Making the best of our bad bargains, per the NYTimes:
“Don’t get too hung up on appearances,” Frank Rolfe reminded us as our tour bus made its way to the first of several trailer parks we would visit on a bright Saturday afternoon in Southern California. “Remember, you don’t have to live in these homes.”
It was Day 2 of Mobile Home University, an intensive, three-day course on how to strike it rich in the trailer-park business. Seventy-five or so students had signed up for the class, which Rolfe offers every other month in different places around the country. Most of the enrollees weren’t real estate speculators; they were jittery members of a hard-pressed middle class. They were nervous about retirement. Or they were worried about their jobs moving overseas. Or they were making $100,000 a year, maybe even $200,000, but felt the need to earn more. All of them, though, had somehow come to see the lowly mobile home as their vehicle to financial freedom. “It’s about self-preservation,” one 42-year-old attendee told me. He had flown down from San Francisco for the seminar because he hated his job selling health care plans.
Our first stop was Green Lantern Village in Westminster, a city of 90,000, landlocked between Santa Ana and Huntington Beach. Green Lantern is a giant patch of asphalt crammed with 130 trailers. We gathered in a circle around Rolfe and the lot’s manager and listened as the manager explained that rents at Green Lantern had been bumped up by more than 30 percent over the past three years. The Mobile Home U. students nodded appreciatively: They learned early in the course that one of the best things about investing in trailer parks is that ambitious landlords can raise the rent year after year without losing tenants. The typical resident is more likely to endure the increase than pay a trucking company the $3,000 it can easily cost to move even a single-wide trailer to another park. As Rolfe put it, an “extra $10 or $20 a month isn’t going to bankrupt anyone.” He compared the hikes with cable companies’ annual bump in fees, which get people into “the habit.” Raising rents by 30 percent might sound steep for trailer-park tenants, who at Green Lantern earn $40,000 on average, but the manager explained why that isn’t the case, as if he were reading from the 500-page instruction manual Rolfe distributed on the first day. For years, Green Lantern rented only to people 55 or older. But these days, the manager told us, a trailer is just as likely to be filled by a two-income family “making minimum wage at a Taco Bell.” There was a murmur of approval: Another early lesson was that whereas seniors tend to live on fixed incomes, greatly limiting their ability to absorb rent increases, working parents “can always pick up extra hours,” as Rolfe put it, even if they’re struggling….
There were 211,000 fewer units of public housing in the United States in 2012 than there were in 1995, according to the Center on Budget and Policy Priorities. Federal spending on rental assistance programs has remained flat in recent years, according to the center, even as the number of households that the Department of Housing and Urban Development classifies as “worst case” rose by 43 percent between 2007 and 2011. A study by the Center for Housing Policy found that among renters who have a job, one in four was spending at least half of his or her income for an apartment. “We’re trying to make things as cheap as possible,” Rolfe said.
While Rolfe, who is 52 and has a degree in economics from Stanford, can come off at times as a caricature of the coldhearted capitalist, during his Mobile Home University courses, he also gives voice to left-wing critiques about the profound fissures in our economy. One in five households, he told the class, lives on less than $20,000 a year. A significant portion of the 10,000 Americans who turn 65 every day are facing life on a fixed monthly income of $1,200 or less. He is an admitted profiteer thriving on the collateral damage caused by our winner-take-most economy, but he also is a zealous student of the constantly changing landscapes of American poverty. “The bottom line is Americans as a group are getting poorer,” he told his students — and while that’s bad news for those living on the economic fringes, it also means opportunities for those willing to take advantage of the trend…
Rolfe confesses to feeling some guilt that he owns the largest house in his hometown while his customers are making do in cramped quarters. It breaks his heart, he confesses, when they evict a family even as he tells himself it’s for the best. He acknowledges he has made millions of dollars warehousing those living on the economic margins. But what if you simply want to keep your monthly living expenses low so you have a nest egg for emergencies — or have the option to take in a movie or buy some wooden ducks every once in a while? Or what if Pontoon Beach is simply your best option? With around 10,000 lots scattered mostly across the Midwest and the Central Plains, Rolfe and Reynolds are about equivalent in size to a public-housing agency in a midsize city — and in an important way, they play the same role. Those living in public housing are generally required to pay up to 30 percent of their household income as their share of the rent. Rolfe and Reynolds’s living in public housing are generally required to pay up to 30 percent of their household income as their share of the rent. Rolfe and Reynolds’s tenants pay on average closer to 20 percent. And unlike the civil servants working for a housing agency, their managers know they must enforce the rules or they’re out. “We go through managers like crazy,” Rolfe says.
