and I am now aware that this Park closure thing is nationwide, not just a Florida phenom. Rent control is a nasty concept and several California cities have given up on it…they were sued into submission, Santa Cruz comes to mind and D’Anza MHP. Rents went to 5K per month from 1K per month when rent control was banished. MHP owners were tired of subsidizing home sales. 1980 doublewides were selling for 500K on the Pacific Ocean cuz lot rent was a paltry 1K per month (due to rent control). In Santa Cruz a 1 bed apt. rents for almost twice that amount…ocean front 3 times that!
To get around this, owners were making rental lots condo lots where you buy your lot. This conversion was squeezing out low income folks and making owners phat. I support this…an owner takes the risk and plunks his cash down, i feel he (or she) should be able to fully develop to maximum potential and profit.
What do you all think? Cruel or just? In between? Happening in your market?
Pinellas County, FL is offering huge incentives to convert MHP to affordable housing (under 125K). 10 years of NO property taxes I heard from a local MHP owner…
Greg Meade
converting MHP to affordable housing - funny, that’s how i promote my business, that a MHP is the most affordable housing available, especially through my flexible financing - only thing cheaper is Mom’s basement . . . or your car (and I also promote that I can set up MH payments cheaper than a car payment!)
I see this trend here in WA - someone told me several weeks ago that something like 28 parks have shut down in the state here in 2006 so far . . . and its all for higher better use (HBU).
Bad for po’ folks, bad for Lonnie dealers (except the availability of cheap homes to be moved) because what if the park in which I am so heavily invested in notes decides to crap out - I have (in WA) 1 year to make hay. Truth be told, it is making me rethink my concentration of new note activity.
A PM told me that the local GreenTree rep told her that they would be flush with repos nationwide soon - seems SOMEBODY who owns a lot of communities nationwide is selling them off for HBU, and many GreenTree-financed homes are defaulting. Now is this ONE seller? or is it marking the trend that Greg notes?
We’ll see - our business is changing very rapidly
Greg,
I believe what you and Steve are seeing is purely a coastal phenomena, which makes sense because those areas are where the land values zoomed into the stratosphere during this recent real estate stampede.
In most areas of the Southeast, Midwest, and Southwest mobile home parks are still in the same condition they were six or seven years ago when the industry bottomed out. In fact, many are even worse and have become true trailer parks.
However, I am seeing more savvy owners starting to upgrade parks and setting up nice living environments. A large operator purchased two parks in my small town over the past three years, cleaned them up, put in newer homes for sale and now they are booming.
I’m still a firm believer that great times are ahead for smart operators who have transformed trailer parks into mobile home communities. In my area alone foreclosures are rising every month. The people who were put into stick built homes with loans that were set up for failure will soon become our very best customers.
The four parks I own are slowly but surely filling up, but we are “locked and ready” for the day when they are completely full. It won’t be long when our Mobile Home ATMs will be spitting out cash faster than lottery machine prints tickets at the local convenience store.
Yes, the industry is changing, but you ain’t seen nothing yet.
Steve
I have to second what Steve said specifically here in the midwest. A lot of the larger communities in my area are cannibalizing eachother, buying the homes for sale in each other’s communities and moving them. This, of course, is a zero sum game especially since nobody is buying NEW homes these days. Seems to me the movers might be the only ones getting ahead in such an environment.
Anyway, a local guy who buys many of the repos and rehabs on his lot said that Hometown parks are no longer buying any of the repos in their communities (this is in Michigan, at least). Not sure what this means, but I have noticed HTA is doing a big RTO business here with new big d/w’s at $60k+… and I’m guessing they, or someone, will be taking a bath on these when the tenants flake out or, if they DO buy, when the loan defaults.
Jeff