Mobile Home Park News Briefing

Can we just be honest here? Having sold more than one mobile home park to the residents I can tell you that there is a reason why only 12 parks out of 900 in Colorado (yes, that’s only 0.013%) are resident-owned communities. I’ll lay it out in simple terms:

1. Most residents don’t want to own their own community. How do I know? Just go ask the tenants.
2. These type of transactions take at least two times longer normally that a regular sale and most sellers are not willing to wait around for it.
3. A huge number of these deals fall apart in the end so after wasting months of time the seller is left to start over again.
4. Non-profits are required to guarantee the loans, and most have zero interest in guaranteeing a “trailer park”.

But then there’s the reality of what happens after these incredibly rare and few deals actually close, namely:

1. Rents seem to go up just as fast or faster (the park we sold in Austin to the tenants had to raise rents faster than we ever did just to cover the bills because they had no idea how to manage a property).
2. Tenants are often miserable because their elected officers play favorites and there is no uniformity in rules enforcement, etc.
3. These properties often look terrible as without professional management nobody follows any codes at all.

I love the fact that the writer of this article used New Hampshire as the gold standard of how great the concept is … since New Hampshire has among the fewest mobile home parks in the U.S. That would be like me comparing the cost of snow skiing equipment in Hawaii.

Now I know that the folks that facilitate these transactions really work the media to make dumb articles like this possible, but those are the facts and no amount of B.S. can change them.

Clearly this writer has no idea how the real-world works:

“I think a lot of these improvements in that industry have gone unnoticed by local officials, planning administrators, those who write those ordinances and regulations. I think it may be time to take a fresh look at that”

No, it’s not the fresh look of mobile home parks that will open the floodgates to new construction. The reason virtually no city in the U.S. allows for the construction of new mobile home parks is simply because they cost the city a ton of money on school tuition and city services while bringing in only a fraction of their cost in property tax. Since almost all U.S. cities are having a cash-flow shortage it’s fully understandable why they view new mobile home parks as economic suicide.

Come on – do you really think a 400 sq. ft. home for $220,000 is a great deal? That’s $500 per square foot – roughly ten times more than a mobile home costs. Sticking a piece of LED lighting on a wall doesn’t really change that fact. If you have a budget of $220,000 – and this is the best idea you can come up with – you need to move to the Midwest.

Another article about a park being torn down for a more profitable use. Week after week I remind viewers that low rents = homelessness. Apparently not enough people read this.

A park owner got a giant offer of $50 million to demolish the mobile home park and put it to a more profitable use. They notified the residents, who now are trying to organize politically to somehow match the offer, naming their group “One Wake” (which maybe should have been “One Woke”?). Of course, this concept has a zero percent chance of ever happening as no non-profit is ever going to spend $250,000 per household to buy the park – and any sensible person would understand that.

These articles just keep getting ever more ridiculous. Here’s a case of a private property owner shutting down a park as the result of rent control, and the residents wanting them to prove how not raising rents is a hardship before they can tear the park down – as though the owner has any legal requirement to get their approval.

“It was a despondent sight last week as the residents of Youngstown Mobile Home Park gathered on the corner of North McDowell Boulevard, protest signs clutched in hand. A similar scene played out on Aug. 29 at Little Woods Mobile Villa on Lakeville Highway.

At both protests, there was an air of desperation — these aren’t people fighting for a principle, they are fighting for their homes.

The owner of the Youngstown Mobile Home Park called for its closure shortly after the city capped rent increases at mobile home parks to 4% of current rates, or by 70% of the Bay Area Consumer Price Index, whichever is less.

“Some people have ended up in the hospital because of all the fear and anxiety,” Mary Ruppenthal, a park resident since 1987, told the Argus-Courier. “We tried to allay their fears and calm them down, but none of us know for sure what's going to come of it all.”

