Rents are up as big pockets investors buy mobile home parks

Lockport, New York – For as long as anyone remembers, rent increases rarely occur at Ridgeview Homes, a family-owned mobile home park in upstate New York.

That changed in 2018 when business owners took over the 65-year-old park amid farmland and down the road from a fast-food and grocery store 30 miles northeast of Buffalo.

The population, about half of whom is elderly or disabled with a fixed income, bears the first two increases. They hoped the latest owner, Cook Properties, would treat the bourbon-colored drinking water, sewage spurting into their bathtubs and potholed roads.

When that didn’t happen and they imposed a new lease with a 6% increase this year, they formed an association. About half of residents launched a rent strike in May, prompting Cook Properties to send out about 30 notices to evict.

“All they care about is a rent increase because they only care about money,” said Jeremy Ward, 49, who makes just over $1,000 a month in disability payments after his legs were nerve-damaged in a car accident.

He was recently fined $10 for using a leaf blower. He said, “I am disabled.” “You guys are not doing your job and I’m getting caught?”

The plight of Ridgeview residents is spreading across the country as institutional investors, led by private equity firms and REITs, sometimes funded by pension funds, step in to purchase mobile home parks. Critics claim that mortgage giants Fannie Mae and Freddie Mac are fueling the problem by backing a growing number of investor loans.

The purchases put residents in a bind, because most mobile homes – despite the name – cannot be moved easily or cheaply. Landlords are either forced to accept unsustainable increases in rent, spend thousands of dollars to move their homes, or give up and lose tens of thousands of dollars they invested.

These industries, including the mobile home garden industry, continue to promote these gardens, these mobile homes, as affordable housing. “But it’s not affordable,” said Benjamin Bellos, an assistant attorney general for Iowa, who said complaints have increased “100 times” since out-of-state investors began buying parks a few years ago.

“You put people in a trap and a trap, where they don’t have the ability to defend themselves,” he added.

Driven by some of the strongest returns in real estate, investors have shaken up a once-dormant sector, which is home to more than 22 million mostly low-income Americans in 43,000 communities. Gardens are vigorously promoted by many as guaranteeing a steady return – by increasing rent frequently.

There’s also a growing industry, with guidebooks, webinars and even a mobile home university, that offers tips to attract small investors.

“I went from an environment where a local owner or manager was taking care of things they needed to fix, to where there were people who were looking at a cost-benefit analysis of how to get the least money,” Billos said. “You can combine it with the idea that we can keep increasing the rent, and these people can’t leave.”

About a fifth of mobile home parks, or about 800,000, have been purchased in the past eight years by institutional investors, said George McCarthy, president and CEO of the Lincoln Institute for Land Policy.

He was among those who singled out Fannie Mae and Freddie Mac to guarantee loans as part of a giant lending bill to expand affordable housing. Since 2014, the Lincoln Institute estimates that Freddie Mac alone has provided $9.6 billion in funding to purchase more than 950 communities across 44 states.

A spokesperson for Freddie Mac responded that he has purchased loans for less than 3% of mobile home communities across the country, about 60% of which are refinancing.

Soon after investors began buying the parks in 2015, complaints about double-digit rents followed.

In Iowa, Matt Chapman, a park-resident mobile home purchased by Utah-based Havenpark Communities, said his rent and fees have nearly doubled since 2019. Another park bought by Impact Communities has seen rent and fees increase, Alex Cornea of ​​Iowa Legal Aid said. 87% between 2017 and 2020.

“Many of the people living in the park were on a steady income, disability, and social security, and they simply wouldn’t be able to keep up,” said Cornea, who met about 300 angry mobile homeowners at a massive church. “It almost led to a political awakening.”

In Minnesota, park purchases by out-of-state buyers grew from 46% in 2015 to 81% in 2021, with rent increases of up to 30%, according to the All Parks Alliance For Change, a state association.

US Senator John Tester of Montana spoke at this year’s Senate hearing, mentioning tenants who have complained about repeated rent increases at the Havenpark project in Great Falls. One resident, Cindy Newman, told The Associated Press that her monthly rent rose from $117 to nearly $400 over a year and eight months — the equivalent of an increase over the past 20 years.

On top of the rent increases, residents have complained about being inundated with fees for everything from pets to maintenance and fines for mess and speeding — all folded into leases that can run as long as 50 pages.

Havenpark spokesman Josh Weiss said the company should charge prevailing market prices when it buys a park at the fair market price. However, the company has moved since 2020 to limit rent increases to $50 a month.

“We understand the concern that any increase in rent would have on residents, especially those on fixed incomes,” Weiss said. “While we try to reduce the impact, the financial reality does not change.”

The mobile home industry argues that communities are the most affordable housing option, noting that average rent increases across parks across the country were just over 4% in 2021. Spending on improvements was about 11%. They said significant investment was needed to make improvements to old parks and avoid selling them.

“You have some people who come into the space giving us all a bad name, but these are isolated examples and these practices are not common,” said Leslie Gooch, CEO of the Institute of Fabricated Housing, the industry trade association.

Both sides said the government could do more to help.

The industry wants to make Federal Housing Administration funding available to residents, many of whom rely on high-interest loans to purchase homes that cost an average of $81,900. They also want the US Department of Housing and Urban Development to allow housing vouchers to be used for mobile homes.

Resident advocates, including MHAction, want lawmakers to cap rents or ask for a reason to increase or evict — state legislation that worked in Delaware this year but failed in Iowa, Colorado and Montana.

They also want Fannie Mae and Freddie Mac to condition their loans that rents remain reasonable. They support residents buying their communities, which began in New Hampshire and has gone into nearly 300 parks in 20 states.

A spokesperson for Freddie Mac said he’s created a new loan offer that incentivizes tenant protection, and last year made that mandatory for all future mobile home community transactions.

In Ridgeview, it is not clear how the rent strike will be resolved.

Cook, which claims to be New York’s largest mobile home park operator and has a tagline of “Exceptional Opportunities. Extraordinary Returns,” declined to comment. The company closed a $26 million private equity fund in 2021 that bought 12 New York parks, but it wasn’t clear if one was It is Ridgeview.

The population, meanwhile, conscripted. Resident Joyce Biles, 85, has started mowing her lawn because crews only show up monthly. Gerald Korb, a 78-year-old retiree, said he is still waiting for the company to move an electric pole and transformer that he fears will fall on his home during a storm.

“I bought a place and now they’re charging all of this on us,” said Korb, who stopped paying rent in protest. “They are absentee realtors that’s what they are.”

Leave a Reply

%d bloggers like this: