The New YorkerMarch 8, 2021
What Happens When Investment Firms Acquire Trailer Parks By
Sheelah Kolhatkar,
a staff writer at The New Yorker, where she writes about Wall Street, Silicon Valley, economics, and politics. She is the author of “Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street.”SNIPPETS:
Trailer parks first sprang up in the nineteen-twenties, as campgrounds designed to attract wealthy tourists. As the country entered the Great Depression, some unemployed Americans, known as “hobo-tourists,” took to compact travel trailers, migrating in search of work. Soon, local governments began to pass zoning restrictions that dictated the size of the lots on which mobile homes could be placed, forcing them into less dense areas of town, and limited how long trailers could be stationed. In the fifties, manufacturers started producing trailers that were more like small bungalows. Trailer parks began to serve largely as housing communities for lower-income and working-class families; many had amenities like clubhouses and swimming pools, and fanciful names like Shangri-La. By the time Table Mound was established, in 1963, there were at least three million Americans living in mobile homes;
during the next two decades, the structures became more elaborate and harder to move. ... ...
In a 2016 interview,
Rolfe recalled that he had assumed that almost anyone who lived in a mobile home was a “drug addict, a hooker, and just the scum of the earth,” and claimed to have felt so unsafe walking around Glenhaven that he applied for a concealed-weapon permit. But, he went on, he came to realize that just because tenants were poor didn’t mean that they were “dangerous” or “stupid.” It was possible to provide clean, safe housing for working people who were “just like you and me,” but who had very little money.
Rolfe met Dave Reynolds, an accountant whose parents owned a mobile-home park in Colorado, at a mobile-home-investing conference in 2006, where both of them were speaking. Soon afterward, they created
Mobile Home University, a program for potential park owners which offered, among other things, three-day seminars in Southern California and Denver, for almost two thousand dollars a ticket. (The program is currently being offered virtually.) Later, they established a partnership that invests in mobile-home parks. In 2017, Rolfe was reported to have compared a typical mobile-home park to “a Waffle House where customers are chained to their booths.” (He has said that the quote was taken out of context, and was meant to refer only to the “incredibly consistent revenue” of mobile-home parks.) Esther Sullivan, who attended one of Rolfe and Reynolds’s Mobile Home University seminars in California while researching her book, summarized the advice that they offered participants: “Look for a park that’s got high occupancy and that doesn’t need a lot of investment.
Take out any possible amenity you’d ever need to invest in, such as a playground or a pool that’s going to need insurance. Make sure it’s got a nice sign, and pawn off any maintenance costs onto your tenants.”
Rolfe and Reynolds recommended that owners
regularly raise rents, but not so much that it would drive out desirable tenants. They also told investors to
avoid “tenant-friendly” states such as California and New York, where evictions can take months, and urged them to concentrate on areas where there is a shortage of reasonably priced rental apartments. The Mobile Home University Web site states,
“Mobile home parks are the hottest sector of real estate right now, due to the endless decline in the U.S. economy.” The site points out that thousands of baby boomers are retiring each day, and that they will receive around fourteen thousand dollars a year in Social Security income: “Mobile home parks are the only segment of real estate that grows stronger as the economy weakens.” ... ...
Whereas traditional homeownership can form the basis for intergenerational wealth, mobile homes depreciate in value, like cars or motorboats. Still, many of
Presley’s neighbors had saved for years or used inheritances to buy their homes. Karla Krapfl, Presley’s second cousin, has lived in Table Mound for three decades with her husband, Dennis, an Army veteran. In 1993, they bought their current home new, and had it fitted with large windows, so that Krapfl could watch from the kitchen as their three boys played outside. Their sons are now grown; two served in the armed forces and the third is a controller at a local company. When I stopped by, Krapfl showed me around the house, which was decorated with quilts, porcelain animals, and silk flowers. Princess Diana plates from the Franklin Mint hung in a triangle in the master bedroom. Krapfl had enjoyed raising a family in Table Mound, and compared living in the park in those years to being on a military base. “Everybody knew everybody’s kids,” she said. “It was all very friendly.”
Table Mound’s owner, Michael Friederick, was from Dubuque, and had made typical investments in the park, plowing the roads in the winter and repairing the curbs. He raised the rent by no more than two per cent a year. During the summer of 2017, less than a year after
Presley moved to Table Mound, she and the other residents learned that Friederick had sold the park. It had gone for more than six million dollars, and was now being managed by
RV Horizons.