I know that 70% of Millennials have said they would vote for a socialist candidate (that study came out during the Bernie Sanders campaign) but here’s a painful fact: property owners have the right to do whatever they want with their property. Really want to stop parks from being torn down? Then embrace much higher rents as that’s the only shot you have. Otherwise, there are few parks out there that might not be more profitable as apartment complexes which rent for an average of $2,000 per month when parks average $300. Rent control is a death sentence for mobile home parks, which have rents so low that they’re not sustainable. Any sensible person understands this.

Connect the dots from these passages:

It’s part of an ownership trend away from family-owned trailer parks (as they used to be called) — often built by farming and ranching families as a way to bring in additional income through rents and to help house workers for large public works projects in the mid- to late 20th century — and toward out-of-state real estate investment interests.

The move away from local ownership has brought new rules for many park tenants, such as limiting the number of sheds and other exterior structures they are allowed to have, ensuring fences are stained and in good repair, and getting rid of junk cars and recreational vehicles or finding another place to store them. The rules are meant to clean things up in terms of the parks’ appearance. But they can be onerous, not to mention expensive for people who are just scraping by

Having grown up and continuing to reside at the Cottonwood Springs Mobile Home Park, near Rifle, Muñoz said he’s used to rent increases, but usually no more than $10 or $15 a year. So, you go from paying maybe $410 to $425 in a year, where some of these corporate-owned parks are jumping from $400 to $500 or $600 in a single year,” he said. “And we don’t have any sort of legislation to prohibit that.”

So all this article is really about is that some tenants hate rent increases and rules enforcement. But how can you bring old parks back to life and make them nice without those two factors? The answer is: you can’t.

Those who want to live in filth and squalor because it’s cheap need to go to those type of properties. But the majority of tenants – 99% of them – want to live in a nice, updated property and pay higher rent for the right to do so. Don’t let this tiny minority of residents dictate and ruin the quality of life for the majority. It’s just plain stupid.

This is one of the dumbest articles of 2023 – on a number of levels:

Dumb #1:  mobile homes contain virtually no asbestos and everyone knows it. The article admits that the only possible areas of concern would be “window caulking, window glaze and roof paint” – which effectively equals zero. A regular stick-built house of the right vintage would have asbestos throughout, from the roof shingles to the insulation to the flooring.

Dumb #2:  the mobile homes in question were never proven to have any asbestos in any possible way.

Dumb #3:  the park owner was then fined for tearing the homes down without asbestos testing – even though they had no asbestos in all likelihood (and I’m betting the baseless testing costs more than the demolition).

Dumb #4:  this whole issue with asbestos has been blown completely out of context for decades. Everyone knows that. Asbestos litigation originated with workers who inhaled asbestos in factories 8 hours a day. At that level, you can potentially have health hazards. But how in the world can anyone have serious ramifications from the incredibly tiny amount of asbestos from supposed ‘window caulking” which they might be exposed to – assuming they were standing next to the home being demolished and deliberately breathing in every fume they could find? Here’s what I found on the internet regarding the phobia over asbestos:

The definitive article exposing fraud in the diagnosis of asbestosis was by Gitlin et al. of Johns Hopkins School of Medicine. In this study published in 2004 films read by plaintiffs’ radiologists were compared to the readings of the same films by independent radiologists. The plaintiffs’ radiologists read 95.9% of the films positive for abnormalities that were compensable for pulmonary asbestosis. The independent radiologists who were unaware of the readings by the plaintiffs’ radiologists read the same set of films as positive in only 4.5% of cases.1

A couple of examples of massive fraud perpetrated by doctors reading films for asbestosis attorneys highlight how expert witnesses can abuse the legal process and undermine the search for truth and justice. One doctor, Ray Harron, personally diagnosed 51,048 asbestos claims. He diagnosed a record number of 515 people in one day, which amounts to one diagnosis per minute. Another doctor, Ray Segarra, a pulmonologist diagnosed 29,000 claims of asbestosis. He estimates that he has made about $10 million doing this work. When questioned on National Public Radio about his readings of chest x-rays, Segarra replied, “I’m certainly not a schemer at all…but am I an opportunistic? I suppose I am. But everybody is.”

