Private Equity Is Devouring the Last Affordable Housing in America

Summary

The video script discusses the plight of manufactured housing communities in America, often the last affordable housing option for many. It reveals how these communities have become targets for private equity firms, leading to significant rent increases and potential homelessness. The script follows residents' struggles, the role of investors like Alden Global Capital, and legislative efforts in Michigan to protect residents from predatory practices. It highlights the broader issue of housing affordability and the need for oversight on large investors.

Takeaways

• 🏡 Manufactured housing communities, often referred to as mobile home parks or trailer parks, are a critical but threatened form of affordable housing in the United States.
• 📈 Over the past decade, these communities have increasingly become targets for acquisition by private equity firms, leading to significant rent increases and potential displacement of residents.
• 💸 The business model of these firms relies on a captive market of residents who cannot easily move their homes, allowing for high rental yields and substantial returns on investment.
• 📊 Between 2020 and 2021, institutional investors were responsible for nearly a quarter of all manufactured home purchases in the U.S., with 12 private equity firms owning at least 1,200 parks nationwide.
• 💵 The cost of moving a manufactured home, ranging from $10,000 to $20,000, is prohibitive for most residents, making them particularly vulnerable to rent increases.
• 📉 Residents like Madalyn Beckett have seen their monthly rent and fees increase by as much as 50% after private equity firms took over their communities.
• 🏢 Companies like Homes of America, affiliated with hedge funds, have been accused of neglecting community amenities while raising rents and evicting residents.
• 🏛️ State Senator John Cherry has been working on legislation to protect residents from predatory landlords by requiring justification for rent increases and limiting fees.
• 💔 The legislation faced opposition and financial influence from the industry, with the Michigan Manufactured Housing Association PAC receiving substantial donations, leading to a withdrawal of support.
• 🔄 The fight for affordable housing in manufactured communities is emblematic of a broader struggle for housing justice and community control in the face of large-scale investment.

Q & A

What is the primary concern of the residents living in manufactured housing communities?

The primary concern is the threat to affordable housing due to increasing rents and fees imposed by private equity firms that have bought out their communities, potentially leading to homelessness.

How many Americans live in manufactured housing communities?

22 million Americans live in manufactured housing communities, which are often referred to as mobile home parks or trailer parks.

What is the role of private equity firms in the manufactured housing crisis?

Private equity firms have been buying up manufactured housing communities, leading to significant rent increases and poor living conditions for residents, as they target these communities for high returns on investment.

What is the average cost to move a manufactured home?

It costs between $10,000 to $20,000 to move a manufactured home, which is unaffordable for most residents living on an average annual income of about $35,000.

Why are manufactured housing residents considered vulnerable to predatory landlords?

Residents are considered vulnerable because the high cost of moving their homes effectively 'traps' them in the community, making them susceptible to exploitative rent increases by landlords.

What is the significance of the legislation proposed by State Senator John Cherry?

The legislation aims to protect residents from predatory landlords by requiring landlords to justify rent increases, limiting fees, making utility charges transparent, and ensuring fair market value is paid for homes if residents are evicted.

What happened to the legislation that was drafted to protect manufactured housing residents in Michigan?

The legislation initially passed the House with bipartisan support but later lost the support of the Michigan Manufactured Housing Association and died in the State Senate.

What is the role of the Michigan Manufactured Housing Association in the failure of the legislation?

The Michigan Manufactured Housing Association initially supported the legislation but later withdrew their support, which coincided with receiving significant donations from Havenpark executives.

What actions have residents taken to combat the issues in their communities?

Residents have been lobbying at the state capitol for a new version of the bill package, attending local council meetings, and contacting state representatives to bring attention to their plight.

How has the situation in manufactured housing communities impacted the everyday lives of residents?

Residents have faced increased financial burdens, with some having to rely on food banks and make difficult choices between paying rent, buying medication, and affording food.

What is the broader implication of the situation in manufactured housing communities?

The situation highlights a larger struggle for control over neighborhoods and the need for affordable housing, affecting people from all walks of life and raising questions about the role of large investors in the housing market.

