The Problem With Low Rents & Economics of Mobile Home Parks

I think everyone should read this.

The Problem With Low Rents by Frank Rolfe

Finally, Frank lays it out clear and simple. The “narrative” of MHP needs reframing.

MHP is low-cost “affordable” housing that is not government subsidized - “if it could be cheaper, it would.”

Typically the landlord has to “fill” the empty spaces and sometimes has to pay to evict or rehabilitate homes. So there is a risk/reward ratio on filling every lot. It’s a potential liability if the home is ruined and the tenant abandons. The landlord is taking the risk that the tenant is a “good” tenant and never becomes a “bad tenant.”

If it’s less risky for the same reward as other investors are able to maintain, then it’s a “good investment.”

The landlord takes the risk of filling every vacant lot, and a new 16x76 HUD-code home can be had for about $40k-$50k. So if the landlord spends $40k or $50k someone can have a home (in exchange for rent). Thus the landlord can bear the cost of the new home if the value of the “lot rent” equals the cost of the home. The value of the lot rent depends on the actual performance of that lot, though. So there is risk and commensurate return, and it is the ratio that is important.

In other words, every new home brought in and “rented” turns into an annuity for the owner; the monthly payments are whatever is left over after expenses, and the term is indefinite. The principal cost of the annuity is the cost of putting up the capital to get the home to where it is ready to provide low-cost housing. A portion is better turned over to the resident after a certain period (“home profit”) and they own the home and the responsibility. Another portion continues indefinitely.

This interplay of large lump sums spent by the landlord (filling, evicting/demo/rehab) and the little monthly rent payments creates an implied discount rate. Would you trade $50k for a stream of payments? Depends on how much, and how long, and how much effort and aggravation and stress it takes. The fact that one can do this in MHP means the landlord is the “capitalist” happy to shell out the bucks to “create” “affordable” housing where it will be used most wisely. If the extra rented lot plus home profit is worth the “return” compared to the “risk.”

If the extra rented lot plus home profit is not worth the risk, the park will go “downhill.”


I’m not a socialist. I’m not for driving rents as low as can be.

But Rolfe’s argument that all investments are based on rate of return is, while factual, disingenuous.

I’ve seen way too many landlords who see a real estate investment as a cash cow to be milked until it collapses from exhaustion. His implication that higher rents will drive landlords to maintain their investments is simply untrue in the real world where most of us reside.

To make this topical, I have a privileged vantage point of MFD owners on Southern California. The maintenance level of many properties I’ve seen — valuables cash flowing properties, some owned by the same families for multiple generations — would turn your stomach. This is an arena where othering is rampant — where landlords and tenants are both particularly oblivious to the needs and desires of people of other ethnicities than themselves.

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There are immoral people in every industry. The point, I think, is that it is not inherently bad to raise rents because the rent is used (mostly) to benefit the community. Of course if the rent is raised more than necessary and/or the reinvestment does not happen, that is socially undesirable. But the “narrative” of providing a service but not trying to make a profit from the “free market” is how “affordable housing” is typically framed. The narrative needs to be, “this is a valuable commodity, let’s preserve it.”


You cannot have low rents and high-quality mobile home parks – at least not in the real world in which new owners have to make mortgage payments, make capital repairs and provide professional management.

Can you have high rents and low-quality mobile home parks? It’s possible, but is a pretty rare occurrence. Between loan covenants, city inspection requirements, and the competitive nature of housing (yes, other park owners will steal your tenants offering a free move if they are unhappy in your community) it would be extremely hard to simply raise rents and not put any capital back into the property.

But if it requires higher rents to attain and maintain the status of a nice place to live, I think it’s worth the risk for society to embrace higher rents since the opposite leads to 100% certainty of disastrous results on mobile home park quality of living and, ultimately, their destruction and replacement with more profitable uses for the land.

Brandon is 100% correct that there are some bad operators in the mobile home park industry – I drive by those properties all the time. But I don’t know any bad operators who charge high rents, only low ones. The last park I drove through that I thought “what a disaster this place is” was a park in Iowa that, consequently, charges the lowest rents in the market. I’ve never driven through one that had high rents and an appalling property condition.

I have been criticized for years over my narrative that the solution to elevating the mobile home park industry and the lifestyle quality of residents is through higher rents. However, I believe that it has proven to be true over and over again, and I have seen no example of a successful park – both for owners and residents – that has low rents. Since society acknowledges that every form of real estate requires capital and a decent rate of return, and that bringing old properties back to life is a plus for all involved, I don’t understand why only mobile home parks are singled out on this issue. I have provided articles and quotes out of major media outlets that applaud those who redevelop old downtown neighborhoods by pouring capital into rebuilding these deteriorating properties, and raising rents to support a better end product. Why the double standard?


