The Mobile-Home Trap (2015)(seattletimes.com)
seattletimes.com
The Mobile-Home Trap (2015)
https://www.seattletimes.com/business/real-estate/the-mobile-home-trap-how-a-warren-buffett-empire-preys-on-the-poor/
69 comments
The only thing special about a mobile home is that usually (non-mobile-home) you either rent or own land+house as a bundle, not rent land and own house (or the far less common vice versa). Besides that it's just the classic trade-off between owning and renting, paying for liquidity. Is owning better in general? Probably, because it has powerful rights in a finite world. Even home owners are subject to disposession due to HOA/COA, property tax, and condemnation/eminent-domain.
Once your doublewide is up on cinder blocks and functionally immovable / hasn't rolled in 20 years, things do actually get more complicated.
"this is my land, you're tresspassing, get that "mobile structure" off in 24 hours or you'll be arrested" is not something you can do to a renter with quite the same level of cruelty.
"this is my land, you're tresspassing, get that "mobile structure" off in 24 hours or you'll be arrested" is not something you can do to a renter with quite the same level of cruelty.
As far as I'm aware, mobile home owners have renters rights on the land, which means you can't exactly do that to them either.
its usually handled as "you're evicted. To cover back rent, we take ownership of your stuff including your trailer. Once we sell your stuff, you may have any proceeds after back rent and fees are paid."
"your home that you own depreciates like a car [...]" is a crock
I agree the organizational structure of it all can lead to some very bad outcomes, but it's not some grand design that a mobile home depreciates. It's a material good, it wears out. The only reason e.g. a SFH appreciates is because the land is appreciating faster than the structure is depreciating.
I agree the organizational structure of it all can lead to some very bad outcomes, but it's not some grand design that a mobile home depreciates. It's a material good, it wears out. The only reason e.g. a SFH appreciates is because the land is appreciating faster than the structure is depreciating.
The value is also affected by perception. Older mobile homes were built with materials and processes that made them more difficult to update and maintain than site built homes. I believe this is largely not the case anymore but the idea that a mobile home has a shorter life span persists.
Older mobile homes turned to kindling during extreme weather. Newer ones are built much better because now there are building codes they have to meet. But reality is you pay for what you get.
Newer mobile homes are treated like custom homes. Including being cemented to the floor, permanently. They cost more, mortgages are larger, so banks treat those homes as permanent. Going so far as making sure the undercarriage is completely dismantled and removed. If the owner defaults bank employees have shown up to take possession only to find an empty lot!
Newer mobile homes are treated like custom homes. Including being cemented to the floor, permanently. They cost more, mortgages are larger, so banks treat those homes as permanent. Going so far as making sure the undercarriage is completely dismantled and removed. If the owner defaults bank employees have shown up to take possession only to find an empty lot!
I work in this industry and can tell you alot of the mobile home value is determined by the lot rent it sits on in land-leased communities. For example if you had a $70,000 mobile home in a mobile home park and lot rent is raised from $300 to $400 then the value of the home will also fall since purchasing it comes with an increased rent payment. There is arbitrage opportunity in moving a home (In only some instances since this can cost anywhere form $3k-$20k) into a park with lower lot rents or even private land.
Followup article [1] in response to berkshire's response [2]after the article was published.
[1] https://www.seattletimes.com/seattle-news/times-watchdog/a-l...
[2] https://www.omaha.com/clayton-homes-statement-on-mobile-home...
[1] https://www.seattletimes.com/seattle-news/times-watchdog/a-l...
[2] https://www.omaha.com/clayton-homes-statement-on-mobile-home...
I've been a real estate broker specializing in this property type for 5 years. I've noticed the trend of large private equity companies like Blackrock buying mom and pop parks and raising rents or redeveloping the property leaving the tenants out in the cold. The cost to move a mobile home is on average $5k - $20k forcing many tenants to abandon their homes. I have a small startup called movemymobile.com that addresses this issue. We currently are finishing up our MVP and should be done within two months.