Their tenants, though, tend to stay if for no other reason than a lack of options. The average resident has “such bad credit,” Rolfe said, that it would be a deal-killer for most landlords running credit checks on potential tenants. Those who are retired are thankful that they own a place of their own, even if it’s only a metal box, because it allows them to live on the little they have. And here Rolfe and Reynolds are providing safe, low-cost housing to those who can’t afford to pay more or choose not to.
“We’re the Dollar General store of housing,” Rolfe said, adding, with an amiable grin, “If you can’t afford anything else, then you’ll live with us.”
Avery Greynold
Funny how “It’s for the best” is only what’s best for him.
Ruckus
There has to be a better way.
There has to be a better way.
Maybe if I keep saying this, it may some day not draw so much laughter.
JGabriel
NY Times via Anne Laurie @ Top:
Oh, well, as long as Rolfe feels “some” guilt I’m sure he’s just a nice guy scraping every penny he can get off the backs of America’s poorest.
How? How is that for the best? How is it for the best that another family is made homeless, you asshole, you parasitic slumlord?
Roxy
Well that just made me want to cry. Damn.
elmo
Totally OT but too good not to share: your evening squee.
Scamp Dog
@OzarkHillbilly posted this link about a NASA study considering the possibility of collapse of industrial civilization. One of the key aspects of collapse the study mentions is that the elites start gathering almost all of the society’s surplus, leaving the commoners with barely enough resources to survive…but I guess mobile home parks are superior in some senses to wood shacks, so we peons should be happy about this, somehow.
jl
The story gives a mixed picture of this guy and his business.
He seems honest about what he is doing. Seems like the author could have done more checking on whether what he says is true by looking at history of complaints or lawsuits or local actions against his parks, instead of simply dropping in on a few occupants and managers.
So I am skeptical, but the basic business model doesn’t seem unethical. Sad that running this type of business is what passes for a great opportunity in this economy.
I’ll save my outrage for when Tom Friedman writes a column about how if everyone just did something like this it would ‘save the economy’.
I wonder sometimes, Russia and the U.S., different roads, but same destination in the end?
NotMax
One word: formaldehyde.
California’s regulations are stricter than the federal ones, but skeptical that the bulk of units in places such as described in the article excerpt could be tested and found in compliance. AFAIK, the ‘park’ owner carries no responsibility for disallowing units not in compliance, no penalties for allowing them, and is under no requirements for testing or detection as a condition of providing a lease or any services.
Renie
Love how this guy deluded himself into thinking he is helping these people.
jl
@Scamp Dog: I tend not to take those doomsday predictions very seriously. I remember reading about the failure, or at least overly pessimistic, The Population Bomb predictions.
But seems to me that it would be more likely to happen in a society with concentrations of great wealth. Except, that, for exhaustible resources, oligopoly will tend to find and extract them more slowly than perfect competition, and the ability to retain more of the economic surplus is precisely the reason.
On the other hand, an important question I have not seen addressed is when it is more profitable to mine potentially sustainable resources into extinction rather than profit from them over a longer time horizon. That can happen either under perfect competition or oligopoly. In a social democracy, political reaction would reign in exploitation when private returns started to diverge greatly from social returns. The problem might be that with great concentrations of wealth, the oligarchs could prevent any interference with ruthless exploitation that had no regard for social returns whatever, through their effective control (even unto ownership) of the government.