Outlines

00:00

🏡 Affordable Housing Crisis

The script opens with a discussion on the affordability of housing, particularly focusing on manufactured housing communities, often referred to as mobile home parks or trailer parks. Despite their negative reputation, these communities are home to 22 million Americans due to their affordability. The script highlights the threat to this form of housing from private equity firms that have been buying up these communities, leading to significant rent increases and potential displacement of residents. The narrative follows Madalyn Beckett, a resident in Michigan, who has seen her rent and fees increase by 50% after a private equity firm bought her community. The script also introduces the broader issue of how these firms target vulnerable populations and the potential loss of one of the last affordable housing options in America.

05:01

💼 Exploitative Business Models

This section delves into the business model of private equity firms investing in manufactured housing communities. It highlights how these firms view the residents as a captive market, unable to move their homes due to the high costs involved, and thus can impose rent increases as they see fit. The script introduces Frank Rolfe, who likens owning a mobile home park to owning a Waffle House with chained customers, emphasizing the exploitative nature of the business. The narrative continues with examples of how these firms have aggressively raised rents and evicted residents, leading to abandoned parks and a lack of basic amenities. The section also touches on the legal challenges faced by residents and the difficulty of holding these large, often distant corporations accountable.

10:02

📉 Legislative Efforts and Corporate Influence

The final paragraph discusses the legislative efforts to protect residents of manufactured housing communities from predatory landlords. It outlines a set of bills introduced by State Senator John Cherry that aim to provide residents with more rights and protections, such as requiring landlords to justify rent increases and limiting the fees they can charge. The script details the collaborative process of drafting these bills and the initial success in gaining bipartisan support. However, it also reveals the influence of corporate money on the political process, as the Michigan Manufactured Housing Association withdrew their support after receiving large donations from industry executives. The narrative concludes with the ongoing efforts of residents to lobby for these bills and the upcoming legislative session that will determine their fate.

Keywords

💡Manufactured Housing Communities

Manufactured Housing Communities, also known as mobile home parks or trailer parks, are prefabricated housing units assembled off-site and then transported to a community. They are a significant form of affordable housing in the U.S., as highlighted by the resident who states, 'We're pretty much the last oasis of affordable housing in this country.' The video discusses how these communities are under threat, particularly from private equity firms looking to maximize profits.

💡Affordable Housing

Affordable housing refers to housing that is affordable to those with low to moderate incomes. In the script, it is emphasized as a crucial need, with manufactured housing communities often serving as a last line of defense against homelessness. The video raises concerns about the threat to this form of housing due to predatory practices by private equity firms, which can lead to rent increases that make these homes unaffordable.

💡Private Equity Firms

Private equity firms are investment companies that pool money from investors to purchase and operate companies. In the context of the video, these firms are buying manufactured housing communities and significantly increasing rents, as illustrated by the news anchor's statement about 'private equity firms... getting involved' and the resident's experience of a 60% rent increase.

💡Predatory Landlords

Predatory landlords are those who exploit tenants, often through unfair practices such as excessive rent increases or poor living conditions. The video uses this term to describe the actions of private equity firms that buy manufactured housing communities and then raise rents dramatically, as seen in the resident's比喻, 'It's like you genetically bred a superior predator and let ’em loose in a target-rich environment.'

💡Rent Increases

Rent increases refer to the raising of rental payments by landlords. The video script discusses how private equity firms have been increasing rents in manufactured housing communities, leading to financial strain for residents. One resident mentions that their rent could increase 'by thousands of dollars a year,' highlighting the severity of the issue.

💡Homelessness

Homelessness is the condition of having no home or a place of residence. The video implies that manufactured housing communities are essential in preventing homelessness, as they provide affordable housing options. The threat to these communities, therefore, poses a risk of increasing homelessness, as suggested by the resident's fear of not being able to afford to live in their home.

💡Institutional Investors

Institutional investors are organizations that invest in securities, such as banks, insurance companies, and pension funds. The video notes that during the pandemic, institutional investors started buying more manufactured housing, contributing to the trend of increasing rents and the financial vulnerability of residents.

💡Vulnerable Population

A vulnerable population refers to a group that is disproportionately affected by certain issues or policies due to their circumstances. In the video, residents of manufactured housing communities are described as a vulnerable population because they often cannot afford to move their homes, making them susceptible to exploitation by predatory landlords, as explained by Paul Terranova.

