Republicans say we shouldn't raise the minimum wage to $15/hour because it would cause inflation. But they ignore the inflation caused by parasites who are raising mobile rents; shoddy products that are built to not last too long so you have to keep buying new ones; local governments who only allow large homes to be built so there is a lack of housing for people of modest means; investors who buy drug companies and jack up the prices of medicine.
https://www.businessinsider.com/mobile-home-community-owners-private-equity-investment-2020-2
Sara Silverstein
Feb 15, 2020, 9:04 AM
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Over the past decade, private equity investors have been buying up communities like Colony Cove and turning huge profits, thanks in part to government-backed loans originally meant to help people like Dahlquist.
But while investors have seen profits expand, many of the 22 million Americans living in mobile homes feel they've been left behind.
"The landlords take the benefits of the cheaper financing, put it in their pocket, make more investments, give it to their investors," Patrick Rucker, a correspondent for the research firm The Capitol Forum, told Business Insider.
"But for people on the ground in these aging mobile homes, things have gotten worse."
Mobile homes are significantly cheaper than traditional homes, costing less than half the price per square foot.
There are 40,000 land-leased mobile home communities in the United States. In these communities, residents own their homes, but they rent the land beneath it.
This makes owning a mobile home similar to owning a car that you park in a rented spot in a garage.
But if the parking garage you are in starts to fall apart or the fee goes up, you can simply drive to a different garage and find a better spot.
That's not the case for mobile home owners, however. Despite their names, mobile homes are actually difficult to move for most people. Most homes are built in a factory and wheeled to the home site, and after the initial placement, moving the home can be costly.
So if the land rent rises, owners are faced with paying the higher rent or potentially abandoning their homes.
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Mobile homes are an important source of affordable housing in the US.
Because of that, government-sponsored entities Fannie Mae and Freddie
Mac provide cheaper loans against these communities to increase the
availability of this type of housing.
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These government-sponsored entities have provided over $15 billion in financing against mobile home communities over the past decade.
Fannie Mae and Freddie Mac offer attractive rates that save investment firms money. Rucker, the Capitol Forum correspondent, estimates investors in mobile home communities have saved at least $200 million in interest from these loans.
Last year, a report on private equity investing in mobile home communities said these loans would be more effective if they had specific rules attached to protect the residents, like rent controls and rules that make it easier for residents to get out.
"I mean, this is taxpayer money essentially that's standing behind this whole enterprise, and we want the benefits to be direct — not some notional possible trickle-down scenario," Rucker said.
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https://apnews.com/article/fcaf55d3ef8342b6a8e79fe06e15cc50
Mobile home owners who for years have enjoyed some immunity from rising housing costs are increasingly finding themselves subjected to massive rent increases, not just here in Iowa, but across the country.
Havenpark Capital, a Utah-based real estate investment firm, raised eyebrows — along with rents — after it purchased parks in the Iowa City and Des Moines metro areas and immediately announced plans for rent spikes. In North Liberty, rents at Golfview Mobile Home Park will rise 58% and in Waukee, rents at Midwest Country Estates will rise 69%. Havenpark Capital recently purchased two more mobile communities: Iowa City’s Sunrise Village and West Branch’s West Branch Village. And as it turns out these are just the tip of the iceberg, the Iowa City Press-Citizen reported.
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In 2018, there were approximately 8.5 million manufactured homes in the United States, accounting for nearly 10% of the nation’s housing stock, according to the Manufactured Housing Institute. This has been a source of affordable housing, in particular for rural and low-income residents.
“These are affordable homes for low income folks,” said Liz Voigt of Manufactured Housing Action and a co-author of the 2019 report. “That’s what the market has been for a long time. It hasn’t really occurred to people that they could gouge them for 80% of their Social Security check. That’s the analysis that these companies have seen: they could make a very big increase in profits based on rent increases in nearly any conditions.”
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Part of the issue is residents commonly own their mobile home but not the land underneath it. If lot rents become unaffordable, residents may have no other option but to try and sell their home to the park or abandon it all together. Moving homes to another park can cost thousands of dollars and moving often means sustaining damage to the home, further depreciating its value.
The 2019 report quotes material from Mobile Home University, a project of RV Horizons aimed at educating aspiring mobile home park investors on the revenue model: “The fact that tenants can’t afford the $5,000 it takes to move a mobile home makes it easy to raise rent without losing any occupancy.”
[Also, most mobile home parks don't allow homes over a certain age to be moved in.]
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To create protections for these communities, there are three “buckets” of policy solutions Voigt pointed to that she said localities and states should pursue to add protections for manufactured home owners in their communities.
“There is a regulatory environment in which (these firms) operate that has created an enormously profitable business on the backs of poor people,” Voigt said.
The first strategy would be to find some consistent means of regulating rent. Voigt emphasized that these regulations look different in different places.
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The second strategy is for residents to have a say in how the park they live in is improved, and an avenue for making complaints if it is not being taken care of properly.
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The third strategy is more complicated. Even if there are limits on the amount rent can be increased and residents have the ability to reliably file grievances, an investment firm is in business to generate revenue. While this doesn’t necessarily put them at odds with residents, a 58% tax increase does.
“There needs to be a clear path toward alternative forms of ownership,” Voigt said.
They ask states to enact laws that give mobile park tenants and associations a chance to buy their park if property owners are approached with an offer. Voigt said that if our goal is to keep these parks affordable in the long term, drastic changes in ownership might be one of the few ways to keep the needs of tenants at the heart of decision making.
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