Mobile Home Park News Briefing

Gee whiz – not another article on a mobile home park being shut down for redevelopment? I never saw that one coming …

“What we’re finding is that a lot of the park owners especially the newer park owners, may be large corporations or hedge funds. Do not become part of the associations, and in some cases, some of them are the bad actors,” said Paula Stark, State Representative for District 47.

I’m afraid that Paula has no idea what she’s talking about. I have been in the industry for 30 years and, without exception, the parks in the worst condition are those owned by moms and pops and NOT institutional owners. Paula may be unaware that big owners typically use sophisticated lenders that require property condition reports that stipulate minimum standards. Moms and pops have zero debt, zero loans, and zero supervision. It’s the institutional folks that are actually bringing these old parks back to life, not vice-versa.

The good news, of course, is that Paula’s bill will die in committee since she apparently also must think that Florida is located in California.

It’s not rocket science: low rents = redevelopment. The only way you slow the accelerating pace of these articles about parks being closed for redevelopment is for lot rents to increase enough that keeping the park in place is the most profitable use for the land. How much does that mean lot rents must go up? Again, it’s not rocket science. Apartments rents average $2,000 per month and mobile home park lot rents in the U.S. average $300 per month. Would parks survive from the wrecking ball at $600 per month lot rents? Not sure, but you have much better odds. Otherwise, why would any park owner not just ultimately tear the park down and build apartments?

I know Mike Cerillo and he is a top-quality operator of mobile home parks. Look at the photos in the article of the clubhouse and the street scene. To claim that he has let this property go down in quality is utter nonsense. There are always two sides to every story, but this author only offers one – and one that I believe to be as accurate as claims that Kamala Harris is managing the border well.

I know nothing about this park or even Alaska. But I do know basic salesmanship and whoever thought that the best way to keep this park in operation was to sue the park owner apparently read one too many books from Barnes and Noble on win/lose negotiating and not enough books like Dale Carnegie’s “How to Win Friends and Influence People”. Not a great plan.

This article contains more B.S. than the livestock pavilion at the county fair. Let’s break it down into bite-sized pieces and get a handle on all the misinformation this article shoots about like a lawn sprinkler.

1. “Now what’s happening because of rent increases … is people have to make a choice between their medicines”.
   
   Look, this worn-out expression is used by virtually every woke writer in the media today. Yes, the rent has gone up significantly (since it started at $350 in a market where apartments are $2,000 per month) but the seniors in this article are mostly on Medicare which – even if they don’t have supplemental insurance – pays 75% of their drug costs and, if they can’t even afford the 25% co-pay, the government has hardship programs to handle 100%. If these were NON-seniors, without health insurance, then this over-used narrative might make more sense. And for that matter, why is the rent singled out as the only straw breaking the camel’s back? Couldn’t you say the same about gasoline, insurance, food – everything in the current era of rampant inflation?
   
   
2. “Now residents are paying more than three-quarters of fair market rent for a one-bedroom in Clark County — just for the land on which their homes sit. Some are also paying on the loans they took to buy their homes. Most residents say they’ve reached a breaking point.”
   
   Look, if you’re paying only ¾ of the 1-bedroom apartment rent, then clearly this is really, really cheap living compared to literally all other forms of housing in this city – and only made more so because these homes are all 2 and 3 bedrooms and not 1. As far as people still paying on the loans, I see not a single home in the photos that could be new enough to qualify. I’ll bet $10 that there’s not, in fact, a single person in this park with an existing mortgage as the U.S. average is 80% own free and clear and that’s with the inclusion of non-seniors who are more prone to buy new homes with big notes on them. So, yes, the lot rent is their actual only housing cost.
   
   
3. “The residents would have to double their rent to cover purchase of the park, O’Banion said.”
   
   That’s exactly the point. That’s why the new owner had to raise rents by so much. Real estate is expensive and mortgage payments are large, as well. This “resident owned community” nonsense never includes the reality that when the tenants buy the park they often raise the rents higher and faster than professional owners do. Just ask the residents 5 years after they buy them. Most miss the days when professionals owned them and kept the rent collected and the bills down. There are already cases of these “tenant owners” putting their parks back on the market because they’re hoping to lower the rent through better management.
4. Woodland East residents have a Jan. 24 deadline to make an offer — 70 days after they received notice of the landlord’s intent to sell. The window is also closing for other eligible organizations — including local governments, housing authorities, nonprofits and community land trusts — to purchase the park.
   
   Look, if I went to a park owner and said “I need 70 days to make an offer on your park” they’d say “you’re an idiot and don’t call me again”. Most park buyers make offers on the spot or within a few days. NOBODY gets 70 days in the real world. On top of that, there is virtually ZERO interest by groups to co-sign on trailer park mortgages so the tenants can run the things into the ground. Only a bureaucrat would think this is a workable plan and that these tenant “first option” concepts have a prayer of getting off the ground. It is literally just a complete waste of time and nothing but virtue signaling by those who pass them into law.