John Oliver (love him or hate him does not matter!) did a video on this issue a while back: http://time.com/5565832/john-oliver-mobile-homes-last-week-t...
The TL;DR is owning a mobile home but leasing the land (lot) underneath it is a very bad idea and will most likely harm you financially.
More detail: Large funds are buying up mobile home parks and increasing the monthly rent for the lot. Since a mobile home is not really mobile (watch the video) the person living there is trapped. The fund wins even if the resident leaves because they can take ownership of the home and lease it to someone else.
The TL;DR is owning a mobile home but leasing the land (lot) underneath it is a very bad idea and will most likely harm you financially.
More detail: Large funds are buying up mobile home parks and increasing the monthly rent for the lot. Since a mobile home is not really mobile (watch the video) the person living there is trapped. The fund wins even if the resident leaves because they can take ownership of the home and lease it to someone else.
>The TL;DR is owning a mobile home but leasing the land (lot) underneath it is a very bad idea and will most likely harm you financially.
This gets a lot blurrier when you're talking about things that are closer to a travel trailer than a mobile home. Those can be packed up and moved in less than a day. You're basically renting a parking space with water/electrical/sewer hook ups at that point. If you need a wide load permit to move it you should definitely own the land.
This gets a lot blurrier when you're talking about things that are closer to a travel trailer than a mobile home. Those can be packed up and moved in less than a day. You're basically renting a parking space with water/electrical/sewer hook ups at that point. If you need a wide load permit to move it you should definitely own the land.
But, what if there's no where to move to? We live in a time and age when voters and the govt that represent them are ever more stingy with land usage. I wouldn't be at all surprised if we end up with no-where to put the mobile home due to zoning and regulation. In that case, the existing mobile home park owners will be able to raise rents to whatever they want: this is the biggest danger.
To Fight it, we must make more land available and remove all zoning. Look cities without zoning like Houstan (places people can actually afford to live), they end up far more prosperous, and far fewer of their citizens ever have a need to move into mobile homes.
To Fight it, we must make more land available and remove all zoning. Look cities without zoning like Houstan (places people can actually afford to live), they end up far more prosperous, and far fewer of their citizens ever have a need to move into mobile homes.
>But, what if there's no where to move to? We live in a time and age when voters and the govt that represent them are ever more stingy with land usage. I wouldn't be at all surprised if we end up with no-where to put the mobile home due to zoning and regulation. In that case, the existing mobile home park owners will be able to raise rents to whatever they want: this is the biggest danger.
This has been happening in the industry for at least a couple of decades. Zoning laws are increasingly restrictive and force folks to rely on mobile home parks.
Source: My family has been in the mobile/modular home business since the 60's.
This has been happening in the industry for at least a couple of decades. Zoning laws are increasingly restrictive and force folks to rely on mobile home parks.
Source: My family has been in the mobile/modular home business since the 60's.
Mobile homes are rolling trash we don't need more places to put them we need to educate people so they wont throw their money away.
Mobile homes are the cheapest way to live long term if you treat them right: buy one to live in for 20/30 years and scrap it, buying a new one. Your long term costs will be less than rent of a small apartment in most cases. They are not an investment in any way. A house is somewhat an investment in that you can sell it in 30 years and get a lot of money back which won't apply to rent (note that I didn't call a house a good investment: it might be but it might not depending on many factors)
Look around you. A mobile home is generally the most cumbersome and expensive-to-move (and store somewhere!) yet valuable thing you can own. Your car is big but moves under its own power.
If a landlord evicts you, any sane law would require them to disburse any value from possessions you leave onsite, minus reasonable disposal or administration costs.
If a landlord evicts you, any sane law would require them to disburse any value from possessions you leave onsite, minus reasonable disposal or administration costs.
I agree - and you normally lease land for a travel trailer in short spurts (for instance, the winter) and move on.
There are a million ways poor people suffer for being poor. In my opinion cataloging all million is less useful than working to acquire and protect wealth, by fighting against (and seizing the resources of) the powerful forces that array against them. Onesie twosie banning specific exploitations is not scaleable, and the powerful forces will quickly move in to find other ways to pick pockets to the bone.
