Randall Schaffer loves his house. The three-bedroom home boasts two full, tiled bathrooms, a family room, living room, and even a charming breakfast nook.
"It's gorgeous," says Schaffer.
Schaffer lives in a manufactured home community in Bath, Pennsylvania. Like many people who live in mobile communities, Schaffer is a retiree on a fixed income. He used to own a jewelry business, and bought the home for $25,000 he had in savings five years ago. At the time, it seemed like a great deal on a retirement home.
The only problem is that Schaffer doesn't own the land that his house sits on. And that can be a big problem.
Greenbriar Village, where the Schaffers live, is owned by ELS, Equity Lifestyle Properties, the largest owner of manufactured home communities and RV Parks in the country. ELS is a publicly traded company with a current market value of over $4 billion, owned by billionaire investor Sam Zells.
ELS charges people like Schaffer a monthly rent, and in many states, there's nobody to stop it from raising the rent as much as they wish. It's a problem that impacts retirees and the working poor who live in trailer parks across the country.
For someone like Schaffer, if he can't afford the rent, he not only gets evicted, like he would in an apartment building, it means he can lose his home. And he will still owe on the mortgage, too.
About 20 million Americans live in manufactured housing, and in some states, like South Carolina and New Mexico, almost 20 percent of homes are mobile, according to Census data. The median income of mobile home residents is only half the national average, and almost a quarter are retirees who live off a fixed income like Schaffer.
That means that the rent doesn't have to go up much to price out low-income residents who make up most of the population who live in mobile or manufactured homes. Some people at Greenbriar who can't afford rent and can't afford to move their homes just abandon them, Schaffer says. They disappear overnight.
"When your community is owned by a large corporation, it's next to impossible to deal with them," says Schaffer. "It's a David and Goliath situation."
Trailer park blues
In corporate-owned communities, the value of a rental property is based on how much rent the company can charge. The more rent the company charges, the more valuable the community becomes — all the better for the owner to sell it for a profit to another property company, investment firm or hedge fund.
In a situation like Schaffer's, he can't move unless he can sell his home or move it. The higher the rent goes, the harder it is to sell. "You can't sell unless you find someone gullible enough to take it," he says.
And moving a modern manufactured home is not as easy as hitching it to a trailer and driving into greener pastures, either. Schaffer would have to find a new location, have his home set on concrete pillars, and possibly use a crane to move the home to oversized trucks. According to his research, it would cost him between $20,000 and $50,000 to move the home, which is out of reach for Schaffer.
It's also out of reach for most mobile-home owners, who at half the median income in Pennsylvania, make about $26,000 per year.
If someone like Schaffer can't sell his house or afford to move it, the corporation can continue to charge him rent as long as his home is on the property, even if he cuts his losses and abandons it. It's a trap that Schaffer didn't realize when he bought into the community.
"People in a place like this don't have $20,000 to move a home, and companies know it," says Schaffer. "These communities are vulnerable, and it's easy for exploitation to happen."
In Florida last month, residents at four properties owned by ELS staged protests saying that rents were going up while services were deteriorating. They said that rents had risen by 20 percent over the last few years to over $600 a month, while roads, laundry facilities and pools that the landlord is supposed to pay to maintain had been falling apart. Most of the residents are seniors.
Last year, residents in an ELS park in San Jose, California, won a landmark $111 million lawsuit against ELS when residents said that they couldn't sell their homes because of deterioration of their once-pristine community since ELS took over in 1997. They complained of lakes that had become filled with slime, backed-up sewers, electricity blackouts, and having water shut off for as many as 20 hours at a time.
In a statement, ELS claimed that the property is a "well-located, 100 percent-occupied, institutional quality asset that received the Manufactured Housing Institute's Community of the Year award in 2012." The company is seeking a retrial to overturn the verdict.
A good affordable housing option — done right
Mobile home parks, or so-called "trailer parks" can be a safe affordable housing option, especially when the communities are owned by the residents, industry advocates say. In New Hampshire, nearly a quarter of the state's 450 manufactured home communities are owned by resident co-ops.
Modern, HUD-certified manufactured homes boast efficiency and even durability — most are Energy Star compliant and create little waste in the environment compared to traditional homes, industry advocates say.
And while the average price for a single-family home in 2013 was $324,000, according to the Census Bureau, the average price for a manufactured home was just $64,000.
"We spend 40 billion a year on housing subsidies because we have such a lack of affordable homes," says Tony Kovach, of ManufacturedHomeLivingNews.com. "What if that money went toward purchasing a manufactured home that costs less than a site-built alternative, and creates the path to home ownership?"
NextStep is an organization that puts low-to-moderate-income families in touch with manufactured home builders. It's a great affordable housing solution, they say, when it's done right.
Instead of placing people in corporate communities, NextStep's partners help people get into nonprofit-owned communities, or build on their own land, usually in rural areas where land is inexpensive.
It also educates homebuyers and helps them get low-interest loans. So far, NextStep has helped 165 people into homeownership.
Manufactured housing has struggled to make inroads as an affordable housing solution and unfortunately, problems with corporate owned-communities exacerbates negative "trailer park" stigmas.
"If you look at how those places are treating residents, and putting profits ahead of residents, it’s not helping the image," says Megan Neff of NextStep.