Manufactured houses, widely known as mobile homes, are one of the most affordable options for homeownership in the United States, but they typically come with a big risk: You own the house; you don’t own the lot it sits on.
That has made mobile home parks ripe targets for investors, who buy communities and then increase the lot rents to boost profits. It’s a massive industry: manufactured homes account for approximately one in 10 new single-family homes in the United States, according to a 2023 report by the Manufactured Housing Institute trade organization.
To curb investor involvement, the state of Maine ushered in a new law last year...
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Manufactured houses, widely known as mobile homes, are one of the most affordable options for homeownership in the United States, but they typically come with a big risk: You own the house; you don’t own the lot it sits on.
That has made mobile home parks ripe targets for investors, who buy communities and then increase the lot rents to boost profits. It’s a massive industry: manufactured homes account for approximately one in 10 new single-family homes in the United States, according to a 2023 report by the Manufactured Housing Institute trade organization.
To curb investor involvement, the state of Maine ushered in a new law last year that requires mobile home park owners to give advance notice to residents if they intend to sell, giving the community members a chance to buy it themselves.
Let’s break this typical “free rent movement” narrative into the three positions presented.
Paragraph 1 says that mobile homes have one HUGE risk: the tenant doesn’t own the land. Well, that’s why mobile homes are so inexpensive to begin with. The average detached dwelling in the U.S. is $400,000 and the average mobile home is probably $10,000. By not owning the land under the home it becomes actually affordable for the bottom third of Americans that can’t afford $400,000. It’s not a risk or a problem – THAT’S WHAT CREATES THE OPPORTUNITY TO LIVE IN A DETACHED DWELLING FOR AROUND $500 PER MONTH IN LOT RENT. They DO sell mobile homes that come with the land. They are called land/home deals. They cost around $150,000 and up.
Paragraph 2 says that “private equity groups increase lot rents to boost profits”. All businesses – large and small – raise prices, when possible, to maximize profits. It’s called the free market system. It’s part of our economic structure called “capitalism”. The issue is not that private equity groups want to increase lot rents – everybody does – but what’s important to note is that this is possible because mobile home park lot rents are ridiculously low. Owners of office buildings and shopping malls would also like to raise rents but there’s no demand so they can’t do it. And so would airlines, car dealers and every other business on earth. But mobile home parks could double existing lot rents and still be the cheapest housing on earth. And stay completely full. And that’s why private equity groups are buying mobile home parks, because they’re a bargain. That’s also why investors bought Apple when it was a dollar a share and gold at $300 an ounce.
Paragraph 3 says that Maine’s new law gives residents a chance to buy the park. But the problem is that residents have no money, so that’s not who’s buying the park. Instead, this concept requires a non-profit to provide the down payment and another non-profit to personally guaranty the loan. And there are not too many non-profits wanting to do that which, as a result, makes the successful purchase of the park by the residents about as rare as a documented sighting of Big Foot.