Home News Rents spike as big-pocketed investors buy mobile home parks

Rents spike as big-pocketed investors buy mobile home parks

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Lockport, NY- As we all remember, rent increases rarely happened at Ridgeview Homes, a family-owned trailer park in upstate New York.

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

Approximately half of the residents are elderly or disabled with fixed income and are enduring the first two increases. They wanted the latest owner, Cook Properties, to deal with bourbon-colored drinking water, bubbling sewage in the tub, and perforated roads.

They formed an association when that didn’t happen, and when a new lease was imposed with an increase of 6% this year. About half of the residents started a rent strike in May, urging Cook Property to send about 30 evacuation notices.

“The only thing they care about is raising their rent because they only care about money,” he said, paying a disability allowance of just over $ 1,000 a month after his leg was nerve-damaged in a car accident. Jeremy Ward (49) said.

He was recently fined $ 10 for using a leaf blower. “I’m disabled. You’re not doing your job, and do I violate?” He said.

The plight of Ridgeview residents is widespread nationwide, led by private equity firms and real estate investment trusts, and sometimes by institutional investors funded by pension funds to rush to buy mobile home parks. Critics argue that mortgage giants Fannie Mae and Freddie Mac are helping the problem by supporting more and more investor loans.

Most mobile homes, despite their name, cannot be easily or cheaply moved, so purchases are binding on residents. Owners are forced to accept affordable rent increases, spend thousands of dollars to move homes, or abandon it and lose tens of thousands of dollars invested.

“These industries, including mobile home park manufacturing, continue to promote these parks, these mobile homes as affordable homes, but that’s not affordable,” said Assistant Attorney of Iowa. Benjamin Bells said that complaints have increased “100-fold” since out-of-state investors began buying parks a few years ago.

“You are trapping people, where they are incapable of protecting themselves,” he added.

Boosted by some of the strongest returns on real estate, investors have rocked the once-sleeping sector of more than 22 million predominantly low-income Americans in a community of 43,000. Many people are actively promoting parks to secure stable profits by repeatedly raising rents.

There are also growing industries featuring how-to books, webins, and even mobile home colleges, providing tips for attracting small investors.

“We’ve moved from an environment where local owners and managers take care of us when repairs are needed, to an environment where some people are considering cost-benefit analysis on how to minimize pennies,” Bellus said. Stated. .. “You combine that with the idea that we can keep raising rents and these people can’t leave.”

About one-fifth of mobile home parks, or about 800,000, have been purchased by institutional investors over the last eight years, said George McCarthy, president and chief executive officer of the Lincoln Institute for Land Policy.

He was one of those who chose Fannie Mae and Freddie Mac for guaranteeing the loan as part of what the loan giant claims to expand affordable homes. Since 2014, the Lincoln Institute estimates that Freddie Mac alone has funded $ 9.6 billion in purchases of more than 950 communities in 44 states.

A Freddie Mac spokesman argued that he bought less than 3% of the loans in the mobile home community across the country, of which about 60% were refinancing.

Immediately after investors began buying parks in 2015, complaints about double-digit rent increases continued.

In Iowa, Utah-based Haven Park community-purchased park-purchased mobile home Matt Chapman said rents and fees have nearly doubled since 2019. Percentage from 2017 to 2020.

“Many of the people in the park are engaged in fixed income, disability, and social security and simply couldn’t keep pace,” said the owner of about 300 angry mobile homes in Megachurch. Said Kornya, who met. “It led to almost political awakening.”

In Minnesota, park purchases by out-of-state buyers increased from 46% in 2015 to 81% in 2021, and rents increased by 30%, according to the state association All Parks Alliance For Change. did.

Senator John Tester of Montana spoke at a Senate hearing this year, recalling a tenant who complained of repeated increases in rents due to the development of Heaven Park in Great Falls. A resident, Cindy Newman, told The Associated Press that her monthly rent would go from $ 117 to nearly $ 400 in a year and eight months, an increase over the last two decades.

In addition to the rent increase, residents complained that they were flooded with all fees from pets to maintenance and cluttered speeding fines.

Heaven Park spokesman Josh Weiss said the company would have to charge a prevailing market price if it wanted to buy the park at a fair market price. That said, the company has moved to limit rent increases to $ 50 per month since 2020.

“We understand the anxieties that rent increases pose to residents, especially those with fixed incomes,” Weiss said. “We strive to minimize the impact, but the economic reality remains the same.”

The mobile home industry claims that the community is the most affordable housing option, with an average increase in rent across parks across the country of just over 4% in 2021. Spending on improvement was about 11%. They said it would require a large investment to improve the old park and prevent it from selling out.

Lesli Gooch, CEO of the Manufactured Housing Institute, an industry group, said:

Both sides said they could do more to help the government.

The industry wants to make federal housing authority funding available to residents. Many residents rely on high-interest loans to buy homes that average $ 81,900. They also want the US Department of Housing and Urban Development to be able to use residential vouchers for mobile homes.

Resident advocates, including MHAction, want lawmakers to cap rents or demand more or reasons for eviction. This is a state law that succeeded in Delaware this year but failed in Iowa, Colorado and Montana.

They also want Fannie Mae and Freddie Mac to stipulate that rent remains affordable on the loans they repay. It also supports community-buying residents, starting in New Hampshire and reaching about 300 parks in 20 states.

A Freddie Mac spokesperson said last year he created new loan offerings to encourage tenant protection and mandated them for all future mobile home community transactions.

In Ridge View, it’s unclear how rent strikes will be resolved.

Cook claims to be the operator of New York’s largest mobile home park, with the slogan “Extraordinary Opportunity.” Exceptional returns, “he declined to comment. The company closed a $ 26 million private equity fund that purchased 12 parks in New York in 2021, but it was unclear if one of them was Ridgeview.

Meanwhile, the inhabitants carried soldiers. Joyce Bayles, an 85-year-old resident, mowed his lawn because his crew only appeared once a month. Gerald Kolb, a 78-year-old retiree, said he was still waiting for the company to move utility poles and transformers, worried he might fall home during the storm.

“I bought the place, and now they are forcing us all of this,” said Kolb, who stopped paying rent in protest. “They are absentee landlords. What are they?”

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