Rents rise as deep-pocketed investors buy mobile home parks
For as long as anyone can remember, rent increases rarely happened at Ridgeview Homes, a family-friendly mobile home park in upstate New York.
That changed in 2018 when business owners took over the 65-year-old park located in the middle of farmland and on the road to a fast food restaurant and grocery store about 30 miles northeast of Buffalo.
Residents, about half of whom are seniors or disabled on fixed incomes, bore the first two increases. They hoped the last owner, Cook Properties, would take care of bourbon-colored drinking water, sewage bubbling in their bathtubs and pothole-filled roads.
When that didn’t happen and a new lease with a 6% increase was imposed this year, they formed an association. About half of residents launched a rent strike in May, prompting Cook Properties to send out around 30 eviction notices.
“All they care about is raising the rent because they only care about the money,” said Jeremy Ward, 49, who gets by on just over $1,000 a month on disability benefits after his legs suffered nerve damage in a car accident.
He was recently fined $10 for using a leaf blower. “I am disabled,” he said. “You don’t do your job and I get a violation?”
The fate of Ridgeview residents is being played out nationwide as institutional investors, led by private equity firms and real estate investment trusts and sometimes funded by pension funds, rush to buy up parks of homes mobiles. Critics say mortgage giants Fannie Mae and Freddie Mac are fueling the problem by backing a growing number of investor loans.
Shopping puts residents in a bind, as most mobile homes — despite their name — can’t be moved easily or cheaply. Landlords are forced to either accept unaffordable rent increases, spend thousands of dollars to move their home, or abandon it and lose tens of thousands of dollars they have invested.
“These industries, including the mobile home park manufacturing industry, continue to tout these parks, these mobile homes, as affordable housing. But it’s not affordable,” said Benjamin Bellus, Iowa’s assistant attorney general, who said complaints have “upped 100-fold” since out-of-state investors began buying up parks. few years ago.
“You put people in a trap and a trap, where they have no ability to defend themselves,” he added.
Driven by some of the strongest returns in real estate, investors have shaken up a once dormant sector that is home to more than 22 million mostly low-income Americans in 43,000 communities. Many aggressively promote parks as guaranteeing a steady return – repeatedly raising rents.
There’s also a growing industry, with how-to books, webinars and even a mobile home university, offering advice on attracting small investors.
“You went from an environment where you had a local owner or manager looking after things because they needed fixing, to where you had people looking at a cost-benefit analysis to figure out how to get the lowest penny,” Bellus said. . “You combine that with the idea that we can just keep raising the rent and these people can’t leave.”
George McCarthy, president and CEO of the Lincoln Institute of Land Policy, said about one-fifth of mobile home parks, or about 800,000, have been purchased over the past eight years by institutional investors.
He was among those who singled out Fannie Mae and Freddie Mac for underwriting the loans as part of what the credit giants see as the expansion of affordable housing. Since 2014, the Lincoln Institute estimates that Freddie Mac alone has provided $9.6 billion in purchase funding for more than 950 communities in 44 states.
A Freddie Mac spokesperson countered that it purchased loans for less than 3% of mobile home communities nationwide, and about 60% of those were refinances.
Shortly after investors began buying up parks in 2015, complaints about double-digit rent increases followed.
In Iowa, Matt Chapman, a resident of a mobile home in a park purchased by Utah-based Havenpark Communities, said his rent and fees have nearly doubled since 2019. Legal Aid’s Alex Kornya of Iowa said another park purchased by Impact Communities saw rent and fees increase 87% between 2017 and 2020.
“A lot of people living in the park had fixed incomes, disabilities, social security and just weren’t going to be able to keep up,” said Kornya, who met about 300 angry mobile home owners in a mega-church. “It almost led to a political awakening.”
In Minnesota, purchases of parks by out-of-state buyers have increased from 46% in 2015 to 81% in 2021, with rent increases of up to 30%, according to All Parks Alliance For Change, an association of parks. ‘State.
US Senator Jon Tester of Montana, speaking at a Senate hearing this year, recalled tenants complaining about repeated rent increases at a Havenpark development in Great Falls. One resident, Cindy Newman, told The Associated Press that her monthly rent had risen from $117 to nearly $400 over a year and eight months, the increase of the past 20 years.
In addition to rent increases, residents have complained of being inundated with fees for everything from pets to maintenance and fines for crowding and speeding — all squeezed into leases that can exceed 50 pages.
Josh Weiss, a spokesperson for Havenpark, said the company must charge prevailing market rates when purchasing a park at the fair market price. That said, the company has decided since 2020 to limit its rent increases to $50 per month.
“We understand the anxiety that any rent increase creates for residents, especially those on fixed incomes,” Weiss said. “While we try to minimize the impact, the financial realities do not change.”
The mobile home industry argues that communities are the most affordable housing option, noting that average rent increases in parks nationwide were just over 4% in 2021. improvement were about 11%. Significant investment is needed, they said, to make improvements to older parks and prevent them from being sold.
“You have people coming into space that give us all a bad name, but these are isolated examples and these practices are not common,” said Lesli Gooch, chief executive of the Manufactured Housing Institute, the association industry professional.
Both sides said the government could do more to help.
The industry wants Federal Housing Administration financing to be made available to residents, many of whom rely on high-interest loans to buy homes that cost an average of $81,900. They also want the US Department of Housing and Urban Development to allow the use of housing vouchers for mobile homes.
Resident advocates including MHAction want lawmakers to cap rent or require a reason for a raise or eviction — state legislation that succeeded in Delaware this year but failed in Iowa, Colorado and Montana.
They also want Fannie Mae and Freddie Mac to stipulate in the loans they support that rents remain affordable. And they’re supporting residents buying their communities, which started in New Hampshire and has grown to nearly 300 parks in 20 states.
A spokesperson for Freddie Mac said it had created a new loan offering that encourages tenant protection and last year made them mandatory for all future transactions in the mobile home community.
In Ridgeview, it is unclear how the rent strike will be resolved.
Cook, which claims to be the largest operator of mobile home parks in New York and has the slogan “Exceptional Opportunities. Exceptional returns,” declined to comment. The company closed a $26 million private equity fund in 2021 that bought 12 parks in New York, but it was unclear if any of them were Ridgeview.
The residents, meanwhile, continue. Joyce Bayles, an 85-year-old resident, has started mowing her own lawn because crews only show up every month. Gerald Korb, a 78-year-old retiree, said he was still waiting for the company to move a utility pole and transformer that he said could fall on his house during a storm.
“I bought a place and now they’re forcing all of this on us,” said Korb, who stopped paying rent in protest. “They are absentee owners, that’s what they are.”