Mobile home park residents say they feel powerless against ‘predatory’ investor groups – The Morning Sun

Powerless and stuck.

That’s what residents of a mobile home park in Clarkston say about their current living situation.

Megan Green and her family moved into Independence Woods in January 2010 and paid around $300 a month for a space for the mobile home they purchased.

Two years later, Utah-based Kingsley Management Corp. bought the park and that’s when things started to change, according to residents. The park was locally owned before that.

Green said her monthly lot rent has increased to over $700 with additional fees for water and trash services that had been provided at no cost. In 2019, the average lot rent with trash pick-up was $258 in Michigan, according to ManufacturedHomeLiving.org.

“(The investor groups) buy these parks just to make money with no intentions of doing anything good for the community,” said Green. “They don’t add anything to make it better. You don’t see where your dollars go.”

Other residents in the park report their monthly lot rents increased $300 the past two years. As a result some are considering legal action against the company.

Green, who plans to move out of the community, said her family and her neighbors are being taken advantage of by management as rents rise and repairs and improvements are not made.

Kingsley Management did not respond to numerous requests seeking comment about Independence Woods.

Changing housing market

Nationwide, institutional investors have been swooping in to buy mobile home parks as inventory and profits for traditional rentals – single- and multi-family homes and apartment buildings – have dwindled.

These purchases of what has been one of the most affordable housing options are putting residents in a bind, according to experts, since most mobile homes — despite the name — cannot be moved easily or cheaply. Owners can either accept large rent increases, spend thousands of dollars to move their home, or abandon it and lose tens of thousands of dollars they invested.

In Michigan, rent increases combined with outdated state oversight is making the once affordable manufactured housing option lose its luster.

Advocates say the increases are due in part to state laws for mobile home parks not being updated since 1987. The current laws have left a vacuum for corporate owners and private equity firms to buy mobile home parks and raise rents.

The Mobile Home Commission Act of 1987 provides little protection for mobile home park residents for upward rent control and very few limits on investors for licensing and leasing requirements.

Housing costs are rising across the country, both in home prices and rent, causing affordable housing stock to drop over 20% in Michigan. These increases are hitting Michigan’s mobile home park communities, where many residents live on fixed incomes, have no other affordable options for housing, and are making decisions about paying bills or rent.

According to MHVillage.com, a Grand Rapids-based online marketplace for buying and selling manufactured homes, there are over 1,200 mobile home parks with 248,000 homes in Michigan. In Oakland County, there are 68 parks with nearly 16,000 homes, according to the most recent federal data. Those numbers are among the highest in the state.

In mid-Michigan, there are 32 homes in Clare, Gratiot, and Isabella counties and over 8,000 homes.

George McCarthy, president and CEO of the Lincoln Institute of Land Policy, a Massachusetts-based nonprofit that researches and recommends creative approaches to land usage, said mobile home parks are traditionally housing of last resort because residents cannot afford to buy a home or live in other types of rental housing.

There are 4 million mobile homes in the United States. According to the institute, around 20%, or around 800,000, are in parks that have been purchased in the past eight years by institutional investors.

He describes the behavior of investor groups buying up mobile home parks as predatory and egregious because they typically reduce services to cut costs, increase lot rents, and make very few investments in community improvements, such as infrastructure or facilities.

“Investors are taking full advantage of the fact that this is really housing of last resort,” he said. “We’re willing to allow global capital to outbid residents for shelter. It’s a crisis that’s been unfolding for at least a decade or more. We have to take some kind of proactive action to prevent capital markets from stealing away necessary shelter from families.”

McCarthy said investors very often shift the cost of services onto residents, including for trash collection and internet.

“They’re deferring maintenance and basically milking the parks for the cash flow that they can get,” he said. “Based on our research, mobile home parks are one of the top three leading returns in real estate investment trusts over the last five years. I think it’s almost unconscionable that these kinds of bottom feeder investors are buying up the parks just to make a quick buck.”

Holly Hook, co-founder of the group Michigan Mobile Home Residents for Affordable Housing and recently appointed by Gov. Gretchen Whitmer to the Michigan Manufactured Housing Commission, lives in Swartz Creek Estates mobile home park in Swartz Creek.

Before Havenpark Communities, a Utah-based investment firm, purchased the park Hook said her rent was reasonable and that she could afford to live alone. She now lives with two roommates as a result of rent increases.

Over the past three years, her rent has increased over 40% from $300 to $432 per month. If you tack on fees for trash, school taxes, water, and sewer her rent jumps to $550 per month.

“The rent increases are showing no signs of stopping,” she said. “The investors have no regard for the people that live in these parks. They don’t see us as a people. We are just a resource to make money. They squeeze us as hard as they can. You feel trapped because it’s too expensive to move your home and the investors know it. It gives them license to do whatever they want.”

Hook said the park’s lease agreements are month-to-month, which allows Havenpark to hike lot rents whenever they want.

Current state law does not require mobile home park owners to offer year-long leases or rental agreements to tenants, which makes those without long-term leases susceptible to any changes the owner wants to make at any time.

Josh Weiss, a Havenpark spokesperson, told The Associated Press that the company must charge prevailing market rates when it purchases a park at a fair market price. That said, the company has moved since 2020 to limit its rent increases to $50-a-month.

“We understand the anxiety that any rent increase has on residents, especially those on fixed incomes,” Weiss said. “While we try to minimize the impact, the financial realities do not change.”

Cody Reynolds, a resident in the Oakland Glens mobile home park in Novi, said his community was purchased by YES! Communities in 2020 and his rent has doubled since then.

YES!, one of the nation’s largest owners and operators of mobile home communities, owns 60 mobile home parks in Michigan and is owned by Stockbridge Capital Group LLC., a San Francisco-based global institutional investment group.

YES! Communities and Stockbridge Capital Group LLC., did not respond to requests for comment.

“When I moved into the community in 2019 my lot rent was $799,” said Reynolds. “Since 2020, my rent has gone up $50 to $100 each year. My lease just came up and I was told there was no option for renewal.”

Every few months, Reynolds said management offered him the opportunity to buy his trailer once his lease ended. When his lease expired on June 30, he was moved to a new trailer nearby. His rent is $1,509.

Making changes

John Lindley, president and CEO of the Michigan Manufactured Housing Association, which represents the industry in Michigan, said the great majority of mobile home park communities are well operated.

When it comes to investor groups buying mobile home parks and implementing outsized lot rent increases, Lindley said those are isolated incidents and not common practices.

“The Michigan Manufactured Housing Association condemns the practices of a few bad actors, but it is important to note that the evidence is clear that they are outliers,” he said. “The notion of big national companies buying up communities and broadly imposing huge rent increases runs against the fact that doing so is a bad business model, and furthermore is not supported by broad market observations.”

He said investors are consistently using their money to make community improvements to enhance the short- and long-term value of mobile home communities, including amenities, streets, walkways, street lighting, and water and sewer lines.

The mobile home industry argues that the communities are still the most affordable housing option, noting that average rent increases across parks nationwide were just over 4% in 2021. Spending on improvements was around 11%. Significant investments are needed, they said, to make improvements at older parks.