficient with revenues coming entirely from tenants’ pad rental fees. However, a Marin County Civil Grand Jury report last year questioned the organization’s solvency.“Novato’s 2022-2023 adopted budget shows that in the past four fiscal years MVMCC’s expenses have exceeded revenues by a total of more than $3.6 million,” the report said.The grand jury said the city was paying about $200,000 a year to help cover the neighborhood’s utility costs. The grand jury also noted that in 2022 the city allocated $3 million of its American Rescue Plan Act funds to help pay for a sewer system project in the community.

Wow, what a shocker. The resident-owned community can’t pay its bills without ongoing subsidies that were not approved by taxpayers. Never saw that one coming.

STUPIDITY RATING ON A 1 TO 10 BASIS: 10