Rents spike as rich investors buy mobile home parks
LOCKPORT, N.Y. —
For as long as anyone can remember, rent increases rarely happened at Ridgeview Homes, a familyowned mobile home park in upstate New York.
That changed in 2018 when corporate owners took over the 65-year-old park located amid farmland and down the road from a fast food joint and grocery store about 30 miles northeast of Buffalo.
Residents, about half of whom are seniors or disabled people on fixed incomes, put up with the first two increases. They hoped the latest owner, Cook Properties, would address the bourbon colored drinking water, sewage bubbling into their bathtubs and the pothole-filled roads.
When that didn’t happen and a new lease with a 6 percent increase was imposed this year, they formed an association. About half the residents launched a rent strike in May, prompting Cook Properties to send out about 30 eviction notices.
“All they care about is raising the rent because they only care about the money,” said Jeremy Ward, 49, who gets by on just over $1,000 a month in disability payments after his legs suffered nerve damage in a car accident.
He was recently fined $10 for using a leaf blower. “I’m disabled,“he said. “You guys aren’t doing your job and I get a violation?”
The plight of residents at Ridgeview is playing out nationwide as institutional investors, led by private equity firms and real estate investment trusts and sometimes funded by pension funds, swoop in to buy mobile home parks.
Critics contend mortgage giants Fannie Mae and Freddie Mac are fueling the problem by backing a growing number of investor loans.
The purchases are putting residents in a bind, since most mobile homes — despite the name — cannot be moved easily or cheaply. Owners are forced to either accept unaffordable rent increases, spend thousands of dollars to move their home, or abandon it and lose tens of thousands of dollars they invested.
“These industries, including mobile home park manufacturing industry, keep touting these parks, these mobile homes, as affordable housing. But it’s not affordable,” said Benjamin Bellus, an assistant attorney general in Iowa, who said complaints have gone up “100-fold” since out-of-state investors started buying up parks a few years ago.
“You’re putting people in a snare and a trap, where they have no ability to defend themselves,“he added.
Driven by some of the strongest returns in real estate, investors have shaken up a once-sleepy sector that’s home to more than 22 million mostly low-income Americans in 43,000 communities. Many aggressively promote the parks as ensuring a steady return — by repeatedly raising rent.
“You went from an environment where you had a local owner or manager who took care of things as they needed fixing, to where you had people who were looking at a cost-benefit analysis for how to get the penny squeezed lowest,” Bellus said. “You combine it with an idea that we can just keep raising the rent, and these people can’t leave.”
George McCarthy, president and CEO of the Lincoln Institute of Land Policy, a Cambridge, Mass.-based think tank, singled out Fannie Mae and Freddie Mac for guaranteeing the loans as part of a what the lending giants bill as expanding affordable housing.
Soon after investors started buying up parks in 2015, the complaints of double-digit rent increases followed.
In Iowa, Matt Chapman, a mobile home resident at a park purchased by Utah-based Havenpark Communities, said his rent and fees had almost doubled since 2019.
Iowa Legal Aid’s Alex Kornya said another park purchased by Impact Communities saw rent and fees increase 87 percent between 2017 and 2020.
“Many of the folks living in the park were on fixed incomes, disability, Social Security, and simply were not going to be able to keep pace,” said Kornya, who met with about 300 angry mobile home owners at a megachurch.