There are free market solutions to the problem with mobile home parks. Even from an economic standpoint there is a huge inefficiency in the industry to the benefit of the landlords.
The problem with this argument is that there's a big difference in the starting line in the race.
So basically 'you dont have to outrun the bear, just the slowest camper'.. right?
> leasing the land (lot) underneath it is a very bad idea and will most likely harm you financially.
Funnily enough, there's a city nearby that's quite expensive to live in (even for California), because it's beach-side. And of course in every expensive city there's an even more expensive neighborhood. Except, for some bizarre reason, this wealthy neighborhood has a similar arrangement where the residents own their homes, but rent the land. Except all the homes are your typical McMansions and permanent; they aren't mobile homes. I was a bit baffled by the whole thing. It's like an HOA but worse.
Perhaps those living there believe that because they are wealthy they aren't worried about any of the consequences normally associated with the mobile-home trap.
Funnily enough, there's a city nearby that's quite expensive to live in (even for California), because it's beach-side. And of course in every expensive city there's an even more expensive neighborhood. Except, for some bizarre reason, this wealthy neighborhood has a similar arrangement where the residents own their homes, but rent the land. Except all the homes are your typical McMansions and permanent; they aren't mobile homes. I was a bit baffled by the whole thing. It's like an HOA but worse.
Perhaps those living there believe that because they are wealthy they aren't worried about any of the consequences normally associated with the mobile-home trap.
That's probably BLM, state gov, or native American land. It's not as bad as it seems because the leases are typically 99 years. Countries such as a Thailand will have 99 year leases. A few will have 200 and 300 year leases. Lots of homeowners in the UK don't own the land their house is on.
Out of curiosity, when the fed rate is almost zero in the US what’s a really good rate for a loan there? These subprime mortgages which offer double digit interest rates even with collateral seem pretty extreme. Being poor must be expensive...
The reason for the high rates for mobile homes is due to the depreciation of the home, the difficulty in being able to reposses it as well as the low credit ratings of most of the borrowers who live in mobile homes. It's not just rich billionaires trying to rip poor people off, there are many factors at play in the industry that need to be addressed. Another issue is how to appraise/value a mobile home. There are currently no standards for appraising the value and most appraisers are inexperienced in mobile home valuation. Not only that but the fact mobile home values are effected by lot rents by the parks makes it even more complicated.
Here's some historical data: http://www.freddiemac.com/pmms/pmms30.html
Ah. They are fixed long term, that explains the huge margins. Here we do 3-months mostly so the lenders risk in terms of future costs of their borrowing is near zero. That’s why my rate is e.g 1.3%. I have part of my mortgage fixed at a 2y interest rate but I wouldn’t want to fix it longer (and I would hate to have pegged my rate pre-2008 to some interest rate based on the expectation of inflation from back then)
Kind of a bummer to see this as I semi rural town with several mobile home parks. They were good places where folks could buy an affordable place rather than rent, and then move up if they could do so later.
Thats exactly the trap, though. You are renting and owning at the same time, which is the worst of both worlds - you are more stuck than any average renter because you have this depreciating house on top of land you don't own that is incredibly expensive and time consuming to move and you have no power to ever really move up and just sell the home because its contingent on finding a buyer who is also willing to agree to the rental terms and the landlord has to approve of the new renter before you can sell.
Almost every time it ends up being a rental park where the tenants paid dramatically more into it and can be held partially liable when they leave for huge sums of money they get no value out of. Its externalized costs of constructing apartments if anything.
Almost every time it ends up being a rental park where the tenants paid dramatically more into it and can be held partially liable when they leave for huge sums of money they get no value out of. Its externalized costs of constructing apartments if anything.
Zanny,
I am working on a startup to change this. Although the cost to move is extremely expensive, a knowledgeable tenant may find the competing park down the street will cover the cost of the move. I know this does not change their situation of being in a mobile home park but it gives tenants options and forces mobile home parks to compete.