I rest my case.

This exchange between the owner and the residents explains the basic problem with these type of articles:

“We’ve been sitting waiting for over a year for them to do it because they evicted our neighbor over little things with his house and he was working on it too he was working on cleaning up his house and yard and everything and they just booted him,” said Kylee Koller, a resident in Prairie Acres Estates.

Erick Pickar, an attorney representing Prairie Acres Estates says management is willing to be accommodating to tenants who communicate with management. Pickar adds that evictions will always be their last course of action.

Tenants disagree, we spoke with one tenant who says they have been communicating with management and still feels there are no options but to comply or leave.

“I got that paper of fourteen things to do I looked over it I can’t afford to do the things that they want so we decided to just get an apartment cause I don’t really have lots of choices,” said Koller.

So who do you believe on this? I’m pretty sure the homes in question are in terrible condition and the owner is simply trying to make them do the basics of proper painting and skirting with a yard free of trash – not unreasonable requests. I bet it’s a really, really low bar. And, of course, the owner will lose thousands of dollars in evicting tenants in lost rent, legal cost, and re-filling the lot if it really comes to that. But at a certain point the owner simply has no choice if he is trying to bring the park back to life and attract new residents of a higher caliber. If this article included photos of the homes in question. I imagine there would be no doubt that I’m correct.

I think you’re going to see more of this type of action in the years ahead as people figure out that a modular home – properly designed – looks no different than a stick-built. It makes no sense that a homebuilder can’t get portions of the home made in a factory (roof trusses, for example) where they can be made to higher tolerances and lower cost. Once that breaks loose then all of the mobile home manufacturing capacity will be changed over to modular components and the factories will go back to three shifts again. It’s just a matter of time.

Look at the photo and tell me that you would honestly not freak out if this went in next to your neighborhood? Of course you would. Why would bureaucrats and non-profits be shocked when neighborhoods push back against this type of development? This doesn’t even look good in the photo, which no doubt was staged by a PR firm to be at the most attractive angle.

Another park re-development story. The bottom line is that only higher lot rents save parks from the wrecking ball.

Maybe they should change the signs to read “Welcome to Austin where the homeowners are terrified” – because they should be. If you can now place an RV or tiny home on basically any residential lot then everybody in Austin is going to see a huge decline in property values. Imagine the $1 million McMansion with an old $500 travel trailer next door (including two non-running cars and three hound dogs). Another Texas city (Houston) learned the hard way that this is just plain idiocy.

You can’t even apparently redevelop a mobile home park without the neighboring residents complaining. The 5.5 acre tract is being converted from a mobile home park to a 155 unit apartment complex. The parcel is fenced off with “under construction” signs all around it. And yet the neighbors complain to the media of what an eyesore it still is. Is there anything more hated by the average American than a mobile home park? Doubtful.

Wow, an article that is actually accurate! Finally!

Governor Kathy Hochul and a bunch of other New York bureaucrats spent $9 million to buy and renovate a mobile home park that currently serves around 100 families. That’s around $100,000 per household spent. I looked up Realtor.com and found that there are pretty nice houses for sale in Trumansburg, NY for about $150,000. Kathy could have given each household $100,000 in cash and then co-signed a $50,000 mortgage and these folks could have elevated their standard of living 1,000% at no greater cost to taxpayers. Once again, bad decision making with the only goal of virtue signalling.

41 spaces on 1.65 acres might just set a new density world record for a mobile home park. And the seller got over $100,000 per lot for this property? Wow, I don’t get California investing at all.

A non-profit buys a 50-space mobile home park for a total package price of around $6 million (original price plus improvements) and saves the residents from the evil park owner and they live forever in a land of unicorns and pixie dust. Sheer genius, right? Well, they could just have given each resident $120,000 cash to go buy a nicer stick-built dwelling with zero lot rent (the lot rent is $483 per month). I can’t believe that I’m apparently the only one that sees these type of virtue signaling events make no economic sense. Either the folks who fund these non-profits have poor math skills or have never looked at Realtor.com.