The residents are making the worst collective decision of their lives. They are hamming it up to the county officials, hoping to force the park owner to perhaps abate or lower rent and instead they are on the path to homelessness. When the bureaucrats say “the Yuma County Board of Supervisors is currently in the process of figuring out if they want to take receivership of the park but that would include calculating the cost of taking over the park and what the next steps could be” that translates to “thank you for giving us the opportunity to shut the park down and say it was your idea”.

It reminds me of the time I evicted a tenant and they told the judge (to try to get out of the eviction) “your honor I am very sickly and I almost passed out ten times driving over here” to which the judge said “well I have some bad news for you: not only am I granting the eviction for non-payment but I’m also instructing the bailiff to take your car keys and you’ll have to take a bus home and get your car later when you’re in a better condition to drive”.

Sometimes trying to manipulate the system has unintended consequences.

So here’s what the writer hides until the end of this article:

Tuesday evening, the Department of Commerce Division of Industrial Compliance shared the following statement:

The Ohio Department of Commerce Division of Industrial Compliance is aware of a water outage that allegedly occurred on Sunday from approximately noon to 6 p.m. Our investigation found that, as a result of the pump house’s door being left open or partially ajar, the extremely cold weather caused the pump and/or other components to freeze, which caused the stoppage. Water service resumed that same day (Sunday) and we have not received any additional complaints regarding that issue. We are aware that some residents may still be without water service due to frozen pipes; however, those issues would be the result of residents who did not take adequate steps to protect those lines from the cold temperatures. As far as we are aware, there are no remaining issues with the park’s water system.

Since the writer knew the entire story was a fraud invented by the residents, why did he still publish it? Gee, I can’t imagine

I don’t know the facts of the case but I’m betting that this park was on a “master-metered” gas system that has failed and there is probably no way of fixing it and turning it back on. They will probably have to convert to propane or all-electric. If that’s the case, it’s one more warning to park buyers about this type of gas system in which the park owner essentially acts as the gas company. I’ve written about this extensively as my very first park purchase 30 years ago lost its natural gas in the dead of winter and I had to convert all lots to propane. It was a nightmare.

I know nothing about this park but I do know that Kansas has below zero temperatures right now (the Chiefs game was 28 degrees below zero with wind chill on Saturday). At those temperatures you’re going to have a ton of water lines freeze. If this article was about an apartment complex it would never have made the paper but since it’s a trailer park the media loves to beat up on the owner as they have a perverse pleasure in holding park owners to a ridiculous standard that no other landlord has ever had to even remotely hit.

Yes, a ton of mobile home parks are going to be torn down in the years ahead. How can you save them? Raise rents aggressively to market levels so the land is worth more as a mobile home park than an apartment complex (which is what most are redeveloped into). Period.

Look, the owner for the past 70 years just died and the family wanted to sell the park to settle the estate. A regular person would have no idea that Maine’s bureaucrats were this stupid:

According to a law that went into effect in October, mobile home park owners are required to give 60 days' notice to both residents and MaineHousing via certified mail.  

So now the family will have to notify the tenants, waste 60 days while they do absolutely nothing, and then move on.

Why will nobody publish the actual numbers of how many park residents successfully act on these “first options”? I’m betting it’s something like .0000000000000001% -- and that’s being kind.

Want to lower your IQ in 10 seconds? Simple read the following:

As mobile home owners fight rising housing costs, some of them have hit upon a solution that also helps in the fight against climate change: banding together and buying the land underneath their homes. This model of collective ownership, also called resident-owned cooperatives or ROCs, is on the rise. The number of mobile homes attached to a  resident-owned cooperative grew from just over 200 in 2000 to more than 15,000 in 2019, according to a 2022 study from researchers at Berkeley, Cornell, and MIT. When residents own the land, they can move more quickly to upgrade infrastructure. That’s where climate change comes in. Renewables — especially solar —  work uniquely well with these types of places, according to Kevin Jones, director at the Institute for Energy and the Environment at the Vermont Law and Graduate School. 

So let me get this straight. Park residents are so rich that they are going to not only buy their park but then rip out all the infrastructure and replace it with “green” energy alternatives? Why stop there? Why not put in a giant greenhouse and grow all resident food needs? Why not put in a Tesla charging station at every parking pad? Seems like the author (who I hope is AI) just isn’t thinking big enough.

I didn’t realize that the biggest predator species in Colorado is apparently not mountain lions or bears but instead the dreaded “landlord” creature. I hear they live in the mountains and swoop down on the first of the month to get checks from their prey. They’ve tried to photograph them, but they are extremely elusive. 

“And in another example, in Jackson, Miss., a city pilot is trying to add more manufactured homes to vacant lots. And that really is aiming at buyers who have a pretty low budget - so less than $200,000. And that's just getting started there, but I think that shows a lot of promise”.

Only a journalist who lives in Manhattan would think that 1) a mobile home costs $200,000 and 2) that’s a low price.

I like this article because it’s honest. It does not sugar coat and the couple have a positive attitude and what they’re doing makes financial sense. It’s a shame that our industry does not seek this couple out and make them spokespeople for the new face of mobile home parks because many young people would identify with them. I may call them myself.

