I believe a lesson to be learned here

With all the press these days concerning Mobile Home Park investors buying up parks and then raising rents sometimes double and triple what they were, I believe there is a lesson in all this.

The lesson is Don’t Over Pay for a Park and you will not have to double or triple rents in year one! That is the only way I see this when I read story’s like the one below.
Time Out Communities doubles/triples rents

First rule in renting, you have to have renters to pay the rent for you to be in business. My thought is that if the park doesn’t work with a modest rent increase in the first year - not double or triple - you are probably paying too much for the park. NOW - on the other hand if these owners paid a fair price for the park and are just being PIGS about rent increases - well shame on them!

So back to my lesson - be the investor whom comes in and doesn’t double or triple rents because you can, instead be the investor that comes in and increases rents strategically over time and still makes a descent profit along the way. And DON’T OVER PROMISE your investors returns that ONLY happen if you double or triple the current rents. In my experience that doesn’t work out well for anybody.

Another issue may be Due Diligence in the front end - did these owners really do the best DD they could and if they didn’t and missed something and now they have a huge expense to pay, well again shame on them for the lack of DD. I don’t know if that is the case.

These are just my thoughts and comments only - I would love to hear your comments.

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All commercial real estate is and has always been valued on pro formas. This space has historically been unique in the sense that buying from mom-and-pop (nice way of saying unsophisticated) sellers has allowed for great returns on actuals. Those opportunities are seemingly behind us as we’re seeing a mark-to-market of the industry as a whole. For purposes of this discussion (vs. one re: morality), the rent raises drawing headlines are simply raising rents to market, and diligence likely argues that demand will be there regardless of who the tenant is. Animal spirits and efficient markets will continue to drive this dynamic. If you aren’t comfortable with it, someone else will be. The reality is the space, even as valuations reset, offers asymmetric risk/reward relative to other commercial real estate at this point in the cycle.

I think the principles you mentioned are the best we can do. But I still struggle with how park owners can address raising rents for legacy tenants on fixed income.

Even appropriate and strategic increases in rent will hurt them over a 5 year period (e.g. they will still have to move out). These people need a park that never increases rent beyond inflation or the CPI calculations covered by social security. There is not a good answer for these tenants.

It doesn’t matter if you give people four years notice that rents will get to market rates. These tenants have nowhere else to go. You are the bad guy and caused this problem. So is it better to deem these parks (that have not raised rents) as unmarketable and let them shut down? Also a bad outcome.

I have thought about options like a chattel reverse mortgage to cover the rent increases, but ultimately the legal complications are a barrier and optics of that can be spun negatively.



I’ve seen you post a number of articles here and on other forums with similar stories lately. I’m curious, what’s your angle? Why do you care if some investors behave this way? Do you feel that it hurts you in some way?

I’m not trying to be a jerk, but it almost seems like you’re a special interest lobbyist. Which is fine, but I’d like to know that before I comment.

@mhp Does animal spirits translate to human nature? I haven’t heard that term before.

What if a city , county etc, designated its own land for MHP development or new land to have the zoning? Obviously this in practicality wont be something that would be done, but creating new supply of available lots . I guess you could even push it further and do a subsidized form of lot rent. Like section 8 . But now you have a spot to put all of these other home under government control .

Or an agreement where it operates at a certain rent for x amount of time and then limited increases.

Im not saying this is what should be done or if its a good idea, just throwing this out as i was thinking more about the supply balance, if you flood it, you can maybe tick lot rents down…

@Dominic730, I can’t speak for @PG but the ongoing bad press isn’t good for anyone in our industry. If it continues down this path, right or wrong, MHP ownership will be lumped in with payday lending, debt collectors, and other perceived “predatory” industries.

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What would be the difference between present day government financed section 8 housing or possible government financed section 8 mobile home parks being built in areas with the highest mobile home rents—government does not need to make a profit but it needs to supply low income VOTERS with housing. Back a few years in 1968 bought our first mobile home to live in at White’s Mobile Home Park west of Grand Rapids. The cost of home Marlette (very nice home) $5,000 and lot rent less than $75 per month and the owner was thrilled with his new source of income!!! I become close friends with the owner-farmer (same church) and learned they could not built fast enough for the demand and the MA and PA owners were meeting a NEED not just screwing people out of their money to pay investors, etc, and the residents were thrilled with the opportunity to own their OWN HOME and live in the park. Today owners are mostly opportunist not builders of parks and for the last 25 years tenants are NOT bringing in new homes—WHY!, WHY!, WHY!!! The discussion of why has been side-tracked for years, but just know the RV park owner are today where MH owners where 30 years ago–they built and people bring in their own RV’s and if the rents are trouble some they can easily MOVE!!! Tenants are not to be pawns of greedy owners but respected as humans and the general public with both spouses working are struggling to pay bills while are back doors are open to illegals that crowd our schools, hospitals, and social services. By the way our first park was at Mission, Tx with 235 spaces!!!