The market itself provides no remedy. As Brad DeLlong points out, the social welfare that is maximized by the unregulated private market is the weighted sum of individual welfares. And what are the weights? They are roughly proportional to each individuals wealth. As a small group owns more and more wealth, the unregulated private market caters more and more to their interests, and not at all to those of the lesser persons.
But, a good glibertarian would say that is as it should be, and if most of the lesser people have to go extinct, hey, that is competition, survival of the fittest, you know.
But that ‘should’ depends on the marginal productivity theory of income being true. Well, empirically, that theory was in serious trouble long before the recession and financial panics of 2007/8. It must be in even more trouble now, though I have not had time to catch up my reading on it for awhile
low-tech cyclist
@NotMax:
My WAG is that it probably depends on who owns the trailer. Tenants that provide their own trailer and just rent the pad – it’s hard to see how the trailer park owner could have responsibility for the safety of the trailer. Might be different if the trailer park is the landlord for the trailer as well. But I’d still bet on minimal enforcement even if there are regs that cover it.
Davis X. Machina
Fred Clark, at Slacktivist, is your man for all things trailer park.
Hobbes
“And unlike the civil servants working for a housing agency, their managers know they must enforce the rules or they’re out.”
Is a casual swipe at government employees required by the New York Times?
wvng
@low-tech cyclist: “My WAG is that it probably depends on who owns the trailer. Tenants that provide their own trailer and just rent the pad – it’s hard to see how the trailer park owner could have responsibility for the safety of the trailer. ” If you look into the way trailer park contracts are written, you will find that if AN OWNER of a trailer is delinquent in land rent for (variable but not long) period of time, they lose their trailer to the landlord. I just learned this is the past week, it is really remarkable. And the cost to remove trailers is much higher than the $3k someone mentioned above. So the landlord just keeps seized trailers and rents them out.
TS
“Rolfe avoids buying any parks in New York and California; both states are too “tenant friendly,” he said — too much in the way of time and money are required to evict someone who is behind on the rent. ”
That about covers the situation. Rolfe has an investment – wants maximum return – nothing to do with the tenants
karen
It took me 3 years to get into the independent living facility apartment which is basically section 8 and I applied in 2010. Now the waiting list is up to 6 or 7 years. The physically and mentally disabled and elderly who live here usually only leave their apartments in one way. I’m in the DC metro area and my 600 SF apartment would be worth well over $1.4K if it wasn’t for the subsidy. I’m so grateful to have gotten here and now that I am here, I’m in. My heart breaks for people who are on the waiting list because the chances are, by the time they make it to the top of the list, they’ll either be homeless, in a nursing home or mental institution or dead. This is a unique type of place, funded by HUD, The United Way and other private funding. Thank G-d it’s not just funded by HUD and thank G-d I live in a state and a county that has kept this place open for over 30 years.
karen
@TS:
Vultures have a place in our world, unfortunately they clean up the carrion.
JoyfulA
Poorish rural people in Pennsylvania often buy a trailer and an acre to put it on that’s off the beaten path.
Trailer parks are in the exurbs and endangered by suburban sprawl. One was part (the rest was a car racetrack) of the land sold to build the mall where the new Wegman’s sits. In the PR clamor, I think the developer agreed to pay each trailer owner a relocation allowance.
A family I knew in high school lived in a trailer park. They were delighted with the trailer. It seemed smallish to me, but it was nearly new, shiny and fresh, with the usual appliances; no big deal. When I visited the Appalachian town where they used to live, I understood their delight. The relatives living in their old house had running water indoors, but from a hand pump on the sink. The toilet was outdoors. The exterior was so battered that a paint job might not have done any good.
