Comedian John Oliver on Mobile Home Perils
Investor · Phoenix, AZ · Member since 2014 · 230 posts · 122 votes
This made me cringe...
We've got mobiles rented in NorCal by people of very modest means and have been mindful of that.
https://slate.com/culture/2019/04/john-oliver-mobile-home-rent-rolfe-last-week-tonight.html
John Oliver is not a newscaster, he's a comedian.
Not sure how I went from the New York Times calling me "the best thing going in affordable housing at a time when the nation's need for low-cost places to live has never been greater" in 2014 to being the brunt of a roasting from a comic on HBO, since we haven't changed our business model in over 20 years.
The truth is that when you upgrade and invest millions of dollars in old mobile home parks, the rent has to go up significantly. It's either that or simply bulldoze them and sell the land for a higher use. This is no different than when apartments, hotels or any other asset is redeveloped. And, in the same vein, there's no doubt that some residents will be displaced. But the vast majority of residents are happy to pay more rent for a nicer place to live.
With the median apartment rent in the U.S. standing at $1,200 per month and the median single-family home at $1,450, it's hard to believe that any sane person would consider the median lot rent in the U.S. incredibly high at $285 per month. If a 5% per year rent increase sounds too high -- which is about normal at most parks and equates to about $15 per month -- then can somebody explain to me how anything from Obamacare to cable TV rates are survivable?
Don't get your facts from a HBO satire show. If you are really interested in affordable housing, do some factual research. The reason that so many private equity groups are quietly buying mobile home parks is that it's probably the best business model on earth. It took the industry 60 years to get in this position, and it gutted out some terrible decades to come out on top in terms of providing the least expensive detached dwelling in the U.S. at the very moment that our country's housing market priced nearly 50% of the population out of the ability to be a homeowner. I didn't create these market forces, I simply invest in them.
It's not hard to see what's going on here.
I just find it odd that someone who could be investing in multi-million commercial and new residential developments decide to purchase trailer parks on an regional or national scale.
What's the motive for entering that space?
Some investors, like our owners, Sunrise Capital Investors, will tell you they do it to save affordable housing for the future while turning the screws on the current tenants. Jacking up the rent and intimidating homeowners while claiming they are only upgrading the park to true market value - all due to the poor management of the previous owners - is the line we get. The real motivation is profit. Low investment, high returns, captive group of low income people who can't afford to move their homes so will do just about anything to keep a roof over their families' heads, few governmental regulations to protect tenants of parks, general stereotypical disregard for the people who live in parks (you know, trailer trash, etc. that continues to be perpetrated), low maintenance on the part of the owners since most homes are owned by the tenants, the ability to hire a low paid on-site maintenance person to assume 24 hour responsibility for the park...doesn't seem to be a downside, does there? Except for the evictions, the homelessness, the physical and emotional stresses on the tenants, the social problems associated with rootlessness, the cost to the local community and state when people who were paying their own way suddenly can't afford food or medicine...these are just some of the results of housing insecurity. The instability caused by evictions, both from parks where the land is being redeveloped, or from unaffordable rent increases when a new owner steps in to "save us" causes a burden on the greater community while the owners continue to rake in their profits. There are better ways to save affordable housing and it does not include investors.
PROFITS! PURE AND SIMPLE! Higher rates of return and much easier to manage and control. Most are the elderly, disabled, retired and poor. These people are the easiest to take advantage of by far. Wow!! looks pretty sad doesn't it
Wow, I think the government or hell why not the RICH investors just pay for everything? Real estate made Donald Trump wealthy....what about Warren Buffett? Well I know we are ALL entitled to have our hand out and expect it to be filled. Why do we need real estate investors? Why can't the government just take care of that for us?
Look there are always going to be divides and disagreements. But I don't care who says what or who does what or how what gets done. At the end of the day Real Estate Investors ARE needed. Are there some folks out there that practice unethical business practices, sure there are. This problem exists in EVERY industry. Every single person has their own "demons", we deal and go on.