So the non-profit spent $7 million cash for two mobile home parks with the intention of using the cash flow to buy more parks. Knowing how the world works, I’m assuming the non-profit bought these for a 5% cap rate and the two properties have an EBITDA of maybe $350,000 per year. That’s if they collected the rent and knew how to run a park, which they don’t. So the EBITDA may be more like $175,000 per year. And that means they will be able to buy a new park about every 20 years or so. Not exactly the potent force in housing they are claiming. Seen it all before.

I know nothing about the tenant, the metering system, or the billing methodology. But can a tenant use $1,000 per month in water? Absolutely. If you have two bathrooms and both toilet flappers are broken you could accomplish this easily. Or if you fill up a commercial water tank on a trailer all night several times a week (a common tool if you are a landscaper, paver or mobile car wash) then you could easily exceed $1,000. There are two sides to every story and you are only hearing one so far.

Bestplaces.net tells me that Louisa County, Virginia has a median home price of $299,700 and a three-bedroom apartment rent of $1,440 per month. So here’s what’s maddening about this article:

“In December, Six-0-Five’s management tried to raise lot rents by more than 40%. The increase would have meant Felipe’s monthly rent payment increased from $445 to $625.”

So the rent is going up $180 per month to $625 and somehow that’s going to render these residents homeless? At $625 that’s less than half of apartment rents.

I would contend that anyone who cannot afford $625 per month needs to immediately move out of Louisa County and move to someplace less expensive. There are many counties in the Midwest where housing costs are half that amount. But the era of mobile home park owners subsidizing residents (which is what’s happening when the owner does not charge market rents) is ending. It reminds me of the current homeowner insurance issues in Florida. If you can’t afford insanely high insurance on your house, you need to move to a place you can afford – but the insurance companies are no longer going to subsidize you living on the beach.

Look, I know the media would like to convince us otherwise, but America is still a free country and this property owner can certainly tear the park down and redevelop it if they want to. It’s called basic American property law. The residents can protest all they like, but at the end of the day a mobile home park is a business and if the land is worth more in a different use then it’s going to be redeveloped. The property owner is not bluffing and threatening – just telling the truth. The media, in this case, is giving false hope.

There is no evil agenda going on here. The statement from the resident:

"When we realized we had a court date it was already too late, and they sent us an eviction notice, I think they want me to leave because I didn't remove the fence, they said my curtains are ugly and they told me to clean outside because it was messy," said Hernandez.

And now the statement from the park owner:

"Our priority at Wikiup is to provide a safe, well-maintained, and affordable community for our residents. We work with residents when there are violations to the rules and regulations of the community that present health and safety concerns for them and other residents.  If after repeated requests and notifications, residents fail to address those violations, for the sake of all residents, and as required under Colorado law, management, as a last resort, must take necessary legal steps to ensure compliance."

The bottom line is that the resident broke the rules, refused to fix the issues even after notification, and then the park owner gave up and evicted them for the good of the entire community at large.

It’s important to remember here that evicting any resident costs the park owner thousands of dollars: 1) legal cost 2) cessation of lot rent 3) demolition of the home. It is very rare for a park owner to evict for rules violations unless it’s a very serious case. There are two sides to every story and the writer of this article gave 99% of the benefit of the doubt to the resident and 1% to the park owner – and that’s clearly unfair.

Basically just more poor journalism that is simply geared to pander to their base at the exclusion of fairness.

I’m not sure what to think about this new concept in which the non-profit owns the housing unit and the “homeowner” can’t sell it except at the price the non-profit demands to someone the non-profit chooses. Isn’t that really just a rental agreement disguised as a mortgage? If you take the ability to create wealth out of home ownership then you’re really ruining that person’s future well-being, right? One more case of groups that think they need to control lives because they believe that humans are naturally stupid.

Pretty crazy when solar panels are deemed to be uglier than a mobile home park.