Mobile Home Park News Briefing

The title says it all. Once again, there’s no escaping the reality that LOW LOT RENTS = REDEVELOPMENT.

Now, Habitat for Humanity of Greater Charlottesville is scrambling to put together an offer on the park on behalf of residents before that 60 days is up on August 6. “Nothing is certain at this point,” said Dan Rosensweig, Habitat Charlottesville’s president and CEO. “But we feel like we have a moral and ethical obligation, when people — especially vulnerable people — who are in harm’s way, to at least look at it.”

No, actually, something is very certain at this point: there’s no way on earth that the residents are going to come up with $7 million in three weeks. Or three months. Or three years. Or three decades. Or three centuries. That’s because these tenant right-of-first refusal concepts are in complete contradiction to the basics of common sense. Here’s the problem: the tenants personally have no money so they are reliant on a hand-out from a non-profit for the down-payment and a second non-profit to personally guarantee the mortgage. And when it comes time to pony up the cold, hard cash, even the most flippant do-gooders have seemingly forgotten their wallets like some dead-beat on a double date. It all reminds me of the time I got a call from a city councilman in Oklahoma City who wanted me not to evict some guy that had not paid his rent for a couple months and was heading to eviction trial (I’m assuming this tenant barged into his office, terrorized him, and he wanted to get him out of his office). So I told him “OK, no problem, you just pay the amount he owes currently and I’ll call the eviction off”. He responded “now wait a minute, I can’t afford to pay the rent” and I said “well, when you’re ready to pay it, just send in the money and we’ll call the eviction off.” Of course, I never heard from him again. All talk but no action when there was actual money involved.

When will bureaucrats figure out that they’ve all been conned into believing these tenant first-rights ever actually pan out? Because they don’t. Everyone in reality-land knows this and simply view the 60-day period as a complete and utter waste of time. Not because landlords are evil and don’t care about the tenants. Obviously, tenant money is as good as anybody else’s. But because these deals never, ever happen in real life. It’s just a statistical fact.

Another park that might have been saved with higher lot rents. Instead, as always, LOW RENTS = REDEVELOPMENT. 

Over the past thirty years we have turned-around dozens of “heavy-lift” mobile home parks just like this one. It’s the logical product of mom-and-pop neglect and the modern, professional owner is the only solution to bring these things back to life. That’s why it’s endlessly annoying when the media portrays professional owners as evil when they are the only possible thing standing between parks like these being demolished or put back in service.

You saw the earlier statistic: only 10 out of 700 Maine mobile home parks have EVER been successfully purchased by the tenants over the past 40+ years. With that in mind, this well-meaning concept has zero chance of ever being of any practical use. However, if they repealed the “sell to tenants” provision – and simply made the tax credit contingent on the park not being redeveloped – you might really have something.

When they build a 253-unit high-rise apartment complex next to a 50-space mobile home park, it’s pretty clear that the park is going to be redeveloped in the near future. The fact that nobody will tell these tenants the truth is all part of our new “politically correct” America, but common sense should already communicate that the park is doomed. While there is typically a lot rent that could economically stave off redevelopment, in this case there’s no way that 50 mobile home park lots can match the economic firepower of 250+ new apartment units at $2,000 per month, regardless of how high the lot rent is.

At the same time, people have to accept that redevelopment is a positive thing. It’s called progress. In the pyramid of real estate, mobile home parks are near the bottom of land use, and high-rise buildings are near the top. It’s a natural progression. It’s not evil or wrong.

"We got 60 days to raise $4 million," Cook said. "That’s where we’re at right now."

No, the problem is WAY bigger than that. You see, at $18 million that’s over $200,000 per lot. There’s no way on earth that you are going to find a non-profit to personally guarantee a loan that big. Sure, the city tossed in $50,000 to give the optics that they are really devoted to this concept (why are the folks that pay the taxes not in an uproar over this use of their money?), but even the bureaucrats that threw that money in the trash know that there’s not one chance in a billion that the residents are going to raise $4 million cash or obtain the financing.

What a monumental waste of time.

