Criticisms of Mobile Home Park Owners
One of the biggest criticisms from the media and certain political figures is the dynamic between mobile home park residents and community owners. The main issue these public figures have is the community owner gains wealth through rent raises and the residents have a depreciating home that is on rented land.
In today’s media and political talking points, we’re becoming conditioned to understand that there is usually more to the story.
Do they have some valid points? Yes and no, let me tell you why.
Challenges of Co-Op Management in Manufactured Housing Communities
First, we do need to understand that certain people prefer to rent. While you’re not accumulating wealth, there are benefits to having someone else take care of the property. There are several people who enjoy the lifestyle of having someone else take care of all the headaches associated with owning property.
A rebuttal to this could identify those communities that have gone through the co-op process and operate as one are typically professionally managed. Well, here’s the rub. There aren’t a lot of management options. While in a meeting with the board of directors for a co-op community they explained to me that they deal with issues that they never envisioned having. These include absorbent legal fees and running out of reserves. They may also run into situations where they can not find multiple management companies to submit RFPs to replace the current management company. So, they’re basically stuck with management that they aren’t all that happy with.
Success of Fee Simple RV Lots
My recent research conducted on fee simple RV lots has opened my eyes. This research consisted of my talking to lenders and owners. I also visited several resorts where this was happening. When I interviewed fee simple RV lot owners, they were happy. The resorts were beautiful and RV lots were consistently raising in value. I had to ask myself why isn’t this happening more in the manufactured housing space?
Specialized Funding to Enhance Manufactured Housing Communities
From a financial standpoint, the resort owners are selling off lots at a much higher price point than they would get from selling these resorts to an institutional REIT. So, if a community owner could sell off their lots at a higher per-lot price, I’m sure this would common practice.
I then asked myself, why can’t these manufactured housing lots sell for more? My conclusion is they need specialized funding to enhance the community esthetics and comprehensive funding for the residents to purchase these lots. Right now, the RV resort product is better than the manufactured housing community product. It probably doesn’t help that municipalities are also allowing new RV resorts where they would probably deny a new manufactured housing community.
A More Equitable Future for Manufactured Housing
We have a real opportunity to address the affordable housing situation and provide equity to the residents of the communities who may want it. I believe that if we enhance our existing communities, it will attract more management companies to this space. If we can provide funding to significantly enhance properties to be sold off as real property, we can open a lot of doors. This will also help with the future development of new communities and reduce the stigma of the communities. The zoning restrictions that create a barrier of entry for investors of manufactured home developments create artificial inflation. This artificial inflation is then trickled down to the residents, and we would help address unreasonable lot rent increases. The benefits would be good for the industry as a whole.
