When large corporate investors purchase mobile home parks, rents tend to increase

LOCKPORT, N.Y. (AP) — For as long as anyone can remember, rent increases have rarely happened at Ridgeview Homes, a family-owned neighborhood in upstate New York.

That changed in 2018 when corporate owners took over the 65-year-old park, which sits between 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 and on fixed incomes, fought the first two increases. The latest owner, Cook Properties, hoped it would solve bourbon-colored drinking water, sewage into their bathtubs and pothole-filled roads.

Not only this, they formed a union when a new lease agreement with a 6 percent increase was implemented this year. About half of the residents went on rent strike in May, prompting Cook Properties to send out nearly 30 eviction notices.

“The only thing they’re worried about is going up is the rent,” said Jeremy Ward, 49, who pays more than $1,000 a month in disability benefits after sustaining nerve damage in a car accident.

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

Read more: Investors are buying mobile home parks. These Fresno renters have a different idea.

The problem for residents in Ridgeview is that institutional investors nationwide, led by private equity firms and real estate investments, and sometimes backed by pension funds, are buying up mobile home parks. Critics say mortgage giants Fannie Mae and Freddie Mac are exacerbating the problem by backing a growing number of investor loans.

Most mobile homes — despite the reputation — can’t be moved easily or cheaply, so the purchases are putting residents in a dilemma. Landlords are forced to accept unaffordable rent increases, spend thousands of dollars to move their home, or abandon it and lose tens of thousands of dollars in their investment.

“These industries, including the mobile home park manufacturing industry, see these parks, these mobile homes, as affordable housing. But they’re not affordable,” said Iowa Assistant Attorney General Benjamin Bellus, who has complained since out-of-state investors began buying up the parks a few years ago. They said they had increased “100-fold”.

“You’re putting people in traps and traps, where they can’t defend themselves,” he added.

Spurred by some of the strongest returns in real estate, investors have shaken up the once-dormant sector, home to more than 22 million mostly low-income Americans in 43,000 communities. Many advertise the parks as guaranteeing a steady return – by raising rents over and over again.

There is also a growing industry, including books, webinars, and mobile home universities that offer tips for attracting small investors.

“You go from an area where you have a local owner or manager who cares if they need to fix things, to where you have people looking at a cost-benefit analysis of how to lower the penny,” Bellus said. “Combine that with the idea that we’re going to keep raising rents, and these people can’t afford to leave.”

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

He was among those who favored Fannie Mae and Freddie Mac because the lenders were part of paying the giants to expand affordable housing. Since 2014, the Lincoln Institute has provided $9.6 billion in financing for Freddie Mac alone to purchase more than 950 communities in 44 states.

A Freddie Mac spokeswoman said less than 3 percent of mobile home communities nationwide buy with mortgages, and about 60 percent of those are refinances.

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

In Iowa, Matt Chapman, a mobile home resident in a park bought by Utah-based Havenpark Communities, said his rent and fees have doubled since 2019. Iowa Legislator Alex Cornea said another park purchased by Impact Communities saw an 87 percent increase in rent and fees. percent between 2017 and 2020.

“Most of the people living in the park were on fixed incomes, disabled, on Social Security and simply couldn’t keep up,” said Cornea, who met about 300 angry mobile home owners at the megachurch. It almost led to a political awakening.

Out-of-state park purchases in Minnesota From 46 percent in 2015 to 81 percent in 2021, rental rates will increase by 30 percent in 2021, according to the state association All Parks Alliance For Change.

U.S. Senator Jon Tester of Montana, speaking at a Senate hearing this year, noted that tenants at the Havenpark development in Great Falls have received repeated rent increases. One resident, Cindy Newman, told The Associated Press that her monthly rent went from $117 to nearly $400 in one year and eight months — the same increase as in the previous 20 years.

On top of the rent increase, residents are saddled with fees ranging from pets to maintenance and charges for reckless and speeding — all crammed into leases that can run to more than 50 pages.

Read more: As Fresno tries to control the housing crisis, a corporate owner steps in

Havenpark spokesman Josh Weiss said the company should charge current market value when it buys a park at fair market value. That said, the company has moved to limit rent increases to $50 per month starting in 2020.

“We understand the stress any rent increase can have on residents, especially those on fixed incomes,” Weiss said. Financial realities do not change when we try to reduce the impact.

The mobile home industry argues that the communities are the most affordable housing options, noting that the average rent increase in parks across the country was more than 4 percent by 2021, while the cost of improvements was around 11 percent. He said significant investment is needed to improve old parks and prevent them from being sold.

“You have some people coming into the space who give us all a bad name, but these are isolated examples and the practices are not the norm,” said Leslie Goch, chief executive of the Manufactured Homes Institute, the industry’s trade association.

Both sides said the government could do more to help.

The industry wants the Federal Housing Administration to provide financing 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 raise rents or seek grounds for an increase or eviction — a state law that succeeded in Delaware this year but failed in Iowa, Colorado and Montana.

They also require Fannie Mae and Freddie Mac to state on mortgages that rents remain affordable. And they support residents buying their communities, which started in New Hampshire and has grown to nearly 300 parks in 20 states.

A Freddie Mac spokeswoman said it created a new loan provision that encourages tenant protections and made those provisions mandatory for all future mobile home community transactions last year.

It is unclear how the rent strike will be resolved in Ridgeview.

Cook, which claims to be the largest operator of mobile home parks in New York and whose slogan is “unique opportunities.” Special Returns” declined to comment. The company He closed a $26 million private equity fund that bought 12 parks in New York by 2021, but it was unclear whether one of them would be Ridgeview.

The residents are also armed. Resident Joyce Bailes, 85, has taken to mowing her own lawn because workers are only available every month. Gerald Korb, a 78-year-old retiree, is waiting for the company to move the power poles and transformers he feared would fall to his home during the storm.

“I bought a place and now they’re forcing all this on us,” said Korb, who stopped paying rent in protest. “They are the landlords who don’t exist.”

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