Gary Rivlin, a writer for the New York Times, wrote an article about us, which came out in March. You can find the article here. In the article, Rivlin was able to condense the successful business model for affordable housing to three sound bites: 1) raise rents 2) no coin laundry and 3) don’t be a slumlord. And he got it right on the first take.
It’s all about affordable housing
The overall theme of the article is that mobile home parks are all about “affordable housing” – the least expensive way a resident can have the American dream of home ownership with their own yard and a community “feel” at a very low price. With over 20% of American households now earning $20,000 per year or less, this need for affordable housing grows daily, but nobody delivers on it other than mobile home parks.
Keeping rents at market is a big profit driver
Rivlin found that we are always trying to keep our rents at market. The “market” being lot rents at 50% of similar apartment rents. As apartment rents continue to go up, so do mobile home park rents. Higher rents mean more profit for investors, as well as the ability to keep up the maintenance of the parks. Tenants still win because they’re paying roughly 50% of what they’d be paying in an apartment. Without raising rents, mobile home park owners fall into a vicious cycle of having no money to put into capital improvements, and the park begins to fall apart, with frequent utility breaks, potholes and general disrepair.
Nobody wants to pay for amenities – neither owner nor resident
Coin laundries are only one of the amenities that we remove from mobile home parks upon purchasing them. We also remove pools, clubhouses, and anything else that costs money but gets virtually no use. Our residents are trying to live as economically as possible, and the fewer amenities, the lower we can keep the rent. Does it make sense for the entire park population to pay for a pool that is used by only a handful of tenants?
Low cost does not mean low quality
Providing a low cost product does not mean that it is not a great quality product. Case in point is Southwest Airlines. They have proudly pioneered keeping costs down for the sake of offering the lowest prices, while at the same time offering professional service and an excellent track record. Walmart is another example. These two concepts are not mutually exclusive. When Rivlin referred to our business model as “don’t be a slumlord” he meant that we strive to keep our parks in the highest order, despite their low price.
Our residents are extremely happy to have this housing option
The big take away from the article is that our residents are extremely happy. In fact, Rivlin could not find a single unhappy tenant in our 221 space park in Pontoon Beach, Illinois. Why are they so filled with joy? Probably because we offer a detached dwelling (with no neighbors up against the walls, roof and floor) and a yard, and the ability to park by their door – all the things that apartments fail to deliver. And we make this possible at an unbelievably low price. Who would not be happy with that deal?
Gary Rivlin may be a reporter for the New York Times, but he also has a good handle on business, and he was able to hit the nail on the head with his first swing. Success in the affordable housing business is based on keeping rents at the right level, minimizing the costs and amenities, and keeping the properties in good repair. Of course, there are a hundred other drivers to a successful mobile home park, but those are a great start.