I am working on a startup to change this. Although the cost to move is extremely expensive, a knowledgeable tenant may find the competing park down the street will cover the cost of the move. I know this does not change their situation of being in a mobile home park but it gives tenants options and forces mobile home parks to compete.
Anyone living in a mom and pop mobile home park should seek to lock their rents down contractually even if they end up paying a little more per month now.
Sounds like a good old japanese zaibatsu.
It seems that this would apply to the Tiny House movement as well.
Most of the time these are not in mobile home parks.
However, it would apply if the residents were renting the land.
Sorry, what is mobile home? A trailer in trailer park?
Sometimes, but in this context it means a smallish semi-permanent house that's built at a factory, then transported to a site on a flatbed truck. They can be moved, but they usually aren't.
https://en.wikipedia.org/wiki/Mobile_home
>A mobile home (also trailer, trailer home, house trailer, static caravan, residential caravan) is a prefabricated structure, built in a factory on a permanently attached chassis before being transported to site (either by being towed or on a trailer).
>A mobile home (also trailer, trailer home, house trailer, static caravan, residential caravan) is a prefabricated structure, built in a factory on a permanently attached chassis before being transported to site (either by being towed or on a trailer).
This was recently featured on Last Week Tonight with John Oliver [1] which also does a good job of covering this issue.
[1] https://www.youtube.com/watch?v=jCC8fPQOaxU
[1] https://www.youtube.com/watch?v=jCC8fPQOaxU
Is there any billionaire out there whose gains prove not to be ill-gotten if we look close enough?
Satoshi?
Satoshi is for all practical purposes not a billionaire. The assets have not and perhaps will not ever be liquidated.
This is speculation. He could theoretically have borrowed money with his bitcoin wallet as collateral in a private transaction.
How do we know that he didn't sell the private keys?
I think purchasing private keys is an unlikely transaction because it would be impossible for the purchaser to know how many copies of the keys existed before the transaction occurred. It could theoretically happen.
You could buy an obligation of him to transfer you the bitcoin on request, like other regular contracts. Kind of like a swap agreement. Of course, some level of trust is required.
> Is there any billionaire out there whose gains prove not to be ill-gotten if we look close enough?
This arbitrary and dangerous thinking.
But if you really feel like it by all means start looking closely at as many billionaires as you can identify and prove that each of their gains were ill-gotten.
Just please avoid the generalization.
This arbitrary and dangerous thinking.
But if you really feel like it by all means start looking closely at as many billionaires as you can identify and prove that each of their gains were ill-gotten.
Just please avoid the generalization.
I think the question "Is there any billionaire out there whose gains prove not to be ill-gotten" is a good question to ask.
There are over 2000 billionaires in the world, and rich people often pay extra for privacy. Learning about all of them isn't a small feat. It's good and proper to have public discussion about such questions before entering research.
There are over 2000 billionaires in the world, and rich people often pay extra for privacy. Learning about all of them isn't a small feat. It's good and proper to have public discussion about such questions before entering research.
I would contribute towards crowdfunding for investigative journalism to dive into the finances of billionaires, with the caveat that I'd expect any whistleblower or other awards for finding wrongdoing would be invested back into the enterprise.
its arbitrary and dangerous to evaluate economic stagnation and profligacy at the hands of a criminal class of sociopaths?
every billionaire is a criminal sociopath?
that is the basic question being asked at the root of this thread, is it not?
It is not. It is possible for a fundamentally empathetic person to go against his or her conscience (or to not look too carefully at what they're really doing), and it is useful to distinguish this behavior from that of people who simply have no empathy.
I just wanted to confirm such an extreme view.
What if someone wins the lottery (after many roll overs)?
At what point do they become criminal sociopaths? When they cross the billion threshold? USD or local currency?
What if someone wins the lottery (after many roll overs)?
At what point do they become criminal sociopaths? When they cross the billion threshold? USD or local currency?