Here is why I am saying these things: I have a good friend that fell on hard times. We have all had those friends or we haven't experienced hard times ourselves. We are HUMAN. I helped her check local parks for a home, 3 months later she found a home that was pretty nice and livable for 1000 dollars. Blew my mind. Her lot rent was 480 a month at that time, 3 years ago, now her lot rent is 620. I wonder why? Greedy park owner? New Park owner? Hmm just MEAN INVESTORS LOOKING TO PREY ON THE LAST DOLLAR OF EVERYONE IN THE PARK? .........
Nope, property taxes went up significantly due to growth in that area. I am wondering how the investor/owner can manage property taxes. Isn't that the government? Oh wait the GOVERNMENT RAISED TAXES BECAUSE THE GOVERNMENT IS TRYING TO GET THAT LAST DOLLAR. But I am sure the investor/owner is just supposed to absorb any increase in the costs associated with owning/operating a park. That way the lot rents stay the same. Heck, what were lot rents in the early days? 50 a month? 100 a month? That would be like you trying to pay your light bill based on rates back then. Wonder how long the light company would let you have light.
Now I am not advocating predatory lending or predatory people. I do disagree with those practices. But this sense of entitlement because the rich are rich and the poor are poor is ridiculous. Look the rich are rich because the WORKED FOR IT....luck does NOT exist. I am talking about the true rich. Not the, "I inherited my granny's money and didn't have to work for it and have no skills" rich. I am talking about the people who BUILT what they have. WORK-DETERMINATION.
Find something else to chastise. Once you own a park and get a true idea as to what it costs to run and operate a park. Not to mention dealing with....um....PEOPLE THAT FEEL ENTITLED......those rose colored glasses will change.....especially if it starts affecting your money.
This is not about "mean investors". No one ever suggested all real estate investors are bad. This is about trying to preserve affordable housing for people - working, retired, veterans, families...all of us. The idea of purchasing manufactured housing parks and squeezing as much as you can out of the captive people who live there is the subject of Frank Rolfe's MHU, podcasts like the ones our owners, SCI, peddle on their website, and loads of others out there who can smell the blood in the water. Parks are being snapped up by corporate investors and others who then wring all they can out of the people who live there. Really, it's a thing!! It's a killing!! I guess it is about entitlement. I just don't agree with who the people who feel entitled are. Pretty sure it's not the people who purchased homes they could afford in neighborhoods they love and who have limits on what they can pay.
@Frank Rolfe Does this work in each state as a way not to run afoul of Dodd-Frank?
"They also prefer to buy used trailers to fill empty lots at their parks. That keeps expenses down for those paying both the lot rent, or “dirt rent,” which every resident pays each month, and the rent on their trailer — half of which can be applied toward purchasing any available unit. A used three-bedroom trailer can cost between $10,000 and $20,000, depending on its age, and take 10 years or so to pay for. The typical tenant who rents from Rolfe and Reynolds pays $250 or $300 a month in lot rent and another $200 or $300 if also renting a trailer. “The trailer park is people’s last choice,” Rolfe says, “and we recognize that.”
I
Look what happened in New York yesterday. Times are changing...
Overview of Policies Won in New York:
-- Rent Protection: The bill adopts the first protections against unjustified rent increases for manufactured home residents in New York. Community owners cannot increase rent (including all rent, fees, assessments, charges, and utilities) more than 3%, except if justified by an increase in operating expenses, property taxes, or costs directly related to a major capital improvement. Residents can sue in court if a rent increase above 3% is not justified. Even if an increase above 3% is justified, the rent increase cannot go above 6%, unless the court approves a temporary hardship exception.
-- Tenant rights if existing or prospective owner is going to change the use of the property: If the community owner is going to change the use of the property and no longer operate it as a manufactured home community, the community owner cannot evict tenants for 2 years and can be ordered to pay each homeowner up to $15,000. Also, if the community owner receives an offer from a buyer and the buyer is going to change the use of the property, then the homeowners and tenants must be given 140 days to put together their own offer and have the right to purchase the community.
-- Reforms to rent-to-own contracts: Rent-to-own contracts must clearly detail specific information about the home and the payments so renters understand the terms, and they cannot charge any additional fee at the end of the contract for transfer of ownership. If a tenant with a rent-to-own contract is evicted, the community owner must refund all the rent-to-own payments. The bill also clarifies that a tenant with a rent-to-own contract is a renter until ownership transfers and the community owner is responsible for warranty of habitability and major repairs until ownership is transferred.