Of course, it’s only logical that the residents are going to come up with $28 million to buy their park, right? Besides the basic issues of how they’re going to get a hand-out for an $8 million downpayment and a non-profit personal guarantee on the mortgage of around $20 million comes this very alarming statistic:

Maine has more than 700 manufactured and mobile home parks. Ten are resident-owned communities.

Are you serious? I hate to rain on the tenant-owned-community concept, but that’s a ridiculously small rate of success. Assuming that the resident-owned concept has been around since the 1980s (which it has) and there are only 10 tenant-owned parks in the state of Maine, that’s an average of less than one deal per half-decade. AND THAT WAS BACK WHEN PARKS WERE MUCH LESS EXPENSIVE.

These concepts simply don’t work – and everyone in the industry knows this. I wish the bureaucrats that pass these stupid laws would research the actual facts. It would blow their minds.

This sale is happening during a time when mobile home parks are rapidly disappearing all over the country. Statistics about this are surprisingly difficult to find, but the Associated Press reported on the trend last year, as did Forbes and Time. This is important because mobile and manufactured homes are the single largest source of non-subsidized, affordable housing in the United States, according to the U.S. Office of Housing and Urban Development. And once they’re gone, the parks are not being replaced. That is certainly the case in the Charlottesville area. Carlton Mobile Home Park is one of just two remaining parks in the city, and one of six if you include parks in Albemarle County. In the last 15 years or so, the  area lost at least four parks.

We’re on a roll this week. Another fair and balanced article. Looks like journalists are starting to realize that the big stories to cover are parks being torn down because rents can’t support keeping them as mobile home properties, not “evil landlords who raise rents”. Maybe media groups are finally taking back the reins from young, woke writers after the terrible Biden debate performance and the inevitable end to the age of stupidity.

When Sylvester moved to the park, the rent for each lot was $359 per month, which she said was affordable as someone living with a disability and working at Stop & Shop part-time. Months later, the rent control board approved an increase to $410, and Leisure Woods management is now seeking to raise it to $588. “I haven’t even lived there two years, and if you take $588 out of my income that leaves me with nothing to survive on,” Sylvester said. “I would be forced to sell.”

Back to the old worn-out woke narrative that a mobile home park lot rent of $588 is too high in a market in which the single-family home is $265,000 and an apartment is $1,420 per month. Only a total fool would believe that narrative. But what’s more troubling is the writer’s contention that it is somehow the park owner’s responsibility to provide housing to people who claim to only make $600 per month. The writer forgets that it’s the government’s responsibility to house people who can’t survive in the real world under the Section 8 program (which has about a 5-year waiting list), not the park owner. In looking at the profit-and-loss numbers provided to the rent control board, I have no idea why this owner has not demolished this park already and redeveloped it into a more profitable use. They better not push the owner into that position – it’s a miracle that he’s willing to even accept $588 per month to begin with.

Finally, a fair and balanced article about the mobile home park industry! It talks about the stigma against “trailer parks” and then goes over the benefits with profound accuracy. It notes that the buying decision was not made because mobile homes are “mobile” (which is why this person also bought an RV for travel) but because they are cheap and offer more financial freedom. She also likes the “support network” which her neighbors provide (and which Time magazine raved about a few years ago).

It appears there are still real journalists out there!

Madison Township trustees have denied a rezoning request that would have allowed for the expansion of a manufactured-home park in the community. Trustees, during a recent meeting, voted unanimously to reject a zoning-amendment application submitted by James Place Properties Inc.

I find it endlessly amusing that people inside our industry (and on Biden’s soon-to-be-unemployed advisory team) claim that there’s a new era of mobile home park construction right around the corner when the truth is that absolutely no city or town in the U.S. is ever going to allow new park construction under local zoning laws.

I will note that another week has passed without a single person responding to my simple challenge to send me the information on any new parks that have been actually built and opened in the U.S. (not just talked about, applied for, or investor funds raised). The “new park narrative” is blatantly false and anyone who has ever actually applied for a permit to build a new mobile home park already knows that.

More common sense takes hold! This is the way to preserve affordable housing: by helping park owners and mobile home residents make upgrades to homes, particularly in areas with severe weather risk.