Billionaires don't need your help, why choose to lend your efforts to it.
temp1831(1)
"Behind every great fortune lies a great crime." — Balzac
I am far (very, very far) from being a millionaire, much less a billionaire. Nevertheless I have a pension and other investments in stocks and shares trackers.
I'm certain one of my holdings via those trackers has committed an offense, or done something 'immoral'. So I suppose my gains are ill gotten, as are probably everyone else's.
> Is there any billionaire out there whose gains prove not to be ill-gotten if we look close enough?
Have any children inherited that level of wealth?
Have any children inherited that level of wealth?
Plenty. There are, for example, three Waltons with personal valuations above 40 billion dollars.
https://en.wikipedia.org/wiki/Walton_family
https://en.wikipedia.org/wiki/Walton_family
Probably not, but there's also probably not any non-billionaire investors out there whose gains are squeaky-clean.
The more billions you have, the more likely that one or more of those dollars were acquired in a method that some folks might find distasteful, I imagine.
No. A billionaire will fundamentally employ thousands of people. At least one of those thousands will be a crook. It is statistically impossible to find a large enough organization without some crime occurring. Perfect controls and checks-and-balances are impossible (and not necessarily even desirable).
Even if, hypothetically, no crime were to occur, with enough customers and employees, at least a few will be disgruntled, and willing to lie, exaggerate, delude themselves, or misunderstand what's happening.
The result is that expose hit pieces are easy enough to craft against anyone powerful enough. The key question is always about how common improper behavior is, who knows about it, under what cultural standards it is considered improper, etc.
I'm not trying to undermine the underlying point: Most people who got very rich engaged in at least some corruption to do it. But a key word there is 'most.' Virtually all are possible to publicly discredit, and it's important to read such pieces carefully.
Even if, hypothetically, no crime were to occur, with enough customers and employees, at least a few will be disgruntled, and willing to lie, exaggerate, delude themselves, or misunderstand what's happening.
The result is that expose hit pieces are easy enough to craft against anyone powerful enough. The key question is always about how common improper behavior is, who knows about it, under what cultural standards it is considered improper, etc.
I'm not trying to undermine the underlying point: Most people who got very rich engaged in at least some corruption to do it. But a key word there is 'most.' Virtually all are possible to publicly discredit, and it's important to read such pieces carefully.
While that's true, the criminals in the billionaire's organization are working to help themselves more than the billionaire. If their activities benefit the billionaire, that's just a side effect. In contrast, some crooks rob their employers outright.
Both happen quite a bit, in large organizations. In most cases, the person at the top sets KPIs (e.g. a salesperson should sell at least $10 million of goods), and incentives around those KPIs. Helping oneself means achieving those KPIs by any means -- bribes, kickbacks, fudging numbers, hiring prostitutes, etc.
Some of those are illegal, and some merely unethical. In some cases, that aligns with corporate interests (more sales!). In some cases, it undermines corporate interests (bad reputation). In some cases, the person on the top quietly supports bad behavior, and in some cases, they have just a hard time stopping it.
It's often quite hard to tell all of those apart. But we haven't really found a way to avoid at least some of those happening in any organization above, say, a few hundred people. Even at a hundred people, it's tough.
One of the underemphasized advantages startups can have over big companies is pretty good alignment and protection against this sort of stuff. Everyone knows each other, and works as a genuine team.
Some of those are illegal, and some merely unethical. In some cases, that aligns with corporate interests (more sales!). In some cases, it undermines corporate interests (bad reputation). In some cases, the person on the top quietly supports bad behavior, and in some cases, they have just a hard time stopping it.
It's often quite hard to tell all of those apart. But we haven't really found a way to avoid at least some of those happening in any organization above, say, a few hundred people. Even at a hundred people, it's tough.
One of the underemphasized advantages startups can have over big companies is pretty good alignment and protection against this sort of stuff. Everyone knows each other, and works as a genuine team.
"your home that you own depreciates like a car and you merely rent the land under it and we can raise the rent whenever we want" is a crock, and needs to end.
Resident cooperative ownership of the land is superior in every way, and Buffett should honestly be ashamed of himself for playing this game.