One reason for the double standard is because it’s housing. What’s the “right rent” is not an easy question to answer. There’s a lot of averages. Too low is obviously not the answer. “Keep raising it!” is also incorrect.

ROC (Resident Owned Communities) probably has great data on this.


The little item being ignored is the value of our money is being debased. 1965 could buy a new Marlette mobile home for $5,000 and lot rent of $30 per month in a classy park in MI. Mobile parks could not be built fast enough by owner operators. Does it cost more (higher expense ratio) to be a multi-park owner vr. than an owner-operator with 2-3 great parks–I would from experience say yes. An absentee owner generally has little community input and when the new out of state owner announcing new ownership one of the first item is increasing rents which can really be insulting to people with fixed incomes. Presently with the fever pitch of no normalcy complaining about high rents will be NEWS. We have a currency problem and it will become much worst–over $2 trillion handed out of funny money to some people who will not work since unemployment checks are greater than working—we are in a major mess having left the gold standard from the 70’s. High rents?? We all have to live with our conscious on how we treat our fellow citizens.


Considering the bond market right now and volatility of the stock market, mobile home annuities are looking pretty good to me.

The best and fastest way to improve a park is to raise the rents.

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My conscious has very little to do with what the open market will set the rents at. Im in this for a business income not charity.


Presuming one is completely self focused, amoral, there is ample reason to run a clean community and invest money in improvements. Doing so improves the park, entices new tenants (100% of whom chose you vs every other living option available to them), and enhances long term equity. Yes, current cash flow is sometimes chosen vs long term mutually beneficial equity enhancement for the owner and the tenant. But, as Frank mentioned, those who don’t manage a properties well nor do they reinvest in their properties are pulling more money from a future pocket to put less money into today’s pocket.


Low rents like $550/month are what the MHP charges right next door. Owned by a Canadian.
That seems REASONABLE to me.
Here in :canada: Cove Communities it is Owned by Americans. It is UNREASONABLE, charging $1115/mo with yearly increases of $75, just for the lot rent. Evictions at 14 days & they take your home.
And they can’t even fix the roads here!!!
Tell me WHO is going to be able to afford this in 10 years???
Not a single person, working or on pension, who had paid their homes off, whose husband has died, not a family who also works and has a car loan & a mortgage for 25 years.
Why are y’all trying to push us out???

I really don’t get it. We all need somewhere to live. Rich people don’t wanna live here. They on the other side of town with the fancy shops & homes.
There are no mansions on this side of town, no one here owns a Ferrari or Porsche.
Why can’t we live on a piece of land for $500 a month?
That seems affordable to me. Not to be mean but I hope everyone moves out in 10 years & they can sell it to the City for more condos.

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Which community are you referring to?

Presently very few park owners have ever developed a park from the ground up (RISKY) nor have been an owner operator. The original owners knew their system (wells, sewage plants ect, they built it) knew their residents and were involved in their LOCAL community and generally lived in the park. The sites could not be built fast enough for new residents bringing in NEW HOMES and generally were very EFFICIENT operators that did not need high rent or raise rents EVERY year. Presently the RV business is booming, parks are being built, parks full with new or newer rigs, a little like the MHP business of 50 years ago. Just my experience–and we do own parks! The first MHP we lived in the owner was out 50-60 hours a week adding sites etc. and he took time to be friends with the residents—lots of changes for the better??? Really how many parks do we need to own to be wealthy and treat our fellow citizen kindly?

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Sorry to hear that your spouse died, you lost your job, and you can’t afford to live in your home anymore. Luckily, Canada is a free Country so you are able to move to a more affordable place.

I have a Park in Kittery, Maine the rents are only $510.00. PM me if you want to move in. We have a brand new double wide for sale it’s $180K. If that’s too high then we can order you a nice single wide. $79-99K depending on options.

I hope things turn around for you.

All the Best.


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The thing about raising rents that a lot of people -especially tenants- do not understand, is that the price of everything goes up on a yearly basis: Maintenance costs, labor, taxes, just about anything you can imagine continues to increase in value. It would be a different ballpark if the rents were at market value, and the price of everything remained the same or even went down. But that’s clearly not the world we live in. Therefore, rents have to increase regularly to keep up the quality of the property.

I don’t understand why there is always so much push-back for the landlord to never raise their prices, often making it an emotional argument rather than an economics one (You can see this in the media as people portray private landlords as villains of society) when that same month their internet service -the same one they’re using to vilify private landlords- raised in price once again and worst of all you can’t even contest it, because internet companies often make it so they’re the only ones in the whole area.They get to gouge the prices and offer terrible service, while the customer has no other choice but to pay it, all while receiving little to no push-back. There’s extremely predatory companies out there, some in essential services and products, yet I only see private landlords take the blunt of it. Mind you this perspective comes from someone with a very poor background and my family has always rented, never owned.