That trailer park used to be on a main two-lane highway, but an interstate with bridge happened, and I thought it had disappeared. It or part of it is still there, barely visible at one angle. The access to it must be convoluted.
Debbie(aussie)
I just want to vomit. The fact that he knows those facts about two income families etc, just makes it worse. He and his “students” feeding off the disadvantaged, VULTURES all of them (middle class on 200.000, they are kidding right?
andy
Trailer park landlords- the scummiest denizens of a scummy “profession”, the lowest of the low.
mai naem
I know a little about mobile home parks, at least in AZ. In Arizona a lot of trailer parks were/are for second homes for snowbirds. I can also tell you trailer parks used to be owned by mom and pop situations but were bought out by big corporations in the late 90s and early 00s when they came in and jacked up rents big time. We are talking rents that used to be in $200-250/mo for nice parks with pools and nice rec facilities going up to $400-600. For that, you might as well rent an apartment. Part of the problem with mobile homes is the transportation to move them can be over $2000. Also you have to them attached to the ground for you to get a loan so that makes it even harder to leave a place. Also, mobile homes on their own depreciate. If they are on their own land, obviously they possibly appreciate.
mai naem
Here’s another depressing story -http://www.theatlantic.com/business/archive/2014/03/my-life-as-a-retail-worker-nasty-brutish-and-poor/284332/
I thought one of the front pagers might link to this. Its about Joe Williams who during the ’12 election, on MSNBC said that Mittman was only comfortable with his people and uncomfortable with people who weren’t like him. Apparently he ended up getting canned from Politico and sheet went down the tubes for Williams pretty quick. Just a depressing read.
BruceJ
@mai naem: Whatever you do, don’t go into the comments. *shudder*
xenos
This seems to be just the new version of the slumlords of the 50s through the 70s, often well connected professional class people owning buildings through nominee trusts so nobody could track down who was really responsible for the rat-infested premises that were collapsing about the tenants while all the money needed for maintenance was being skimmed off as ‘profits’.
Think about the wickedness of choosing to profit from a business scheme like that.
Think of the contempt and hatred of the poor that you need to build up in your soul to allow you to be able to profit from this misery.
Think about how much of our economy is built around this sort of exploitation, sometimes more genteel, sometimes less.
Ever wonder why such a hateful sub-culture arose to produce the modern Republican party?
gogiggs
Tumbrels.
It’s time.
I’ll knit if I have to.
I’m not kidding
gogiggs
I am so not kidding.
amy c
@mai naem: Yes, the depreciation is huge. My mother lived in one of these places, and after about five years she sold her trailer for about a third of what she paid for it. Two thirds depreciated in five years! Granted, her purchase and sale were timed exactly with the highs and lows of the housing market – in Florida, nonetheless – so she may have been a particularly sorry case. But that just brings home another big point. If your trailer is located near a housing market that takes a huge dive, you will bear the brunt of that dive mercilessly.
The rent my mother paid got her a place to hook up the trailer, access to a coin-op laundry room, a rec room with the occasional game of Bingo, and a small pool. It was a decent enough place. You could sure do worse. But it was a bad deal next to apartments, overall, especially for someone elderly and/or on a fixed income. Mostly because when anything went wrong with her trailer, she had to pay to have it fixed. One year her air conditioning died. Obviously not a good thing when you live in a tin can in Florida, and it was thousands to repair. The rent indeed went up every year, even though the services provided by the “park” never increased.
Another big drawback is that these places tend to be isolated, because they are basically just large tracts of land. Nothing is walkable, and public transportation is lousy if it exists at all. But many of the tenants, at least in places like Florida, are at a point in their lives when they should be driving less, not more. If the “park” could at least offer a shuttle to the grocery store a few times a week, it might do a lot for quality of life…but, that would eat into profits, heaven forfend.