-- Requirements for lot rent leases: Leases must include Homeowner/Tenant Bill of Rights that will be developed by the Department of Homes and Community Renewal. If the community owner does not offer a lease, the tenant has all the same rights has a leaseholder and cannot be evicted except for allowable reasons (such as non-payment of rent). Also, a community owner cannot increase rents under tenants are offered a lease.
-- Reforms to other fees imposed by community owner: Tenants only have to pay attorney’s fees to a community owner if ordered by a court. And late fee can’t be more than 3% of what tenant owes and can’t be imposed before 10 days after due date.
For the full Housing Stability and Tenant Protection Act of 2019 click here:
So, I ended up here because I just heard BP podcast episode #339 with Frank. I think it was recorded after this lively discussion. It was interesting and he did not come across as he does in the John Oliver segment or his training courses. Everything he said was valid.
But watching John Oliver's video and reading the entire article that Frank linked to shows that even he knows that he's attracting a number of bad apples to his courses. The fact that he half-heartedly told them that they shouldn't significantly jack up their rents while telling every that they're way under the sweet spot of $495 per month proves the point.
And while one could say that he's not responsible for what people do with the information he's giving them, he needs to speak out more and louder.
Plus, what he said does make him seem like a bad apple whether it's true or not.
There certainly ethical and unethical ways for MHPs to be run... whether they're legal or not.
It seems to me that @Gail Travers MHP used to be run ethically. Now, by drastically raising the rent, while legal, SCI is running it unethically. And saying that it's only $15 isn't really true when you average all of the new MHP owners.
I understand Frank's point that tenants have been vastly underpaying rent for years compared to the rest of the market but jacking the rent just because the former owner wasn't charging full market value isn't right either.
Plus, it's interesting that many commenters say stuff like, "Well, when you flip houses, you're charging more."
That's true. But here's the difference... I'm putting my money and hard work into it BEFORE I make my profit. And with rentals, I fix them BEFORE I raise the rent. I think it's odd that these MHP investors say that they need to raise the rent before making repairs.
Also, nowadays, if I still "rented" with my current income, a 5% increase wouldn't hurt me because it'd be the cost of one killer night out on the town. But back when I didn't have two nickels to rub together, 5% would have been three days worth of top ramen. Hell, even if you doubled my "rent" (can't be done since I own my home), while I'd be super pissed and start looking for a new place, I have more than enough money saved up to get me through a whole year of "double rent".
These people don't have that luxury.
And don't give me any of that "pulling themselves up by their bootstraps" or "they're lazy" non-sense because nobody is successful on their own and most of the people in MHPs either have two or more jobs or they retired after working for 40+ years.
Now, I'd like to believe that the Frank Rolfe I heard on the podcast is the true Frank. Yet, when I hear what he said in his own course, I have a hard time believing it.
Maybe the "Waffle House" comment was taken out of context, but I haven't heard any claims that his other comments were. If they were taken out of context, post them here so we can all make an informed decision. And if they were just stupid statements, own them, apologize, and don't make the same mistake.
God knows that I've said really stupid things in the past and I guarantee that I'll say stupid things in the future. Everybody does because we're human. Just try to correct the problem when you inevitably do say something stupid like... My Padres are going to win the World Series next year!
We have already watched one mobile home community in our area succumb to poor corporate ownership. The rent goes up, people can no longer afford to invest in the upkeep of their homes, the investors put very little into the maintenance of the community and soon the once vital neighborhood is a sad place to be. We, in Akron, NY, were willing to fight our corporate owners - Sunrise Capital Investors. We had a rent strike, which ended when Sunrise agreed to sell the park to us for fair market value. We were able to secure funding to purchase the park and form a co-op! However, fair market value was not enough for our owners and the sale fell through. We were unable to fund the extra million Sunrise wanted. Our desire to be free from corporate ownership remains strong. Sunrise purchased a second park not too far from us and we fear for them as well.
Frank Rolfe's past comments about mobile home residents and their communities are a sad and lasting testament to the growing disregard some Americans have for one another. It is much easier to misuse people when you can convince yourself and others that such people are undeserving. "Live and let live" sentiments are seen as weak and a sign of an "entitled" underclass. These are difficult times.