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December 9th, 2022
Private equity firms have recently targeted mobile home real estate as a source of exceptionally strong investment returns. A spokesperson for the Lincoln Institute of Land Policy said that approximately one fifth of mobile home parks (approximately 800,000) have been purchased in the last eight years by institutional investors. The increase in corporate ownership of mobile home parks has led to a dramatic increase in rent and related costs for mobile home residents, imposing added strains on some of the nation’s lowest-income households.
Why have mobile homes drawn the attention of Blackstone, Carlyle, and other national private equity firms? According to Frank Rolfe, investor and author of “Mobile Home University,” mobile home communities offer uniquely stable revenues, particularly in economic recessions:
“If you believe that the U.S. economy will continue to decline in the years ahead, under the weight of social programs and the drag of an aging population, then mobile home parks are virtually the only form of real estate that performs better in a recession. As America gets poorer, mobile home parks are the only form of housing devoted to this demographic.”
Frank Rolfe also noted that high investment returns are ensured due to mobile home tenants being generally incapable of affording the costs of changing their residence. He noted the “advantage” that when a tenant cannot afford to pay elevated rents, a mobile home park owner may still benefit by acquiring title to the mobile home:
“Another interesting barrier is the difficulty tenants have in moving their home out of a mobile home park. It costs around $5,000 to move a mobile home, so virtually no tenants can ever afford to move. As a result, the revenues of mobile home parks are unbelievably stable. But what happens when a tenant cannot afford to continue to pay their rent? Then they normally abandon the home, and the park owner ends up with title under abandoned property laws.”
A class action lawsuit was recently filed against a private equity firm that purchased five mobile home parks in Mercer County, West Virginia. Reportedly, the suit will seek relief for residents subjected to hiked rents and other detriments originating from the new ownership. A critical dispute is whether these investment firms are properly licensed to operate the mobile home parks and in compliance with the rules surrounding habitable living conditions. The plaintiffs’ attorneys relayed to news outlets that many of the residents poised to lose their homes to elevated rents are West Virginia’s veterans, elderly individuals on fixed incomes, and families raising children.
