Big-pocketed investors have built a thick portfolio of Michigan mobile home parks – with one in 10 now owned by private equity firms.
In recent years, mobile home parks across the country have been purchased by investors at a rapid pace. But a new tracker released this week by the Private Equity Stakeholder Project, a watchdog group, reveals the full scope of private equity’s stake in manufactured housing.
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Baltimore Terrace Mobile Home Park in Hastings on Monday, April 17, 2023. After the mobile home park was purchased by hedge fund-linked investment firm, some residents say the water quality is poor and repairs are being ignored while rent prices have increased.
There’s probably no bigger falsehood forwarded by woke media outlets than the narrative that private equity groups do a worse job of maintaining their properties than mom and pop owners ever did. When a new buyer closes on a deal, they can’t make immediate enhancements without following a defined timeline that includes statues on enactment of rules enforcement, lining up contractors who are often months out on availability, and having to contend with weather issues (for example, you can’t pave roads in the winter, etc.). That means that any writer could drive through virtually any newly acquired mobile home park a few days after closing and declare “look, it’s just as bad as it was before” since there’s no possibility that anything has yet been accomplished. Of course, if they visited a few months later they would be blown away by the extensive improvements and the happy tenants who now love where they live. This reality is further backstopped by institutional lenders that produce property condition reports as part of loans and require improvements to be made within certain time boundaries.
Therefore, the truth – as any person with common sense would already grasp – is that private equity groups inject millions of dollars into infrastructure and home improvements in American mobile home parks on a regular basis (exactly what mom and pop owners cannot afford to do) and, without these groups entering the industry, the overall quality of parks would be substantially lower with a larger number of parks having been torn down and redeveloped.
While it is true that private equity group buyers often raise rents, that’s also true of any new buyer – large or small – and that includes even when the residents buy the parks themselves under a “resident-owned community” structure. Higher rents are necessitated by servicing large, new loans, fixing up infrastructure, installing professional management, and covering ever-escalating operating costs thanks to the highest inflation in 40 years. With the average U.S. mobile home park lot rent standing at around $300 per month vs. $2,000 per month for apartments, it’s baffling how park owners are endlessly criticized for rent increases which normally hover around $50 per year. The last time I looked, that’s how much more I’m paying for a single gas tank fill-up under the Biden administration.
Did you notice the date on the caption on this article’s photo? April 17, 2023. That’s over a year ago. Why did the writer not use a current photo? Probably because the improvements have now been made and the park looks a thousand times nicer after the private equity group finished their property improvements! You gotta love the media’s manipulation of the facts.