Institutional investors are buying up local mobile home parks nationwide and raising the rent and fees mobile home owners pay to park their homes.
Corporate investors, like private equity firms and real estate investment trusts, purchase mobile home parks and raise the rent on tenants who are primarily disabled or on a low or fixed income, The Associated Press reported.
Out-of-state purchases in Minnesota almost doubled between 2015 to 2021, with 46% of the state’s mobile home parks purchased by an out-of-state company in 2015 to 81% in 2021, the outlet reported. Rent at these parks rose as much as 30% simultaneously, according to The AP.
Private equity firms and large real estate companies are buying up mobile home parks across the country, leading to significant rent increases and complaints of neglect from residents. https://t.co/wDcVYiaDtR
— The Associated Press (@AP) July 25, 2022
The state of Iowa’s number of complaints at mobile home parks has gone up “100-fold,” according to Iowa assistant Attorney General Benjamin Bellus, The AP reported. (RELATED: ‘Meltdown’: Future Of US Housing Market Is Dire)
“These industries, including the mobile home park manufacturing industry, keep touting these parks, these mobile homes, as affordable housing. But it’s not affordable,” Bellus told The AP. “You’re putting people in a snare and a trap where they have no ability to defend themselves.”
Bellus said that mobile home owners live in an “environment” where local owners or managers were replaced by corporations that keep raising the rent because they only look at the “cost-benefit analysis for how to get the penny squeezed lowest” and believe the residents can’t leave, The AP reported.
Iowa Legal Aid’s Alex Kornya said these investment companies are buying mobile home parks where many lower-income Americans live and subsequently raise the rent and fees, including one park which saw rent and fees increase 87% between 2017-2020, the outlet reported.
“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,” Kornya said at an event with around 300 mobile home owners, The AP reported. “It led almost to a political awakening.”
Montana residents at the Havenpark Communities’ development in Great Falls complained about the excessive increase in rent since 2020, The AP reported. Cindy Newman, a Havenpark Communities resident, told The AP that less than two years ago, she paid $117 a month for rent, but over the last year and eight months, it has increased to almost $400.
A spokesman for Havenpark Communities, Josh Weiss, defended the company’s rent increases saying its policy since 2020 has been to limit the rise in rent to $50 a month, but that it also has a financial duty to have rent prices coincide with their purchase price of the park, according to The AP.
“We understand the anxiety that any rent increase has on residents, especially those on fixed incomes,” Weiss told The AP. “While we try to minimize the impact, the financial realities do not change.”
Lincoln Institute of Land Policy president and CEO George McCarthy said corporate investors spent the last eight years buying enough mobile home parks to accumulate around a fifth of the mobile home lots in the U.S., reported the outlet.
McCarthy criticized lending giants Fannie Mae and Freddie Mac for backing a large number of investment loans for mobile home parks, including the $9.6 million in financing Freddie Mac has approved in 44 states since 2014, according to The AP.
A Freddie Mac spokesman resisted the criticism, saying that the lending company provided loans for less than 3% of nationwide mobile home park purchases and that most of the loans were for refinancing purposes, according to The AP.