Mobile home owners may be finding themselves stuck.
Private equity firms like the Carlyle Group, TPG and Blackstone are increasingly buying up mobile home parks across the country, raising rents and pushing tenants out of their properties, according to the British comedian John Oliver.
The host of “Last Week Tonight with John Oliver” put a spotlight on the asset class in Sunday’s episode of the HBO show, taking on the institutional investors that have purchased likely more than 100,000 home sites in the U.S., he said.
Roughly 20 million Americans live in mobile home parks, which comes out to 1 in every 18 people. Most mobile homeowners own their houses and rent the land underneath them, which is “financially catastrophic,” Oliver said.
When a mobile home park owner sells the land to a major developer or private equity firm, the buyer will then typically raise rents, pushing people out of their properties. Because it can cost tens of thousands of dollars to move the homes, jacking up the rents can lead people to walk away from their mobile homes, Oliver said.
Sam Zell’s Equity LifeStyle Properties and Carlyle have been buying up such properties in South Florida, where developers are already constrained by land. In December, Equity LifeStyle paid nearly $50 million, or about $53,000 per lot, for a mobile home park near Riviera Beach.
Unlike traditional houses, mobile homes depreciate in value. Oliver shared a clip where finance host Dave Ramsay compares buying a mobile home to buying a car. “Cars go down in value. Mobile homes go down in value. It’s a car you sleep in,” Ramsey said.
While the homes are affordable, interest rates can exceed 15 percent and buyers are often faced with predatory practices and exorbitant fees, Oliver said.
“Mobile homes may be a terrible investment for people buying them, but they’ve been an incredible investment for Warren Buffett,” he said, adding that the Buffett-owned Clayton Homes, the largest manufacturer of mobile homes, generated pre-tax earnings of $911 million last year.
One solution for mobile homeowners would be to band together and buy their parks themselves, the talk show host said. Many states lack legislation giving the homeowners the right of first refusal if a large investment firm or developer were to make an offer on a property.