Vice Media recently released a video to its American audience, attempting to play on their woke sensibilities with the worn-out theme that mobile home parks are nothing more than rich landlords beating up on the poor. Instead, this misguided reporter and story probably built one of the best videos ever on the benefits of mobile home park investing. Here’s what the video basically tells the viewer.
Old, poorly maintained mobile home parks are a disaster for everyone
Just look at the visuals in this Vice piece. The property depicted is a complete dump with sewage flowing down the street. It’s reminiscent of the North Lamar property we bought in Austin years ago, and one that we should have won the Medal of Honor to bring back into good condition. And, just like North Lamar, you probably noticed that the problem with the Fresno property in the Vice video was 90% with the homes – and the park owner didn’t even own those homes. The customers did. Note that the guy they interview in his yard tells you that he’s a homeowner. The reporter didn’t even understand the difference in responsibility between renting homes and renting the land. That’s a big problem.
Bringing mobile home parks back to life is essential to the residents and surrounding community
Another visual of the Vice piece is the contrast between an old rundown mobile home park with a ton of deferred maintenance versus the “after” product of pumping capital and time into making it nicer. And everyone comments on how much better the park is looking as a result. Nobody in the entire video complains about that progress except the residents who ignore the improvements and instead complain about all the rules that have been put into place to keep it nice going forward.
Higher rents are a part of bringing old parks back to life
Even the court-ordered receiver in the Vice video acknowledges that higher rents are mandatory to get a property back on its feet. You can’t have mobile home parks in good condition yet with low rents. Unlike Vice media -- which Disney invested $400 million in and has written the investment off as worthless -- mobile home park owners are actually business people who understand that it’s idiocy to invest capital without a good rate of return on that investment. Most adults have at least enough economic sensibility to understand that the tenants’ desire to have somebody come in and spend hundreds of thousands of dollars on improvements at a 0% rate of return is probably not going to happen in the real world.
Residents that won’t pay rent or obey rules need to go for the welfare of those around them
You’ve got to love the part of the video in which the tenant walks by with a dog on the loose and the receiver screams at her for not having the dog on the leash and the tenant basically tells them to go screw themselves. The reporter admonishes the receiver for ordering the tenant around, and the receive pushes back that it’s a danger to the community to have loose dogs and cannot be tolerated as it damages the quality of life of all the other residents in the park. Anyone who watches this segment and sides with the reporter or the tenant is clearly out of their mind. Mobile home park owners know that “no pay/no stay” is the only workable system for collection and “no play/no stay” the only system for those who will not play by the rules in the park.
Mobile home park lot rents are insanely low and need to go up substantially
The reporter brings in an “expert” to expose the “unfair” economics that park owners enjoy, named Mariah Thompson with California Rural Legal Services. Ms. Thompson then explains in compete detail why mobile home parks are a terrific business model. She outlines how park rents are insanely low and easily raised, and how mobile home parks have an incredible “moat” to deter competition. I guess nobody at Vice has ever interviewed any Wall Street analyst, because those are exactly the ingredients that any stock investor of prominence seeks out in a successful business – in fact, virtually verbatim!
Mobile homes are anything but mobile
It never ceases to amaze me that reporters are fascinated with the concept that mobile homes are not mobile and, somehow, that’s a big deal to them. If mobility is a key to tenant rights, then I guess single-family homes and condos are way worse than mobile homes because those can’t be moved at any cost. For the edification of the reporter, the correct name since 1976 has been “manufactured home” which in no way even remotely suggests mobility. But the fact that mobile homes are not mobile does not deter the tenant in any way from asserting their right to sell the home, rent the home, or abandon the home. You don’t need wheels or a hitch for any of those, and that’s how 99.9% of mobile homes change hands.
The industry is consolidating and that leads to higher park prices
The whole point of this misguided Vice story is to elicit anger towards big corporate buyers who are “taking over the mobile home park industry”. Of course, that’s a great thing for those who buy mobile home parks now as it suggests that values will ultimately skyrocket through industry consolidation. After all, that’s how it went with the self-storage sector not that long ago, when Public Storage single-handedly made millionaires of a ton of mom and pop owners. Not bad news unless you’re a woke reporter.
The U.S. has property laws and woke narratives have no place in the real world – nor should they
Perhaps the saddest part of this Vice Media expose was the anti-climactic ending in which the residents in the mobile home park and the young reporter descend upon a clearly agitated judge who is there to bless the sale of the mobile home park to the large corporate owner. She does so literally within 60 seconds, with no further discussion. How could the judge be so heartless? Because America has property laws and one is that the owner is allowed to take the highest offer. The whole premise of this story was that the evil corporate owner was going to inject a ton of money into a failed mobile home park to bring in back to life and, as a result, significantly raise the rents. The problem is that none of this is evil. When Ms. Thompson complains that the new owner will probably provide affordable housing to residents “that are nicer than the existing ones who can’t afford it” – and you simply look back on the disaster the tenants made of the property and the resident who tells the receive to go screw themselves – then you realize that’s probably a good thing for the community at large.
Conclusion
Memo to Vice Media: can we please move on to a topic that is more interesting? This is their second video production on “evil” mobile home park owners and it was worse than the last one. Let’s face the facts. Only 8% of Americans live in mobile homes, and only a portion of those live in mobile home parks – maybe 5% tops. That means that 95% of Americans could care less about the subject of this story. And if you watch this from start to finish you can’t possibly come away from it without wanting to learn more about mobile home park investing. I’m betting even the reporter has been thinking about it. It reminds me of the National Geographic segment that I was featured in years ago. It was negative on the industry and “evil owners”. Then, about a month later, I got a call from the producer wanting to know how to buy a mobile home park.