Funny that this would be the article following the park closure described above. Maybe common sense is not a part of the American way any longer, but if you harass owners about raising rents and making money they will simply shut down and find a better use for the land. Maybe nobody understands the drill, but here it goes again:

1. Mobile home parks typically have great locations, with major frontage, in attractive school districts.
   
   
2. Mobile home parks are the correct size for most pad users (2 to 10 acres) and therefore don’t need to be subdivided.
   
   
3. Cities will give park owners any zoning they want as long as it gets the mobile home park torn down.
   
   
4. The land under many parks has risen to a value level in which it is as, or more, valuable than the park itself.

Against that simple backdrop it is suicide for cities and residents to literally push owners into redevelopment at this point, which articles like this one – written by a woke author with zero business sense – clearly do. Is the media deliberately trying to eradicate U.S. affordable housing?

The title says it all. This is what happens when you don’t raise rents and, therefore, can’t make enough money to justify not developing into a different use. Basically, down goes the park and up goes the apartment complex or retail center.

And this is the future if residents and bureaucrats don’t accept the realities of life and economics.

This article was obviously written by AI but it does have some good points.

Can you spot a problem with the facts in this article:

The average sales price of a new mobile home in Idaho in 2022 was $168,500. That’s an 83% increase over the price in 2017, which was $92,300, the report said. The cost of a new mobile home is cheapest in Kansas, Ohio and Nebraska, where the average sales price in each in 2022 was around $101,000.

Then comes a clue:

Channel said one reason the average price of a mobile home is highest in Idaho is because residents are more willing to pay a premium for “higher-end” multi-section models, like a double-wide or a triple-wide, versus a typical single-wide, than people in other parts of the country. The U.S. Census Bureau’s Manufactured Housing Shipment Survey shows that in 2022 a majority of mobile homes shipped to Idaho were larger, more expensive models.

The bottom line is that many people in Idaho buy large, fancy mobile homes to put on their personal land and NOT into mobile home parks. If you take 50% off all of these prices, then you’re recalibrated back to singlewides that go into mobile home parks.

What this all boils down to is that the city is now saying that RVs can only be in the park for 6 months while people have been living there full-time for decades. Why the change in attitude by the city? You know the answer. It’s probably because kids are moving into those RVs with their parents and the city doesn’t want to pay the tuition (in fact, the article mentions the recent school crossing sign). So at a time when the affordable housing crisis in the U.S. is at its worse, here’s another government agency trying to basically shut a park down. In San Francisco they’re letting people live in tents on the city streets, but here we have a city that won’t let people live in RV park spaces at no danger to anyone and completely compliant with the precedent that’s been going on for decades.

Once again, there’s only word for this behavior: hypocrisy.

First of all, whenever I hear of “San Dimas” I think of the movie Bill & Ted’s Excellent Adventure (which is where the fictional movie is located). And in this case San Dimas is on its own excellent adventure in actually advancing a good idea that is becoming more popular with many states, counties and cities:

“Grants of up to $40,000 will allow San Dimas mobile homeowners to “make critical health and safety repairs, as well as make meaningful upgrades to their homes for energy-efficiency savings, refurbishments, restoration, and more,” according to a news release. “This initiative is expected to enhance the quality of life for residents and extend the lifespan of these affordable properties.”

This is the framework of true affordable housing progress in the U.S.

So a school district can buy a mobile home park and then shut it down without warning or compensation and not a word is said – while at the same time an “evil” private sector developer can do the exact same thing and be met with litigation, the city council trying to block all redevelopment options and the media in a frenzy of outcry and threats?

Can you say “hypocrisy” anyone?

See if you can make sense of this story.

I looked up the Woodlands park that the story references and found it to have 1,235 lots at about a $700 lot rent, which equates to a revenue of around $10,374,000 annually. Assuming the other park is just as large then total revenue is around $20 million annually. It’s just basic math.

So if that’s the case, then how could the two parks pay $83.8 million in property taxes annually against $20 million of total revenue?

I’m assuming that the writer made a typo or misinterpreted the actual information. If we were on a game show we’d guess that the $20 million revenue yields $14 million in net income which equates to around $200 million in valuation and, at a 3% property tax rate = $6 million in annual property tax.

Therefore, I’m betting the actual number is $8.38 million and NOT $83.8 million.

If I’m wrong on this, please educate me on how any of this is possible mathematically.

Articles like this should serve as a wake-up call to the MH manufacturing industry as you have 400 sq. ft. tiny homes beating out 1,000+ sq. ft. mobile homes for demand – even at $1,200 per month price points.  The industry must accept that it must have a terrible stigma problem when you can re-package a smaller version of the product in any wrapper other than “mobile home” and it sells ten times faster and at a higher price per square foot. The only way to get rid of the stigma – it appears to me – is to radically change the exterior of mobile homes and tack on a better name. Just as the optics of an elongated rectangle sitting on stilts is clearly not a crowd pleaser, even the name “mobile home” or “manufactured home” is a sales loser. “Tiny homes” came out of nowhere and, with the aid of a few HGTV shows, have already blown mobile homes out of the water with consumer preference. Surely, manufacturers must find this alarming.