While many people are concerned about rent increases, the news is that this trend isn’t new. Over the past eight years, one-fifth of mobile home parks have been bought by institutional investors. According to George McCarthy, president of the Lincoln Institute for Land Policy, this trend is the result of two factors. One factor is the loan guarantee offered by Fannie Mae and Freddie Mac. The companies claim to expand the supply of affordable homes and are funding the purchase of mobile home communities in 44 states.
In a recent report, the Lincoln Land Policy Institute found that institutional investors have purchased about one-fifth of the country’s mobile home parks. As a result, many mobile home communities have experienced rent increases. In order to stabilize profits, park operators must raise rents. But how can they attract small investors? The industry’s experts offer tips. Read on to learn how to attract small investors and secure stable profits.
Out-of-state investors bought more than one-third of Minnesota’s mobile home park units in 2015, a sharp increase compared with the average rent increase of 2.4 percent a year. According to https://finanza.no/forbrukslan-kalkulator/ , these investors increased rents by an average of eighty percent from 2015 to 2020. And that’s just one of the many complaints about rent increases. In a recent Senate hearing, Iowa Senator Jon Tester said that tenants’ rents increased eighty percent from 2017 to 2020. The rent in Great Falls, Minnesota, has risen by $ 95 in three years.
Heaven Park limits rent increases to $ 50 per month
The state of Minnesota isn’t immune to rising rents, as deep-pocketed investors are buying mobile home parks. The price of mobile homes has risen by more than half a cent per square foot since 2015. Minnesota’s Havenpark Communities grew by 81 percent between 2015 and 2021, and a spokesperson said the company must charge market rates for the homes. However, Havenpark has limited hire increases to $50 per month since 2020, and the company is spending more than $11 million on improvements at its parks.
This trend is fueling the industry, with webinars, how-to books, and a mobile home university. But why are investors spending money on mobile home parks instead of building new homes? One reason may be that deep-pocketed investors want to improve these communities, according to industry leaders. They claim to be offering the best affordable housing option for residents. But the industry’s own numbers tell a different story.
Heaven Park limits rent increases to 30% in Minnesota
As the number of mobile home communities grows, so do complaints of escalating rents. Freddie Mac says it bought loans on less than three percent of the mobile home communities it bought – and most were refinances – in the past eight years. Nonetheless, rent increases are escalating, with tenants complaining that rent has nearly doubled in the last year. A report from the Iowa Legal Aid Society said that the rents for park homes have risen 87 percent between 2017 and 2020.
In New Hampshire, the rent strike began. Residents bought communities and are now fighting against Freddie Mac to ensure their future. The protests are working. In Minnesota, for example, the number of out-of-state park purchases will increase by 81 percent by 2021. According to the All Parks Alliance For Change, state associations have been tracking rent increases for parks. Last year, U.S. Senator Jon Tester argued that repeated rent increases at the Havenpark development in Great Falls prompted him to intervene. A resident, Cindy Newman, said her rent went from $117 to $400 in one year.
Heaven Park limits rent increases to 30% in Montana
The industry argues that mobile home communities are the most affordable housing option. But as deep-pocketed investors begin to buy up parks, rents have skyrocketed. The average rent increase in a park will exceed 10% in 2021, and park owners say that it may take more than half that amount to stabilize old parks. Freddie Mac, which guarantees loans to affordable housing providers, says it has purchased less than 3% of mobile home parks nationwide over the past three years. The average rent increase will be about $50 per month in 2021, which is well over double what many tenants have been paying for the past three years.
As a result, tenants are increasingly forced to pay more than they can afford. One recent example is Ridgeview Homes, a 65-year-old mobile home park in upstate New York. After its new corporate owners purchased the park in 2018, rents spiked. The park is conveniently located near a grocery store and a fast-food joint. Half of the residents are elderly or disabled. They have remained steadfastly in their homes despite the first two rent increases, hoping that Cook Properties would work to fix the problems.