💡Legislation

Legislation refers to the process of enacting laws or the laws themselves. The video discusses efforts by State Senator John Cherry to introduce legislation that would protect manufactured housing residents from predatory practices. The bills are designed to 'weed out the bad actors in the industry' and ensure that residents are not exploited.

💡Lobbying

Lobbying is the act of attempting to influence decisions made by officials in government. In the script, residents like Holly and Theo go to the state capitol to lobby for a new version of the bill package aimed at protecting their rights. Their actions are part of a broader effort to gain support for legislation that could regulate rent increases and provide more security for residents.

💡Havenpark Communities

Havenpark Communities is a private equity firm mentioned in the video that owns multiple manufactured housing communities. The firm is highlighted as an example of an entity that has significantly increased housing costs for residents, leading to financial hardship and the potential for homelessness. The video uses Havenpark to illustrate the broader issue of private equity firms' impact on affordable housing.

Highlights

The threat to affordable housing in the form of manufactured housing communities, often referred to as mobile home parks or trailer parks.

22 million Americans rely on these communities for affordable housing.

Manufactured housing communities are the last line of defense against homelessness for many.

Private equity firms have become new landlords in these communities, leading to rent increases of nearly 60%.

Residents face the harsh reality of potential homelessness due to unaffordable rent increases.

The predatory business model of private equity in manufactured housing, likened to a superior predator in a target-rich environment.

The financial exploitation by private equity firms, prioritizing profits over the welfare of residents.

The high costs associated with moving a manufactured home, trapping residents in predatory situations.

Institutional investors' increased involvement in manufactured housing during the pandemic, leading to a surge in purchases.

The unique vulnerability of manufactured housing residents due to their inability to move their homes easily.

The high annual returns for investors in manufactured housing parks, outpacing other real estate assets.

The case of Homes of America, an affiliate of Alden Global Capital, and its aggressive rent increases and evictions.

The legislative efforts in Michigan to protect residents from predatory landlords, including requiring justification for rent increases.

The sudden withdrawal of support for the legislation by the Michigan Manufactured Housing Association after receiving large donations.

The residents' fight for affordable housing and against the plunder by private equity firms.

The residents' advocacy and lobbying efforts at the state capitol for the passage of the bill package.

The broader implications of the fight for control over neighborhoods and affordable housing for all.

Transcripts

I worked my whole life and

this is what it comes down to?

Some greedy person wanting

his big chunk out of

what little bit I had?

[Host] How much longer can you afford

to live in your home?

One month.

I don't know what I'm going to do.

Hope that I don't wake up tomorrow?

That's crossed my mind.

One of the most important forms

of affordable housing is under threat.

They're called manufactured housing communities.

You might know them as mobile home parks

or trailer parks,

and they often get a bad rap.

But 22 million Americans

call them home for a reason.

[Resident] We're pretty much the last

oasis of affordable housing in this country.

[Sam] These parks are at the foundation

of America's housing market,

often the last line of defense against homelessness.

But over the last decade,

these communities have become the target

of a new kind of landlord.

[News Anchor] Private equity firms

are increasingly getting involved.

Some of the biggest investors in America

have moved into this industry.

People living in a local mobile home park

outraged over the sharp

increase in lot rent.

Rents were raised by nearly 60%.

Their rent could increase

by thousands of dollars a year.

A group of mobile home residents

are protesting their living conditions.

[Resident] It's like you genetically bred

a superior predator

and let ’em loose

in a target-rich environment.

This is actually a good day.

Sometimes it's like mud.

[County Prosecutor] This corporation is putting profits ahead

of the safety and welfare of our local citizens.

And this we will not allow.

[Sam] So why have manufactured homes

become private equity’s latest target?

And what can be done

to save one of the last forms

of affordable housing in the country?

[Resident] I've lived in manufactured homes for

50 years, maybe more.

[Sam] Madalyn Beckett lives in a park

outside of Lansing, Michigan.

[Madalyn] This park was run the way

a good park should be run,

by the same couple

for years and years and years.

They were a little stern.

Or she was a little stern.

She was a lot stern,

but nobody pulled any punches with her.

[Sam] Like most people in manufactured housing,

Madalyn owns her home,

but pays monthly rent

to the park owner for the land it sits on.