I wish more counties would take this approach with their infrastructure funds.

Another positive article about a city government realizing the importance of preserving mobile home parks.

This can’t be happening! Where did all the wokesters go?

Kerr Properties intends to rezone the site to industrial use.The letter points out that the company contacted 20 nonprofit agencies seeking assistance in the relocation and support tenants.“The response to our appeal for help from these agencies was extremely disappointing with only one group responding. Fortunately, PIERS stepped up and offered assistance to all those willing, and in coordination with our relocation coordinator successfully relocated all tenants.”

Another article about a mobile home park being torn down to build a more profitable industrial use. What’s interesting about this is that 19 out of 20 non-profits rebuffed any assistance to the residents in relocation efforts. This further supports my theory that most non-profits only interested in fundraising or publicity – not because they actually care about people in need.

Tester’s Manufactured Housing Community Sustainability Act would create a 75% federal tax credit offsetting capital gains if the property is sold to a resident-owned cooperative or nonprofit. This economic incentive would help preserve more manufactured housing communities and keep more families in their homes, while protecting the long-term viability of this important piece the affordable housing market.

Well, this is sort of on the right track. The future success of keeping mobile home parks from being redeveloped could be achieved with aggressive tax abatement. I wrote an article years ago when a Congressman proposed that there be no capital gains tax charged when a mobile home park is sold without being redeveloped. Of course, that concept didn’t go anywhere. But tying that idea to selling to the residents is a death sentence for this vision to have any real impact, as the odds of the tenants successfully buying any park is about .00000000001%. If you remove that roadblock, you might really have something of value. Hopefully, Tester will soon realize this to be the case.

“President Biden and I believe that every American deserves affordable housing, so they have a roof over their head and a place to call home,” said Vice President Harris. “That is why we have a plan to build millions of new units of affordable housing in communities all across our nation, which will bring down the cost of housing for renters and help more Americans buy a home. Today, I am proud to announce that we are taking a critical step forward by investing $85 million to help more than 20 communities throughout our country remove barriers to building more affordable housing.”

That sounds like a speech Huey Long would make in the 1930s to energize poor, stupid voters by claiming he would “put a chicken in every pot”. After last week’s debate and Supreme Court ruling, we all know that absolutely nothing will come of this and it’s just an attempt to appear relevant and distract voters from bigger issues like Biden’s disastrous debate performance.

As for this one particular program, the total value of all U.S. single-family homes is around $35 trillion. So exactly what will be accomplished with $85 million? Nothing more than a few non-profits engaging in meaningless studies. This is as stupid as me giving a televised speech in which I proudly announce that I will be investing $5 in space colonization, to move the needle on building a vast colony in the sky. But at least I won’t require a teleprompter.

Have you ever been to Delaware? Nobody wants to live there, nobody wants to visit there, and nobody wants to invest there. Crazy new laws such as these only further make the state dead in the water as far as any revitalization efforts are concerned.

HARNETT COUNTY – Harnett County commissioners denied a rezoning request from a couple who said they wanted to bring affordable housing to seniors in the Chalybeate Springs area at its meeting June 17. The final decision came at the end of a heated, gavel-banging debate. 

Yet another example that there is absolutely no chance on earth that there will be any meaningful new construction of mobile home parks in the U.S. in the years ahead. I will note that not one person responded to my offer last week to educate me on all these supposed new mobile home parks that have somehow been built nationwide but that I’ve never actually seen any evidence of. If you do ever come upon one of these Big Foot sightings please send the new park’s name and address to me. I’ll keep everyone posted on the results.

I don’t know any of the facts in this case, but this appears to be simply one side of the story. The facts of this narrative have nothing to do with the fairy tale of the “big, evil landlord” but simply revolve around the lease term and quasi-rent control rules of Massachusetts. Those black-and-white items can be resolved in court. But clearly this article is written by a writer with “landlord derangement syndrome” and there is much included that not only has no bearing on the story but is clearly just an attempt to manipulate the reader, like swinging a gold pocket watch in a 1940s hypnotism movie.

Mullin said Sharpe could sell the property and the development would have to move to another location since it's no longer in escrow, but he would like to see the development move forward in the same location. Sharpe didn't respond to a request for comment.

