Mobile Home Park News Briefing

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.

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

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

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.

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.

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.

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.

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

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.

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.

“Since the lots in question are designated and used for RVs, they do not meet the definition of mobile home lots,” Ubaldi told San José Spotlight. “City staff appear to not understand their own (policy) and state law. We are operating in full compliance with the (policy). There have been no illegal rent increases.”

Sounds correct to me. And then the city’s response shows they knew better:

“I thought we were trying to keep people from becoming homeless and unhoused and parking their RVs on the street, and I would think the city would want to get very much deeply involved in this — because that’s what’s going to happen to these people,” he said Thursday.

Sounds like the old Biden playbook: knowingly violate the law because you know it takes time for the court to react. The city’s goal had nothing to do with the actual law – simply deranged bureaucrats trying to pervert the law for their own amusement.

Many can no longer afford to live there, but leaving would mean abandoning the homes they own, and there is nowhere cheaper to go. 

I wrote an article recently regarding the McChicken sandwich at McDonalds, which has gone up 300% within two years, yet still sells just as well as when it was a dollar. Why? Because even at $3 it’s about the cheapest thing on the menu. In this case, you have mobile home park residents who say “I hate my landlord for giving me the cheapest place to live in my city”. It makes no sense. Shouldn’t the title to this article be “thank heavens they don’t redevelop this mobile home park”?

Are the folks that write these articles aware that housing is only the fifth highest monthly cost for the average American family? The four ahead of housing are healthcare, childcare, transportation and taxes. Why are there no articles addressing how punishing those costs are and how much they’ve gone up under the Biden regime? Once you fix those four, then you can talk about housing, in my opinion.

“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.

“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.

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.

"We do not want to lose anyone at all in this park. And the only way we can do that is to raise another million-and-a-half," said Cook. There's been little money to be found among agencies and non-profits that work to create housing or prevent homelessness.

Here’s a reality check: raising $1.5 million by passing the hat around the mobile home park is not going to work. This is what I’ve been writing about for years: RESIDENTS DON’T BUY PARKS: NON-PROFITS DO. Finding non-profits that want to chip in cold hard cash is tough, if not impossible. That’s why virtually none of these tenant park purchases ever pan out.

Hopefully people in Maine are not so stupid as to forget that if you put an unfair cap on mobile home park lot rents the owners will simply tear them down and build apartments (see the Sweetwater article at the top of this column). You can’t get around the free market system, and price controls always result in disastrous consequences.

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.

Other than L.L. Bean I’m not that familiar with what Maine provides for America other than a whole bunch of woke nonsense. This new concept of mobile home park specific rent control is so dumb that even an academic from Duke University sees the problem:

Charles Becker, an economist at Duke University who studies the mobile home market, said that while keeping affordable housing affordable is important, he agrees with Rollain that rent control is not the best way to contain those costs. I’m uneasy about outright rent control because it essentially transfers ownership rights fairly arbitrarily,” Becker said. “If it were me, I would build new communities with city [or] county money to let market forces keep costs down.”

So what’s next? I’m sure this concept will be tested in the courts and, if rent control prevails, the park will be torn down and redeveloped into a better use that has no rent control. Of course, it will first be offered to the residents who will fail to raise the money needed to buy it (as already happened before) and will then be homeless. The city gets its secret dream of no mobile home parks and, at the same the time, can pretend that they did it all to save the residents from “evil” landlords.

This story is wrong on so many levels.

FEMA is demanding that all park residents who were flooded in Hurricane Helene raise their mobile homes two feet above the base floodplain elevation (BFE) to get their permits to move back in after Hurricane Helene wrecked their homes. Now the city has agreed to give these victims temporary permits for one year so they can make repairs and move back in while they save up enough to raise the mobile homes up in the air, which they clearly cannot afford to ever do. This is basically forcing them to invest their life savings into short-term repairs only to lose their homes a year from now when they can’t afford to raise them up in the air at a cost of thousands of dollars. In the hard-money lending business that is called “loan to own” in which the lender hopes for the borrower to default so they can take the property away. This proposal is equally sinister.

People complain that mobile home park owners are cruel to raise the rent $10 per month but FEMA and city hall, in this case, are literally destroying these people’s lives – and gutting their savings – with impossible demands that are clearly never going to be successfully accomplished.

Residents find red tags on their doors before inspections even take place

Yup, it’s pretty clear what’s going on. Cities are loving FEMA’s stance that opens the door for them to get rid of all those hated mobile home park residents. City managers across America are probably on Google right now trying to figure out how much dry ice you have to drop into clouds from chartered airplanes to trigger major weather events.

Why shouldn’t California follow Maine’s example? It’s a sure-fire way to get mobile home parks torn down while giving the appearance that you are really concerned about the plight of the trailer park tenants. What a great con.

Now, following major damage, FEMA and local fire agency leaders are saying most of the homes do not meet health and safety codes. The homes must now be re-assessed to see if major construction can be done – like raising the base elevation of the home 12 feet.

See a trend here? City fathers are using FEMA as the tool to get their mobile home parks torn down and the residents out of their city limits. They must be celebrating this once-in-a-lifetime opportunity to get rid of lower income folks from within their city boundaries.

The tenants want to buy their mobile home park to fend off the evil landlord that might buy it. But there’s a big problem:

The homeowner leaders of the newly formed Milner Park Community Cooperative are in active negotiations with the out-of-state investor/owner trying to purchase the Milner Mobile Home Park property. But negotiations currently find the two sides more than $2 million apart.

So the residents are asking strangers to send in $2 million to bridge the gap:

For anyone who might like to help the homeowners purchase the land under their homes, tax-deductible donations can be made through nonprofit Yampa Valley Community Foundation.

Here’s the problem: it’s not gonna happen. Not ever. Not even close.

It might be time for the “Free Rent Movement” folks to acknowledge that their “tenant-owned” fantasy just doesn’t work in real life.

In real estate, cash is king. If you have none, then don’t bother to show up to play. End of story. Standing around with a can on the street corner might score you $10 from strangers, but not $2 million.

FLOWER POWER SCORE: 10