[Madalyn] When I retired,

I looked at my money

and my situation

and I'm like, “Okay, great.”

I knew what the rent was.

It was a third of my income.

I don't live high on the hog.

You know, I'm not going to Paris anytime soon.

And then the conglomerate came in

and offered, apparently, the owner

money that he couldn't resist.

I looked it up and I went,

“Oh dear, I think we are in trouble.”

[Sam] Three years ago, a private equity firm

bought Madalyn’s community,

and later sold to another firm.

Since then,

her monthly rent

plus fees have jumped 50%.

Instead of what I thought

the rent was going to be,

it's $200 more.

I have nowhere to go.

Just the other day,

my daughter went with me to the food bank

and I hadn't done that before.

I haven't been poor.

I worked for 45 years.

There is no American dream anymore.

All it is is survival.

[Sam] During the pandemic,

institutional investors started to buy

more manufactured housing than ever before.

Between 2020 and 2021,

they made nearly a quarter

of all manufactured home purchases in the U.S.

Today, 12 private equity firms own

at least 1,200 parks nationwide,

according to the Private Equity Stakeholder Project.

In Michigan,

private equity owns

1 in every 10 parks.

There is an overall trend in our economy

to identify who has the fewest choices

and then squeeze them.

[Sam] Paul Terranova organizes manufactured

housing residents in Michigan.

[Paul] While folks often call them mobile homes,

they're not really particularly mobile.

Wall Street investors,

private equity firms, hedge funds

kind of figured out

that folks living in manufactured

housing communities are trapped.

They can't move.

[Sam] It costs $10,000 to $20,000

to move one of these homes,

and most people who live in them

can't afford that.

[Paul] If you think about the fact

that the average manufactured housing resident

lives on about $35,000 a year,

that's generally out of people's range.

[Sam] Because they can't move,

they're uniquely vulnerable

to predatory landlords,

who can charge the highest rent

residents can bear.

[Paul] There's a guy named Frank Rolfe

who runs something called

Manufactured Housing University.

Okay, we're now at her second park.

We're getting out again. So, here we are.

[Paul] He was quoted saying

something along the lines of,

“Owning a mobile home park

is like owning a Waffle House

and having your customers

chained to the booth.”

The big thing is, they can really tolerate

rent increases really well.

And it pretty much works throughout America

because there's so much need

for affordable housing right now.

[Sam] That business model,

a reliable stream of payments from captive tenants,

is a big reason why

these parks are so lucrative,

providing investors with one of the highest annual returns

of any asset in real estate —

higher than offices,

commercial, industrial, you name it.

[Photographer] Say “trailer park.”

[Group] Trailer park!

[Resident] This is a financial play to them.

They don't care about us.

They’d just as soon evict us,

take our homes

and then rent them out

to somebody else for $200 more.

[Sam] Theo Gantos lives in a park near Flint, Michigan.

Three years ago,

it was taken over by Homes of America,

an affiliate of the hedge fund

Alden Global Capital.

Alden Global is best known

for buying newspapers across the country

and stripping their assets.

[Theo] Yeah, we had a pool, you know,

before Homes of America.

We still pay the same amount

as though we had a pool

and as though we had a community center.

But we have no community center either.

[Sam] Since 2021,

Homes of America has gone on a buying spree,

spending nearly $300 million

to acquire a 138 parks across 17 states.

They've raised rents

and aggressively evicted residents.

After years of neglect,

only about 15% of the lots

in Theo's park are still occupied.

[Sam] And who is Homes of America?

Homes of America

is just a shell within a shell within a shell.

Homes of America is Randy Smith.

[Sam] Randall Smith is the founder

and Chief Investment Officer of Alden Global.

He lives in Palm Beach, Florida.

As of 2017, he owned 17 mansions.

He has since sold 14 of them

for a reported profit of $57 million.

Yeah, this is the plunder

of private equity.

This is what they do.

Okay, everybody ready?

Everybody rolling?

Hi, good afternoon.

[Sam] In August,

the county prosecutor brought charges

against Homes of America's

local LLC for operating the park

without a license.

It's the first time

that the owner of a manufactured housing park

in Michigan has ever faced that criminal charge.

[County Prosecutor] A key element in the North Morris Estates’

inability to obtain a license

is its seeming refusal

to fix the park's water problem.

