Rents are rising as wealthy investors buy mobile home parks

LOCKPORT, N.Y. — For as long as anyone can remember, rent increases have been rare at Ridgeview Homes, a family-owned mobile home park in upstate New York.

That all changed in 2018, when corporate owners took over the 65-year-old park, nestled among farmland and down the road from a fast-food and grocery store about 30 miles northeast of Buffalo.

Residents, about half of whom are retired or disabled on a fixed income, are putting up with the first two increases. They hoped the latest owner, Cook Properties, would deal with the bourbon-colored drinking water, sewage bubbling in their bathtubs and potholes on the roads.

When this did not happen and this year they introduced a new rent with an increase of 6%, they formed a partnership. About half of the residents went on rent strike in May, prompting Cook Properties to issue about 30 eviction notices.

“All they care about is raising the rent because all they care about is money,” said Jeremy Ward, 49, who receives just over $1,000 a month in disability benefits after his legs damaged nerves in a car accident.

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

The plight of Ridgeview residents is spreading across the country as institutional investors, led by private equity firms and real estate investment trusts, and sometimes financed by pension funds, swoop in to buy mobile home parks. Critics argue that mortgage giants Fannie Mae and Freddie Mac are exacerbating the problem by backing an ever-increasing number of loans to investors.

Shopping puts residents in a bind, as most mobile homes — despite the name — can’t be moved easily or cheaply. Landlords are forced to either agree to unaffordable rent increases, spend thousands of dollars to move their home, or leave and lose tens of thousands of dollars of their investment.

“These industries, including the manufacturing of mobile home parks, continue to promote these parks, these mobile homes as affordable housing. But it’s not affordable,” said Benjamin Belus, Iowa’s assistant attorney general, who said the number of complaints has increased “100-fold” since out-of-state investors began buying up the parks a few years ago.

“You’re putting people in a trap and a trap where they have no way to defend themselves,” he added.

Fueled by record real estate returns, investors have shaken up a once-sleepy sector that is home to more than 22 million low-income Americans in 43,000 communities. Many aggressively advertise the parks as a guarantee of stable profitability – by repeatedly raising rents.

There’s also a growing industry of how-to books, webinars, and even a mobile home university that offers advice on how to attract small investors.

“You went from an environment where you had a local owner or manager who took care of things when they needed repairs, to one where you had people looking at cost-benefit analysis to get the least bang for the buck,” said Belus. . “You combine that with the idea that we can just keep raising rents and these people won’t be able to leave.”

George McCarthy, president and CEO of the Lincoln Land Policy Institute, a Cambridge, Mass.-based think tank, said the parks, which contain about a fifth of mobile home lots nationwide, have been bought by institutional investors in the past eight years.

McCarthy singled out Fannie Mae and Freddie Mac for guaranteeing loans as part of the lending giants’ affordable housing expansion bill. Since 2014, the Lincoln Institute estimates that Freddie Mac alone has financed $9.6 billion to acquire more than 950 communities in 44 states.

A Freddie Mac spokesman countered that the company purchased loans for less than 3% of mobile home communities nationwide, and about 60% of those were refinanced.

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

In Iowa, Matt Chapman, who lives in a park purchased by Utah-based Havenpark Communities, said his rent and fees have nearly doubled since 2019. Another park acquired by Impact Communities saw rent and fees increase 87% between 2017 and 2020, said Alex Kornia of Legal Aid Iowa.

“Many of the people living in the park were on fixed incomes, on disability, on Social Security and just weren’t going to keep up,” said Cornya, who met with about 300 angry mobile home owners at the mega-church. “It almost led to a political awakening.”

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

U.S. Senator John Tester from Montana, speaking at a Senate hearing this year, recalled that tenants complained about repeated rent increases in the Havenpark development in Great Falls. One resident, Cindy Newman, told The Associated Press that her monthly rent and fees rose by $117 to nearly $400 in a year and eight months — the same increase as in the previous 20 years. The company says the increase was $95 over a three-year period.

In addition to the rent hikes, residents have complained about being bombarded with fees for everything from pets to maintenance and fines for disorderly conduct and speeding, all packed into leases that can run to more than 50 pages.

Josh Weiss, a spokesman for Havenpark, said the company should charge prevailing market rates if it acquires the park at fair market value. However, starting in 2020, the company limited rent increases to $50 per month.

“We understand the anxiety any rent increase causes for residents, especially those on fixed incomes,” Weiss said. “While we try to minimize the impact, the financial realities do not change.”

The mobile home industry argues that the communities are the most affordable housing option, noting that average rent growth in parks nationwide was just over 4% in 2021. The cost of improvement was about 11%. They said significant investment was needed to improve the old parks and avoid selling them.

“We do have people who give us a bad name, but these are isolated examples and this practice is not common,” said Leslie Gooch, executive director of the Manufactured Housing Institute, the industry’s trade association.

Both sides said the government could do more to help.

The industry wants to make Federal Housing Administration financing available 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 the use of housing vouchers for mobile homes.

Resident advocates, including MHAction, want lawmakers to cap rents or require cause for increases or evictions — state legislation that passed this year in Delaware but failed in Iowa, Colorado and Montana.

They also want Fannie Mae and Freddie Mac to stipulate in the loans they repay that rents remain affordable. And they support residents buying into their communities, which started in New Hampshire and has grown to nearly 300 parks in 20 states.

A Freddie Mac spokesman said the company created a new loan offering that incentivizes renter protection, and last year made it mandatory for all future mobile home community transactions.

Ridgeview is unclear how the rent strike will be resolved.

Cook, which claims to be the largest operator of mobile home parks in New York City and has a tagline of “Extraordinary Features. Exceptional profitability,” he declined to comment. In 2021, the company closed a $26 million private equity fund that bought 12 parks in New York, but it was unclear if Ridgeview was one of them.

Residents, meanwhile, soldier on. Joyce Bales, an 85-year-old resident, started mowing her own lawn because crews only show up every month. Gerald Korb, a 78-year-old retiree, said he’s still waiting for a company to move a power pole and transformer he fears could topple over on his home during a storm.

“I bought the place, and now they’re forcing all this on us,” said Korb, who stopped paying rent in protest. “They’re absentee landlords, that’s what they are.”