As it later emerged, according to court documents,
RV Horizons is one of several foreign limited-liability companies controlled by another L.L.C.,
Impact MHC Management. RV Horizons
announced that it would be charging residents for water and trash removal, which had previously been included in the rent. It installed new digital water meters on each property,
billing residents five dollars a month for the meters. It also raised the rent on lots: Mills’s lot rent rose from two hundred and seventy dollars a month to three hundred and ten 😵 . According to Jim Baker, the executive director of the Private Equity Stakeholder Project, a think tank that monitors the effects of private-equity firms’ investments,
extracting profits by increasing lot rents and decreasing expenditure on upkeep is 😈 common. “In many cases, residents have invested forty, fifty, sixty thousand dollars into the homes,” he said. “There is such a strong incentive to pay, because are you going to walk away from this home that you put your retirement into?”
A year later, RV Horizons raised the lot rent again . By then, Presley had moved out of Mills’s single-wide and was living with Cheyenne in her own home, a dilapidated trailer built in 1974 that she acquired for twelve hundred dollars. Her brother, Buddy, who worked at a company that sold and installed building supplies, delivered flooring, drywall, and insulation. Presley suffers from spinal stenosis, which sometimes leaves her hobbling in pain. The condition entitles her to federal disability benefits, provided that she works only part time—a situation that requires a delicate financial balancing act. At the time, she was employed as a substitute cafeteria worker for the Dubuque Community School District, in addition to bartending.
She immediately started worrying about how she was going to make the new lot rent 🥺.RV Horizons had sent all the residents a
new lease,
forty-seven pages long and full of addenda, which contained some provisions that struck Presley as
unfair and potentially illegal, including an eight-hour limit on street parking for guests, a requirement for a hundred-thousand-dollar-minimum insurance policy to cover accidents related to pets, and the institution of quiet hours. Despite the fact that the land belonged to the park, residents were
now responsible for repairs to the water pipes connected to their homes. Clotheslines were no longer permitted. There would also be a
fifty-dollar late fee for any rents received after the monthly deadline.
RV Horizons claimed that the money from the rent increases would be spent on
repairing the roads and installing satellite-television service.
As Presley discussed the complexities of the lease with Mills and their neighbors, she felt a surge of fury. “I was
pissed,” she said. “I thought people were being played with.” The next day, she and Mills printed flyers inviting residents to a meeting the following Sunday afternoon in the yard outside the community storm shelter. A hundred and fifty people showed up. Presley and Mills handed out yellow stickers that read “No to illegal lease.”
Full article:
https://www.newyorker.com/magazine/2021/03/15/what-happens-when-investment-firms-acquire-trailer-parksnewestbeginning Mod > AGelbertI had not realized that this predatory practice was a "thing" until my son dated (for a mercifully short time) an awful woman who owned trailer parks in TN. She was also a trailer park broker. In many ways, she was just an awful person.
I had not realized that this predatory practice was a "thing" until my son dated (for a mercifully short time) an awful woman who owned trailer parks in TN. She was also a trailer park broker. In many ways, she was just an awful person.
AGelbert > newestbeginning ModI'm glad for your son that he did the right thing. As a young man I did exactly the wrong thing in 1970, and paid for it until 1988. The divorce was ugly and I remain estranged from both "my" children by their choice, not mine.
In 1991 I met my present wife, who is a woman of virtue. In many ways I owe my life to her, as she taught me through her example what I had never learned before.
The Mobile Home Park we live in was run by a couple that owned a mansion worth over 1 million dollars (in 1996!). They were (both died of natural causes years ago), as slumlords go, fairly decent people. The lot is 1/3 acre and due to the fact that Vermont is a "rent control" state, they could not raise the rent above the published annual increase in the CPI.
So, we did okay with the Manufactured Home we purchased new in the year 2000.
After the widow of the couple that owned the Park died, the Park was put up for sale. We-the residents took
ROC (
Resident Owned Community) advice and formed a
CO-OP that bought the Park for about 12 million dollars. The rent still keeps going up, even though part of the
CO-OP pitch was that it wouldn't, but at least with a
CO-OP there is no slum lord to make up excuses for adding "fees" for this, that or the other. That said, I am not impressed with the fact that all the "rules" we were saddled with before were voted in AGAIN by the majority of the residents. It seems democracy is no guarantee that nit pickers will stop their nit picking.
Se la vie.At any rate, with the homeless rate in Vermont at crisis levels, we are pretty sure the
racists in the Park (
there are way too many of them) will not be able to gin up excuses to "evict" two old Hispanic Geezers, one of which is on a Disability Pension from the Federal Aviation Administration.
I forgot to add one thing: That mansion I told you about that the couple owned? When the husband died of a heart attack around 2005 or so, the widow had the mansion torn down because it "depressed her". I'm sure the tax on the assessed value of said mansion in Essex Junction had nothing to do with it...
I am quite certain that selling that mansion and giving the money to the residents of the Park that had enabled them to build it in the first place never entered her mind...