Furthermore, Improving the quality of your property is the best business model as landlord. Being a slumlord -while also a morally wrong thing to do- is not even a good business model: Less appealing properties sell for less and attract worse tenants, and also conversely make less money. The landlord’s best interests are aligned to properly maintain their property and keep a quality standard of life for their residents.

The reason so many Mom & Pop parks have insanely under-market rents is because they caved to tenant pressure, did not raise the rents and conversely ran their business incorrectly. Eventually their business model became unsustainable, their property deteriorate, tenant quality decreases and then the differed maintenance gets to them, which ultimately ends up in them selling the property. This is no coincidence.

From a moral standpoint MHP owners are offering the cheapest form of affordable housing in the country. We are not in the apartment business charging people $2,000 for a tiny studio apartment in a building that’s seen better days 50 years ago. People are able to have their own home, a yard, have pets and all at roughly half the price apartment prices in that town.

I sleep well at night knowing I’m running my business properly, while also genuinely offering something valuable to my residents that even the government (who is supposed to be one stepping in to help people) can’t.


How and why did this discussion turn into moral judgements rather than intelligent business strategy? Owning and operating a manufactured housing community is not, and should never be, any different than manufacturing aluminum foil? Of course, the foil should be safe to use - so should a community be safe to live in. If the foil manufacturer promises 500 feet in a roll, there should be 500 feet in the roll. If a community owner promises a club house with a fitness facility, that should happen. If a community owner promises “lifetime leases” to those buying homes that are placed in the community, that lease should be honored.

None of that means the community owner has some moral obligation to make sure the tenant can afford the lot rent. Change is constant.

When I headed a large chattel lending operation, we were among the first to use risk based pricing. Our “A” borrowers rarely defaulted on their home loans unless one of the wage earners died, or there was a divorce, or an unfortunate marriage, or there was an illness that went beyond what their insurance would cover. Repossessions ran below 1%.

Our “D” borrowers lost homes for many reasons and our repossession rates often exceeded 5%. In my many years of lending I learned that character was the main reason people lost homes and our “B” borrowers had more character than our “C” borrowers and our “C” borrowers had more than our “D” borrowers. If that wasn’t true the disparity between “A” and “D” borrowers would never be as wide. All of this is true with tenants and lot rent as well.

None of this is the community owner’s fault. If someone moves into a community and doesn’t expect and plan for regular lot rent increases they are derelict in their duty as a adult and perhaps to those in their care. Increases are going to happen because they need to happen. Tenants should plan, and perhaps save for them. Anything else is irresponsible.

People living in the City of Chicago and many of the Northern suburbs have seen an almost 600% increase in property taxes in less than ten years. While I find that to be a series of very bad strategies by government, I fail to see how morality enters into it. Those governments will, like community owners who raise their rents too far will pay the price down the line. Raising lot rents or property taxes will have consequences that will hurt those raising those costs down the road.

The market will take care of those who make impulsive or emotional plays be they tenant or landlord or government. None of this has anything to do with morality.


Though you make sense overall, you seem to be shaming senior citizens or the disabled who have lived in these mobile home parks for years- sometimes decades quite honorably as decent citizens, but are on fixed incomes. They cannot keep up with continual high dollar lot increases every single year, plus new installed water meters, and other fees.

Please don’t shame low income people who are of decent character, and just have the unfortunate case of having fixed incomes or living on social security. There are a lot of these people in mobile home parks.

Taxes go up, insurance goes up, cost of utilities goes up, cost of maintenance goes up. Social Security has an inflation adjustment tied to it as well due to this understanding. It’s not cruel, it’s simply reality.


In the final analysis, we must be judged by our actions. People who fail to plan for the future have no one to blame but themselves.

A number of years ago I was asked to speak at a high school class reunion on how to plan finances for retirement. When I suggested the minimum a person needed before they consider retirement was $3,000,000 the reaction was anger and disbelief. Only about 20% agreed and asked for additional help on how to accumulate the funds, and only 10% actually followed through and managed to accumulate the suggested amount over the 15-20 years before they retired.

At least one of them that thought I was crazy is now working at a Home Depot full time at 74 years of age, and quit speaking to me when he and his wife were forced to go back to work after a short retirement.

You can debate if my number was correct (it would be higher today) but what cannot be debated is that people unwilling to take personal responsibility for their lives are responsible for their own fate. I’m not trying to shame anyone, but if I’m their landlord I expect them to pay on time even if the rent goes up because my costs go up. Any shame they feel should be their own. There is more to being a decent person than not stealing or messing around with children so I’m not willing to give someone a pass because part of the way they live is admirable if part of their attitudes and behaviors cause them to fail at taking care of themselves and their family.


As a community developer and development consultant for over 45 years, I agree with Ken. All economics revolve around market conditions, current and (confirmed) future! If you don’t know how to ascertain both these, GET OUT NOW while you still have your skin attached. Don’t stop until you get to $3M (adj for inflation).