[Theo] Well, when the water comes out like this,

it kind of ruins your whole day.

[David] Hopefully, we'll get the attention

of the out-of-state corporation

that owns this park

and force its officers and directors

to do the right thing

for the residents of this community.

It's clear to me

this corporation is putting profits

before people.

[Theo] Honestly, the warrant should be to

Randall Smith, CEO of Alden.

But he's hidden himself

behind multiple shell layers.

So getting to him is hard.

These big companies

buying up these communities

now need some oversight,

because right now

they're free to abuse residents

in pretty much every way they want.

[Sam] Holly Hook lives 30 minutes away at another park,

owned by private equity firm

Havenpark Communities.

That's the same company

that bought Madalyn’s park,

and it owns 63 other parks across the country.

In the last six years,

Havenpark has doubled Holly’s housing costs.

To avoid homelessness,

she’s had to take on two roommates.

What power do you have right now

in the existing legal structure

to do anything about the rising rent

or any of the fees?

There's absolutely no recourse right now.

About a year after this started,

it’s like something just broke in me

and I started talking to some neighbors,

saying, “We've got to gather

and do something about this.”

[Paul] Residents were up in arms,

and they started

going to their local township council meetings,

and their city council meetings,

and a few of them

were able to make contact

with a couple of state representatives,

a Democrat named Senator John Cherry.

[Holly] A lot of people from the district went up to him

and told him about what Havenpark was doing,

and that’s what got him interested

in drafting the bill package.

[John Cherry] What the legislation tries to do,

in the broadest sense,

is to weed out the bad actors in the industry.

What we're trying to do is make sure

that folks don't get exploited.

That's what this is about.

[Sam] State Senator John Cherry

is the sponsor of legislation

that would protect residents

from the worst

abuses of predatory landlords.

The bills were drafted in 2021

by a coalition of residents and advocates,

in direct negotiation

with the landlord industry group.

[Paul] It was a very collaborative process

that actually included

the Michigan Manufactured Housing Association.

[Sam] The legislation would require landlords

to justify any rent increase

above the rate of inflation

in front of the state commission.

It would also limit the fees that landlords can charge,

make utility charges transparent,

require notification when a park is sold,

and force landlords

to pay fair market value for a home

if a resident is evicted.

These are really modest protections,

so it's not everything

that we need right now.

It's not going to set the rents

back to what they were

or anything like that,

but it would start

to make things more fair.

It would just be a modest start.

[Sam] In the state's last legislative session,

the legislation passed the House

with overwhelming bipartisan support.

The bill is passed.

[Sam] But then something changed.

In the early part of 2022,

the Michigan Manufactured Housing Association

did a 180, pulled their support,

and it died in the Michigan State Senate.

When we looked at the records,

we did see that that coincided

with the Michigan Manufactured Housing Association PAC

suddenly getting some very big donations.

[Sam] Over the course of a year,

two Havenpark executives

gave $358,000 to the industry PAC.

[Holly] And that’s right when the

Manufactured Housing Association

just totally pulled their support.

[Paul] That money is, some of the people

that I know, that's their grocery money.

That's their prescription copay.

That’s the medicine that they're doing without

and the food that they're doing without,

because these people were gouging them.

[Holly] The most vulnerable residents in Michigan

are being taken advantage of.

And some people have to choose

between rising rent,

medications and food.

[Sam] In February, Holly, Theo, and other residents

went to the state capitol to lobby

for a new version of the bill package.

I’m testifying in support of Senate bills

486 through 490.

There's no free market

when residents are trapped.

[Sam] Its fate will be decided

in the upcoming legislative session

this September and October.

[Paul] We have overwhelming support

from the Democrats in the House,

and we have some Republicans

who've committed to support as well.

How many legislators

would you say you've met with?

I would say at least 100 of them.

We’ve met with almost all of the Michigan Senate

or their staff,

and now we're starting to work

on the House.

[Sam] Manufactured housing communities

are just one type of property

that large investors

have targeted in recent years.

But these parks are ground zero

in a fight that affects all of us,

the fight for meaningful control

of our neighborhoods

and for housing that people

from all walks of life can afford.

[Madalyn] Everybody deserves drinkable water

and everybody deserves to have affordable housing.

We just want a livable place.