Rents Rise as Wealthy Investors Buy Mobile Home Parks

LOCKPORT, NY — As far back as anyone can remember, rent increases rarely happened at Ridgeview Homes, a family-owned mobile home park in upstate New York.

That changed in 2018 when corporate owners took over the 65-year-old park located in the middle of farmland and across the street from a fast-food joint and grocery store about 30 miles northeast of Buffalo.

Residents, about half of whom are elderly or disabled on fixed incomes, accepted the first two raises. They expected the last owner, Cook Properties, to take care of the bourbon-colored drinking water, the sewage that bubbled up in their bathtubs, and the potholed roads.

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

“All they care about is raising the rent because they only care about the money,” said Jeremy Ward, 49, who is getting by on just over $1,000 a month in disability payments after his legs were damaged in the nerves in a car accident.

He was recently fined $10 for using a leaf blower. “I’m disabled,” he said. “You guys aren’t doing your job and I get a ticket?”

The plight of Ridgeview residents is playing out across the country as institutional investors, led by private equity firms and real estate investment trusts and sometimes funded by pension funds, swoop in to buy parks of mobile homes. Critics say mortgage giants Fannie Mae and Freddie Mac are fueling the problem by backing a growing number of investor loans.

The purchases are putting residents in a bind, as most mobile homes, despite the name, cannot be moved easily or cheaply. Landlords are forced to accept unaffordable rent increases, spend thousands of dollars to move or abandon their home, and lose tens of thousands of dollars they invested.

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

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

Buoyed by some of the strongest returns in real estate, investors have shaken up a once-sleepy sector that is home to more than 22 million mostly low-income Americans in 43,000 communities. Parks are aggressively promoted by many as a guarantee of consistent returns by repeatedly raising rent.

There’s also a growing industry, featuring 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 taking care of things as they needed fixing, to an environment where you had people looking for a cost-benefit analysis to get the lowest penny,” Bellus said. . “You combine it with the idea that we can keep raising the rent and these people can’t leave.”

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

He was among those who singled out Fannie Mae and Freddie Mac for guaranteeing the loans as part of what the lending giants bill as affordable housing expansion. Since 2014, the Lincoln Institute estimates that Freddie Mac alone provided $9.6 billion in purchase financing for more than 950 communities in 44 states.

A Freddie Mac spokesperson countered that it had purchased loans for less than 3% of mobile home communities nationwide, and that about 60% of those were refinances.

Shortly after investors began buying parks in 2015, complaints of double-digit rent increases followed.

In Iowa, Matt Chapman, a mobile home resident in a park purchased by Utah-based Havenpark Communities, said his rent and fees had nearly doubled since 2019. Alex Kornya of Iowa Legal Aid said another park purchased by Impact Communities saw rent and fees increase 87% between 2017 and 2020.

“A lot of the people who lived in the park were on fixed incomes, disability, Social Security and they just weren’t going to be able to keep up,” said Kornya, who met with about 300 angry mobile home owners at a megachurch. “It almost led to a political awakening.”

In Minnesota, park purchases by out-of-state buyers increased 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 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 went from $117 to nearly $400 over a year and eight months, the same as the increase in the previous 20 years.

In addition to rent increases, residents complained of being inundated with fees for everything from pets to maintenance to disorderly and speeding tickets, all included in leases that can be more than 50 pages long.

Josh Weiss, a Havenpark spokesman, said the company must charge prevailing market rates when it buys a park at fair market price. That said, the company has moved since 2020 to cap its rent increases at $50 per month.

“We understand the anxiety that any rent increase has on 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 across the country were just over 4% in 2021. Spending on improvements was about eleven %. Significant investment is needed, they said, to make improvements to older parks and keep them from being sold.

“There are some people coming into the space that give us all a bad name, but those are isolated examples and those practices are not common,” said Lesli Gooch, executive director of the Manufactured Housing Institute, the industry trade association.

Both sides said the government could do more to help.

The industry wants to make Federal Housing Administration financing 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 housing vouchers to be used for mobile homes.

Resident advocates, including MHAction, want lawmakers to put a rent cap 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 that they support that rents remain affordable. And they support residents in buying their communities, which began in New Hampshire and has reached nearly 300 parks in 20 states.

A Freddie Mac spokesman said it has created a new loan offering that incentivizes tenant protections and last year made them mandatory for all future mobile home community transactions.

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 a tagline “Exceptional Opportunities. Exceptional returns,” he 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 one of them was Ridgeview.

Residents, meanwhile, move on. Joyce Bayles, an 85-year-old resident, has taken it upon herself to mow her own lawn because crews show up only once a month. Gerald Korb, a 78-year-old retiree, said he is still waiting for the company to move a power pole and transformer that he fears could fall on his house during a storm.

“I bought a place and now they’re forcing us to do all this,” said Korb, who stopped paying rent in protest. “They’re absentee landlords, that’s what they are.”

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