Why the Media Does Not Understand Our Business Mode By Frank Rolfe

It’s a well-known fact that the media hates the mobile home park industry. They delight in producing television shows like Trailer Park Boys and Myrtle Manor, and motion pictures like 8-Mile that promote the stereotype that all mobile home park residents are misfits with a beer bottle in one hand and a cigarette in the other. But recently they have decided to attack our business model as well, claiming that all park owners are simply wealthy opportunists that gouge rents on hapless souls that have no choice but to pay whatever the landlord requests. Is that really how it works?

The fallacy that customers have no options

One of the first issues that the media has with the mobile home park business model is that the customers have no ability to leave. They often cite my Bloomberg quote that they “are like Waffle House customers chained to their booths” (which I gave the Bloomberg writer in trying to explain why mobile home parks have a lower loan default rate than restaurants, not expecting that they would take it literally). Of course, the truth is that a truly unhappy customer (or one that just needs to move for work or family reasons) has two different options. One is to sell their mobile home. If you simply go to MHVillage or MHBay you will note the sheer scale of mobile homes for sale from private owners. And that does not even include mobile homes being sold by realtors such as Century 21 and Remax. I’m not sure how the media missed this fact. We have mobile homes being sold in our properties frequently, and to say that’s not an option is puzzling. The other fact is that most mobile home park owners will pay for the move of a mobile home to their property (these are called “organic” move-ins). Therefore, since the barrier to moving the mobile home is effectively non-existent, no case can be made for this argument.

The problem with number comparisons: rent

The median home in the U.S. is over $200,000, and the average apartment rent is around $1,400 per month. With these giant starting points, an increase of 10% would be $20,000 or $140 per month respectively. That’s what 92% of all Americans know (8% live in mobile homes). However, a 10% increase in the average mobile home park lot rent of $280 per month is $28. That’s 80% less than apartments and 1/1000th of single family homes. To have a mobile home park lot rent equate to the same increase as a 10% apartment rent hike, it would have to go up 50%. Nobody seems to have figured out the fact that, in real numbers, you can’t compare mobile home park lot rents to the other forms of housing simply based on fast interpretation.

The problem with number comparisons: home price

And, of course, there’s an equal fallacy in comparing mobile home numbers with stick-built. Mobile homes are not “real” property, instead they are “personal” property – the same classification as a car. Nobody buys a mobile home with the expectation of price appreciation. They buy them because they are insanely inexpensive compared to traditional housing. They are after the monthly savings, not some phantom price bonanza when they go to sell 30 years from now. In fact, if you take the dollar savings over a 30 year period in a mobile home ($1,000 per month less than a stick-built) and then compare it to the price appreciation of the stick-built you’ll find the mobile home resident did better. Here’s the math: $1,000 x 360 = $360,000 savings with mobile home vs. price appreciation of $200,000 home (don’t know the number but can’t be more than $100,000, right?).

The non-profit confusion

What’s with this assumption by the media that mobile home park owners signed a sacred vow not to increase rents? Mobile home parks are for-profit enterprises and to even suggest differently is both troubling and odd. There’s this thing out there called HUD that subsidizes the apartment industry via a program called Section 8 – OK, that’s a non-profit. But mobile home parks are just one of a hundred sectors of traditional real estate and none of them are non-profit. Some people tell me that mobile home parks are different than all other real estate sectors because we deal with the “poor” and therefore can’t use traditional economic models. Two responses: 1) our customers are not “poor” by any definition [the U.S. defines “poor” as earning around $1,000 per month, while our average customer in the industry earns $2,500+] and 2) there are many other real estate sectors that deal with the actual “poor” and receive no scrutiny at all, such as apartments and some older motel operations.

The hypocrisy of subsidies

And speaking of the apartment industry, how is it possible that nobody ever realizes that we are the only form of nonsubsidized housing in the U.S.? Apartments and single-family homes are supported by the Section 8 program at HUD that pays roughly 80% of the rent. Single-family homes are blessed by Fannie Mae support to make home sales possible for millions of customers who could not qualify using traditional evaluation tools. As these have spiraled out of control and left millions of people unable to afford them, the government steps in and quietly solves the problem via subsidies and changing the rules. But not mobile home parks – we get no support at all. This is an apples to oranges issue that the media never picks up on.

The proof is in the pudding

I think that one of the biggest issues in the unfair media commentary on our industry is the simple fact that very few writers – if any – have actually been inside a mobile home park. They get their knowledge of the industry from the typical sources: Trailer Park Boys, Myrtle Manor and 8-Mile. So the ignorance just keeps going full circle. The only writer that I know that has ever spent even one night in a mobile home park is Gary Rivlin from the New York Times. He lived in one of our parks for a week, and it completely changed his attitude on the industry https://www.nytimes.com/2014/03/16/ magazine/the-cold-hard-lessons-of-mobile-home-u.html . After officially becoming a mobile home park resident for a few days, he was astounded at how happy the customers were and he raved about the fact that mobile home parks “are the best thing going in affordable housing”.

Conclusion

Mobile home parks and Rodney Dangerfield share the same tagline: “they can’t get no respect” – at least as far as the media is concerned. This is a sad since anyone that spent the time to learn how the business works would be a huge fan. Until then, it’s good that most mobile home park owners have a tough skin and a clear conscious.

Frank Rolfe has been a manufactured home community owner for almost two decades,and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank’s views on the manufactured home community
industry visit www.MobileHomeUniversity.com.