More investors buying mobile home parks, leaving residents behind
(Newsy) Housing in the U.S. is getting more expensive all the time — especially lately. A real estate research firm found rent across the country increased by about 11% last year.
Now one of the last affordable housing options left in America is mobile homes, but people are being priced out of those, too.
A growing number of investors are buying up these parks as many of the long-time owners are retiring and looking to sell.
While many people own their mobile homes, they still have to pay rent for the land they sit on. When investors come in, they’re known to raise that rent and other fees.
One report from June 2021 showed investors made up almost a quarter of mobile home park purchases between 2019 and 2021.
Compared to the two-year period before, there was a 13% increase in investor ownership.
Mobile Home Park University is an organization that runs a boot camp to help investors looking to buy these parks.
According to them, “the fact that tenants can’t afford the $5,000 it costs to move a mobile home keeps revenues stable and makes it easy to raise rents without losing any occupancy.”
More than 22 million Americans live in mobile homes and policy experts say they could face up to a 70% rent increase. It generally comes down to what the investor decides.
For these residents, an increase would have a significant impact on their ability to keep up with their finances.
George McCarthy, president and CEO of the Lincoln Insititute of Land Policy, explains how this leaves many residents with nowhere else to go.
"If they can't afford the land rent and they get displaced, they end up losing their homes as well, and they end up having to abandon their homes and their homes end up falling into the ownership of the park owners who can then rent them to somebody else," McCarthy said.
Affordable housing options are limited, and only 1 of 4 low-income households eligible for federal housing assistance actually receives it.
The federal mortgage company Fannie Mae says the annual median household salary of mobile homeowners is about $35,000, which is half of the annual median income for people who own homes built on site.
The thing is, these investors aren't necessarily acting alone — they're doing this with government support.
Investors have access to government loans from agencies like Fannie Mae, which has acknowledged those mobile homeowners tend to have lower incomes.
"Fannie Mae and Freddie Mac have a mission that requires them to preserve the affordable housing stock in the United States, and it's ironic that they're actually giving money to these private equity people who are actually making the most affordable housing in the United States less affordable all the time," McCarthy said.
To combat this problem, some mobile home park residents are coming together to try and buy their park so they have more agency over the decisions made. But it can be difficult because they don’t qualify for the same government loans that the investors do.
"A lot of them are able to buy their parks instead of the investors, but when they do, they do it with less attractive financing," McCarthy said.
"That's usually provided by mission-driven organizations like Community Development Finance Institutions, and that's generally, probably the interest rates are close to twice as high for those kinds of loans as they would be from the financing from the Fannie Mae or Freddie Mac. Once the community gets control of these parks, they make the investments in the park to improve them. They add community centers, they add new infrastructure, they add covered bus stops for their kids. I mean, the kinds of things that the community needs and they don't raise the rent on themselves."
There’s been a push for state legislation requiring parking owners to notify residents when they plan to sell so they have time to organize and decide if they want to make an offer, but only a handful of states like Massachusetts and New Hampshire have made this happen.
"Little by little as people get more and more aware of it, the states are acting, and state legislators are pushing through these opportunities to purchase legislation, so that's a good thing," McCarthy said.
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