In recent weeks, a number of major publications have published articles about manufactured housing communities as investments for wealthy people. To summarize them in a sentence: manufactured home communities (also known as mobile home parks) present investment opportunities and the benefits of the investment go to the owner.
Unfortunately, these articles mostly ignore a critical view of the absentee-investor ownership model they profile. Worse, they don’t recognize the existence and benefits of a better ownership model—a model that has the potential to build wealth, ensure security, and improve the living conditions of millions.
Mobile Home Parks as Money-Makers for the Already Moneyed
Recently, a number of stories have highlighted investors who are making significant returns from buying manufactured home communities. First was the New York Times Magazine, with “The Cold, Hard Lessons of Mobile Home U.”, March 13, 2014. Next came Bloomberg’s entry: “Trailer Parks Lure Wall Street Investors Looking for Double-Wide Returns”, April 10, 2014. Other reporting has discussed these articles, including an interview of the author of the Bloomberg article by Nicole Goodkind of Yahoo Finance, “You won't believe this hot new investment 'vehicle'“, April 10, 2014.
These articles focus on the ways that investors can make a significant returns on investment by investing in housing of “last resort”.
According to Gary Rivlin's article in the New York Times, at Mobile Home U. potential investors learn that “ambitious landlords can raise the rent year after year without losing tenants.” This is possible because the tenants almost certainly can’t afford to live elsewhere. Rivlin quotes the manager at one manufactured home community saying a two-income family “making minimum wage at Taco Bell” can absorb rent increases because they “can always pick up extra hours.”
The seminar leaders reportedly dislike “amenities of any kind,” including laundry rooms or vending machines. They also recommend aggressive application of community rules. One community manager who works for the people who run the seminars is quoted as saying: “You get with the program … or you’re out.” Likewise, Mobile Home U.’s online materials state that late fees should be as high as the law allows so that no one is tempted to be late on their rent so that they can pay for a needed car repair.
Profiting from those at the economic fringes has made the operators of Mobile Home U. very rich. By their account, last year their 100 communities generated more than $15 million in profit.
It’s not hard to discern why potential investors pay to attend their “bootcamp” seminars – they claim a return of roughly 25 percent on their investments in manufactured home communities, and apparently are willing to share their secrets.
A Better Alternative Exists
Reading these articles, you would never know about a very successful alternative—resident ownership. This is ironic because, ultimately, investors don’t pay for the communities they buy—the residents do. It’s an obvious point, but an important one; the cost of getting a loan to buy the community, fix the infrastructure, hire a manager, and turn a profit all come from the residents themselves.
The corollary is that if the residents bought their own communities they would have cheaper rent or more amenities, because all of those costs would be paid except there would be no profit on top.
Resident ownership isn’t hypothetical. In New Hampshire alone 107 communities are owned by the residents. These residents don’t worry about underinvestment, they don’t worry that their community will be sold to make room for a big box store, and they don’t worry that the rent will be raised just to increase the investor’s “yield.”
Residents across the nation now have the opportunity to purchase their communities. Resident Owned Communities USA, (ROC USA) has established a nation-wide network of organizations to provide funding and technical support to residents that are interested in purchasing their communities. In Pennsylvania, Regional Housing Legal Services has been operating a project designed to provide the legal services necessary for establishing homeowner’s associations or cooperatives for interested manufactured home community residents.
It’s a shame that the New York Times Magazine and Bloomberg either weren’t aware of resident owned communities or didn’t see fit to print their stories. Truly, these communities are a hopeful counterpoint to the stories focused on profiting from providing housing of “last resort”. At Mobile Home U., investors learn the most efficient ways to obtain a 20 percent plus return on investment. As they say on the website for Mobile Home University, the “big winners are the owners of the mobile home parks.” Think about what happens when the residents are the owners and that more than 20 percent stay in the community. Safer, more secure communities, where residents keep more of their money and build a prosperous future together—that means a whole lot more “big winners.”
(Photo of single-wide with portico by Flickr user taberandrew, CC-BY.)