You can see the dilemma the industry is in because the general opinion is that mobile home parks are thought to be part business and part non-profit, with owners running scared of public perception while at the same time trying to use normal business principles in managing their investment. It’s basically a no-win position that is unique to this one asset class. If you raise rents you’re “evil” and if you don’t raise rents and therefore can’t keep the property up to a high standard you’re “evil”. Let’s all just be honest and state that the public is wanting to unfairly place the burden of housing those few residents who cannot afford to live in a modern world on the shoulders of the mobile home park owners. The correct and fair solution would be for the U.S. government to subsidize the lot rent of those who cannot afford to live at market rent levels, but we all know that won’t happen because those programs are completely out of money. That’s how the apartment industry has handled this same criticism since Section 8 began in 1937, and nearly 5 million apartment dwellers are on this program (which is why it’s broke).

When you bring any asset back to life, it requires risk and capital. It also requires a re-set on rent levels to justify that investment. This is true in all real estate sectors, from the hotel renovation to the apartment rehab. If there are non-profit investors who are willing to buy mobile home parks and renovate them and keep rents artificially low, then more power to them. However, I see nobody stepping up to the plate on that one.

In case nobody is noticing, there are more mobile home parks being redeveloped in the U.S. right now than ever before. These are big parks with 200+ lots and the future uses range from big box retail to apartments. I’ve talked to some of these owners and they just didn’t want to the hassle of keeping the park open since all they get is criticized for everything they do. At the same time, low rents don’t justify keeping the park as a park, and there’s much more money (and no criticism) in pretty new apartment buildings.

It may be hard for people to accept, but it is possible to construct a win/win business model in which the resident pays higher rents and gets a better lifestyle, while the owner risks capital and gets a high rate of return to make it all possible. That’s what most park owners I know are doing. And it’s a good thing they are or America’s supply of affordable housing would be dwindling at an even higher rate of speed than it already is.


@Dominic730 I posted this article to get feedback from the group, to share my thoughts and to create conversation. I have been in RE investing for over 20 years and not much “hurts” me at this point. I feel a sense of giving back and sharing of knowledge when I address what is in the news and ask for feedback.

I am sure there are a lot of “new people” on these forums that may read or listen to stories like this and think “Well I am out of here” or worse yet not even try to get into this business because of a story or articles they see and I believe a recourse like this is meant to share all sides of things. That is how one learns and gets wise.

Thanks for your feedback


Hi Frank,
Thanks for this post. There are 3 related topics I have been pondering as I do not have much knowledge or data on. First, I think that in order to level set the public perception, we (as an industry) need to share relevant data on an apples to apples basis. This problem is that is is hard find. With that said, are you aware of any studies/research which outlines:

  1. True economics of ‘subsidized’ affordable housing solutions. I find it ironic that MHPs are considered affordable yet we are entirely private, without any public subsidies. I am wondering what the economics of "ANY’ affordable housing projects are and would be without subsidies. How many investment projects would there be without public subsides? I am asking as I do not fully understand their economics.
  2. A data point which is more public is ‘rent increase’ standards amongst different industries. Most of us know for a fact that apartments, as a practice, continually raise rents during good times. They will press the market until there is a ceiling. The interesting thing is that I do not see backlash on that practice. Of course they are usually an entirely private sector, not subsidized (hmm, aren’t we as well).
  3. ROC and other tenant owned MHPs. I see lots of discussion on this concept. I am all for their place in the market but do not know much about them at all. How are their economics? Are they viable and how are their long term performances.

Unfortunately, as you stated, we are “thought to be part business and part non-profit”. I do not know where that misconception originated from but I believe its a major crux of our problems. I do wish the national MHI would address this.

Note: I do realize there are many MHP owners who are slumlords and abuse the power they have. This I totally ABHOR — but this also exists in every niche. Those infractions need to addressed and stemmed. But I also know many owners who are trying to do the right thing. Its very difficult when people think we are like a non-profit, yet we have absolutely no public support.


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Frank, thanks for the info, but PLEASE address the area WHY tenants are not in general bringing in new homes and instead more credit worthy park owner are being caught with that problem . Presently we are in the RV and MH park business and seeing a Newmar at $250,000 parked in our park is no problem but a True home at $40,000 is a stretch for a resident to bring in. I believe the poor in general ARE POORER today than 25 years ago and of course the wealthy are doing fine which compounds the problem where people complain that workers at Walmart make $12 per hour and the top brass make over 5 million per year. People make comparisons just as easily of park owners showing our million dollar plus homes ??? Their is a rebellion against people of wealth and most people assume if you own multiple parks you are wealthy and we can become a target. We need to treat our residents with respect and the first month of new owner ship raising $60 per month is disrespectful–do it gradually–stay out the news—and being an asset to the local area will help in the PR area. Is your park an asset to the area or a negative? Do you sponsor any local events, are you part of the local C of C , what do you give back to the area or just a taker???


Thanks for sharing the link to the article.