Gee, what a shocker – another new mobile home park development that never got off the launch pad. When will people learn that this stuff is just never going to happen? To build a new park you have to go so far out in the middle of nowhere to get the permit that no bank will finance the deal, and there’s nobody who wants to live there even if you built it.

Clearly, this park is going to be torn down, as the purchase price of $7 million equates to over $100,000 per lot for this dilapidated property. And the writer is correct that mobile home parks are being redeveloped at the fastest pace in American history:

Its sale is part of a national trend: Mobile home parks are disappearing across the country — fast. Statistics on this are difficult to find, but there are reports around the country of parks being sold, demolished and redeveloped. The Associated Press reported on the trend last year, as did Forbes Magazine and Time Magazine. As housing prices and land values rise dramatically, developers are buying up the parks, forcing residents out, tearing down the trailers, and building more traditional housing in their place.

But what I find offensive about this writer’s spin on the story is this quote:

When a mobile home park is sold, residents are usually displaced one way or another, say attorneys familiar with Virginia’s Mobile Home Lot Rental Act who spoke with Charlottesville Tomorrow. Either the new owner raises the lot rent beyond what the current resident can afford, or decides to use the land for something else.

Clearly, the only way that a park like this would NOT be torn down is for the lot rent to go up to a level that the park is actually worth over $100,000 per space based on the true operating net income. If residents don’t want to pay market levels then, yes, the park gets demolished. It’s not rocket science. So maybe the solution is for lot rents to go up to levels high enough to make sense for some mobile home parks to stay in that line of business. It’s a total lie to claim that park buyers lose all of their tenants (more like between zero and 1%) when rents go up, and equally false to imply that the owner actually intends to displace them in the first place. But, yes, there are marginal tenants in every property in America that may not be equipped to handle modern housing costs (and not just in mobile home parks) and they need to swiftly be placed into Section 8. To claim that higher rents are inherently bad is just plain stupid, as that lame theory serves as the trigger for redevelopment and displacement of all of the residents as opposed to just a few, if any.

I know nothing about this case and the details involved, but the legal issues listed can easily be resolved in court and will probably do nothing more than delay the rent increase for a few months.

But what I take offense to is this quote:

“The crux of our complaint is that this out-of-state company has come into our community and bought up a number of mobile home parks in the area …”

Week after week we get these woke journalists trying to brainwash America that somehow out-of-state landlords are inherently evil as opposed to in-state owners which are better. Why? Of course, the answer it they’re not any different, but it’s all part of some stupid wokester narrative that big private equity groups are going to rule and destroy the earth and, since they are all located in New York, any park that’s not in the “Big Apple” can be slapped with this type of label to somehow hurt private equity group morale and make them cry. It’s about as convincing an effort as those who are now trying to brainwash America that Joe Biden did fine in last week’s debate. It’s just not going to work. 

What started as a win for residents of Little Woods Mobile Villa last week – as an arbitrator struck down a massive rent increase put forth by the park owners – quickly soured when those same park owners issued yet another proposed rent increase and formally notified the city of their intention to permanently close the park. “We will continue to arbitrate annually until we are either able to achieve long-term viability or are forced to cease operations,” said Nick Ubaldi, whose family owns the park and who oversees its day-to-day management, in an email to reporters.

For how many years have I been explaining LOW RENTS = REDEVELOPMENT. It’s called common sense. The tenants may have won the battle but they lost the war. Instead, their focus should have been to ask “we know you need to make a good return on your investment or you’ll redevelop this place, so how much does our rent need to be?” and then happily paid it on the first of each month. That would have saved the day.

What’s equally sad in these articles is that the residents are often mislead into these losing positions by non-profits suggesting that the tenants have legal rights which they simply don’t. They effectively empower these people to become homeless, then move on to lunch at the country club.

The City of Moab bought the mobile home park in 2018, with the intent of turning it into an affordable housing development. Six years later, there’s no development and no plan in sight.

You have to love the hypocrisy of the media, which has no problem when a city shuts a park down but, when a private sector landlord does the same thing, they demand capital punishment.