Linnaeus
Ugh. Vulture capitalism. Though that’s an insult to vultures, who actually play a necessary role.
kate
@Ruckus: I work for a national nonprofit that partners with local nonprofits so that when manufactured housing communities come up for sale, the residents can choose to form a co-op and buy the property. The corporation (which is what the co-op is) the property so that no individual takes on debt. We assist with forgivable funds for due diligence so that the residents can make an informed decision, and we also provide financing if the residents choose to purchase and the deal works–the numbers have to work on rents and needed improvements in order to make the whole thing sustainable for the residents. We also provide ongoing help to assist people
pseudonymous in nc
When the WW2 spoils were divvied out (unevenly) in GI Bill loans, the US lost its chance to do social housing properly. That’s had long-lasting consequences.
A trailer is an upgrade from a tar paper shack. Again, it’s easy to forget that such things are not uncommon in America.
shadows mom
I live in a mobile home park in Northern California. It should be noted that newer manufactured homes may be indiscernable from a traditionally built home so these cannot always be considered as low-income housing. The stereotypical view of ‘trailers’ is certainly not the norm in the communities I know.
My city has 9 mobile home parks, giving it the highest concentration of mobile home communities in the state. We have ~4500 mobile homes in the city representing a significant voting bloc. Two key points are worth considering. The state recognizes the financial and physical considerations of mobile home living and supports rent control ordinances. The way these work in my city is that the park owners may raise the rent each year by 3% or 60% of the CPI in February, whichever is higher. IN 30 years, the CPI increase has exceeded 3% only 3 times and only once was it over 4%. This does mean an annual rent increase, but it is moderate. My community actually tries to sell new and existing tenants on leases, which typically have a 4-6% annual increase depending on the term. If residents sign a lease, they are no longer protected by rent control.
The park owners/managers MUST print a large font warning on their lease; however, they are under no obligation to present a fair and accurate representation of the differences in total rent over time with the two options.
Rent control does not mean an owner cannot increase rent more thatn 3% in a year. What it does mean is that they must petition the city for the right to raise the rent and justify it. An example of an accepted justification is that the community was sold and a reassessment for property tax resulted in a substantial increase in operating costs. In my community, this meant a permanent $65/month increase in the rent as the community had not been sold since it was started in 1971. Other justified increases may come from major capital improvements. Unfortunately, if you signed a lease this protection is not available to you so on top of paying a higher annual increase, you also are subject to increases at the whim of the owners.
Understandably, the owners are fighting rent control ordinances tooth and nail. Happily, they have lost their last several appeals to stop rent control in several communities. If interested, check out GSMOL the state-wide mobilehome owners lobbying group.
Ben nelms
Orange County is the home of about 100 manufactured home land-lease community’s. I find it curious that you selected as an example “mobile home park” that is over 50 years old with mobile homes that have been in place for that length of time.A majority of the residents in this park own their mobile homes free and clear.The residents live there because they prefer the lifestyle or it is the only affordable housing available in this expensive area of Southern California.The amount of space rent in this park is for less than than rents in apartments in the area that are of inferior quality, smaller and located in crime ridden areas.
Most of the mobile home parks in this area have been upgraded over the years as the parks have been upgraded to accept new homes that were built after the HUD Code went into effect in 1976. That code is a result of a Congress mandate that requires that Manufactured homes to comply with stringent health, safety and construction standards. Manufactured homes are the only type of U.S. housing to be subject to a federally mandated building code.Today’s manufactured who is equal, and in many respects superior to a comparably sized site built home.
Most of the mobile home parks in the Orange County area are well maintained and managed, with many residents who prefer the manufactured home lifestyle. Vacant spaces in these parks are seldom available with waiting lists of people who desire affordable quality homes in an area they want to live. Site built homes and apartments cannot compete with these attributes of mobile home parks.Plus most people prefer to live in a home they own!
New land lease communities are no longer being built in Southern California because of excessive regulations, zoning, rent control, land costs and land availability.