As America faces rampant inflation, everyone is paying the price – and that includes more than 20 million Americans who live in mobile homes.
Unfortunately, some mobile home park owners are causing negative headlines about mobile home parks, raising the question of what responsible owners should be doing during these challenging times.
Many of these news stories paint a grim picture of life in a mobile home park: steep increases in rent, poor living conditions, sewage back-ups, water supply issues, pavement that is falling apart, and empty promises of improvements to living quality.
The country is in the grip of skyrocketing inflation not seen in decades, and costs are going up for everyone, including mobile home parks. In many cases, rent at long-neglected parks are well below the market rate, leaving owners with little choice but to increase rates to keep up with the rising costs of running their parks.
However, the approach that some investment groups are taking – steeply raising rent without making any repairs or improvements to better the lives of their residents – is unsustainable, as eventually residents will fight back. These park owners, who are simply focused on the profitability of their investment and are not doing anything for their residents, are being called out by their residents and making a bad name for the rest of the mobile home park investment industry.
What Park Owners Should Be Doing
What about the responsible park owners? What should they be doing as inflation runs rampant? The short answer: They should always be seeking ways to improve their parks.
As a mobile home park investment company and owners ourselves, we often purchase parks that are in a state of disrepair. Many of these parks are over 50 years old, their infrastructure is in poor condition, and the quality of the property is below average. Perhaps the previous owners didn’t want to put any money into the park, or they simply didn’t have the budget due to their decision to not raise rates along with the rest of the market.
This leads to a declining property and lower living conditions for residents. Roads may become full of potholes, the pool and clubhouse could close down, the security lighting within the park might no longer work, and weeds could be growing out of control, for example.
This deferred maintenance causes the experience of living in the park to decline, and it also causes the value of the park and residents’ mobile homes to decline.
After all, who would want to buy a home and live in a park like that?
When acquiring a park, the first thing a new owner should do is show the residents they are serious about their residents’ experience living in the park. Instead of just raising the rent to catch up to the rest of the market, it is wise to prove a true desire to increase the quality of the living experience to the residents, too.
If residents are going to pay market rates for rent, they deserve the best living experience in the market as well.
Owners should begin by addressing those areas that the previous owner neglected, bringing the park back up to the quality of the rest of the market in the area. Next, owners should consider making improvements to the property that would give residents reasons to get excited about living there. This is the type of responsible mobile home park investment company we work to be.
Responsible Owners Produce Results
We know this approach is the right way to operate because our residents tell us how grateful they are for the changes we make.
We are transparent with residents when we buy a park, and they typically already know their rent is lower than the rest of the market. We clearly communicate that if rates are going to increase to match the market, their quality of life in the park is going to improve as well. They’re going to have nice roads, clean landscaping, good lighting, and other amenities we know they deserve. As a purposeful mobile home park investment company, we’re going to spend a lot of money on the park, and they’re going to have the best community of its kind in the area.
This approach doesn’t just benefit the residents – it’s also the best way to protect the investment. Instead of owning parks that are steadily declining, we own parks full of happy residents who appreciate the contrast from previous ownership to ours. And if there are vacant spaces, a well-run park with a great living experience is more likely to attract new residents who choose to make it their home.
In today’s challenging climate, operating this way isn’t easy, or cheap. But it’s the best way – and the right way.
This content is the perspective of the author and is not intended to be relied upon as a forecast, recommendation or investment advice, and is not an offer or solicitation to buy any securities or to adopt any investment strategy. The information and opinions contained in this content are derived from experience, historic data, and other sources deemed to be reliable, are as of the date of this content, and may change as subsequent conditions vary.