LIBERTY, Mo. — Over her 25 years living in a quiet suburban mobile home park, Kristi Peterman got to know the neighbors directly next door and a few across the street.
But since she and her neighbors collectively purchased the sprawling park outside of Kansas City from its longtime owner in 2021, she’s gotten to know just about every resident.
“It’s a community, and not just a neighborhood,” she said. “A neighborhood is a group of houses or homes that are in proximity of each other. A community is something entirely different.”
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Lennon, who owns eight mobile home communities, said that increase was needed because the previous owner was charging too little for too long — the park has only seen two rent hikes over the last five decades, he said. That left the park poorly maintained, he said, with a backlog of costly upgrades needed. Since his purchase, Lennon has paved roads, added fencing and installed new mailboxes, among other improvements.
Look, all of this “Free Rent Movement” nonsense is simply not going to work. If you deny a property owner’s legal right to raise rents to market levels, they’ll simply tear the park down and put something else on the land that is more profitable. Now it looks like the ‘Free Rent” folks have a new plan: let’s just buy up all the mobile home parks in the U.S. and then artificially suppress the rents. Only one problem: to service the debt, they’ll still have to raise the rent just as much. And then, of course, they’ll have to also raise the rent to account for higher prices on water, sewer, electricity, insurance, property tax, etc. By the end of the movie the tenants pay the same rent if they own it then they would with a regular investor owning it.
But it turns out worse. Because the tenants don’t really buy these properties, non-profits do. The non-profit originators go through the exercise to get up-front fees which they pocket. However, the loans are personally guaranteed by a different non-profit (the lender will not accept the tenant’s personal guarantee as they have no assets) on typically a 5-year loan term. When it comes due, the non-profit guarantor can simply lose interest in the renewal and then the property gets sold back to a regular investor. In other words, it’s a racket. And all the residents get out of the deal is lousy management and poor living conditions from the amateur management of their fellow residents. And all for the privilege of being a promo piece for the non-profits before they cut them loose.
For the truth about these “tenant owned” parks, look no further than the story of Sans Souici in Colorado https://coloradosun.com/2024/04/22/sans-souci-boulder-county-mobile-home-park-challenges/. It details the miserable failure that these deals become.
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