Mobile Home Parks: The Business
Since Colorado started keeping data on mobile homes three years ago, dozens of parks have gone up for sale.
Part of the appeal for investors is how little the landlord has to do. Think of it like passive income: if you don’t own the structures on top of the land. “Everything up to the home is the responsibility of the landlord,” explained Sullivan.
This “cash cow,” as some have called it, is not a new business; it has been around for decades. But Sullivan said it has traditionally been a mom-and-pop kind of business. “What’s new is this veritable gold rush of corporate and private equity investment that we’re seeing in the manufactured housing community space,” she explained.
The state’s Mobile Home Park Oversight Program keeps a running list of park sales in the state. We analyzed the data and found that large, out-of-state companies have made most of the purchases since the state started recording.
The data shows Horizon Land Co. Inc. bought seven parks in 2020. The company’s website says it owns communities in 20 states. Legacy Communities, a company based in Florida, bought parks with the highest number of homes in the data. All together, the parks the company bought since March of 2020 had 773 homes.
Although the interest from big companies might feel like it is sudden, Sullivan said it has been going on for years. But it has become a lot more common recently.
Sullivan thinks we’re seeing the increase in competition for the available parks because there is a limited stock.
“The myth of manufactured housing, so-called mobile homes, is that they’re mobile. These homes are not mobile,” Sullivan said. “They’re intended to be mobile once from the factory to the site of installation.”
Some of the newer mobile homes can be moved, but that process can cost anywhere between $5,000 to $15,000, money that many homeowners don’t have. Then the challenge becomes finding a place to move the home to. “There is such high demand for housing in these mobile home communities, that it’s often impossible to find an open lot to move your home,” said Sullivan.
Basically, renters of the land are trapped, and what a lot of big companies have found is that families are willing to do whatever it takes to save their home.
“Oftentimes they’ll tolerate really egregious rent increases like 50% to 60%,” said Sullivan. “But when rent hikes become intolerable, unmanageable for residents. Oftentimes they move, and they’re forced to leave their home in place.” When they do that, Sullivan said, the mobile home can and often do become property of the landlord after eviction. The landlord can then sell to someone else and charge them rent for the land.
Tawny Peyton is the executive director for the Rocky Mountain Home Association. She represents landlords, sellers and mobile home park owners from across the state.
“There have been many offers made to property owners, just unsolicited offers to purchase their property,” said Peyton.
Colorado has a law that gives residents 120 days after listing to come up with the money to purchase the parks where they live. A law, Peyton said, that is costing sales and inconveniencing landlords.
“Why would anybody want to sit on an offer that requires client underwriting, financing, appraisals, and everything else when there’s a cash offer and they can just close immediately?” Peyton said. “I just think everybody has to be put in those shoes to understand the situation.”
Bullied Out of a Sale
Merlin Zimmet has been in those shoes. He owns Triangle Mobile Home Park in Durango, Colorado and was in talks with Harmony Communities to sell it.
“They have a lot of money, and they think that their money can buy anything,” said Zimmet.
Harmony Communities is a large company based in California that has been buying mobile home parks across the country.
When Harmony first approached Zimmet, he said the company asked him to sign an “intent to sell” contract with a contingency.
“[The contingency] stated that if I did not perform, in other words, if another entity steps up and purchases the park out from under Harmony Investments then I was going to be responsible for their quote-unquote ‘due diligence,’” Zimmet said. “In other words, all the money they spent on researching the sale of my property, I would owe them back.”
That due diligence cost seemed to be a floating figure, he said, that constantly changed and initially seemed to be unlimited.
Negotiations got so nasty, he said, it ended up turning him away from the deal.
“By the time I got pushed around and bullied and got some nasty text messages sent to me about what was going to happen to me or my park if I didn’t sell to them, I just decided to draw a line on the sand,” said Zimmet.
He ended up going under contract to sell to an organization representing residents. Which meant he owed Harmony money aside from the escrow.
Rocky Mountain PBS obtained a settlement agreement that showed two separate payments were due to Harmony. One of the payments was for $25,598.57 and the other was $20,000 to be released as a part of the earnest money deposit.
“They’re making money and they didn’t even have to buy anything,” said Zimmet.
We reached out to Harmony for a response. The company said the money it received was money they put into escrow, essentially a deposit.
Harmony spokesperson George Antypas said Zimmet’s comments were “inaccurate and potentially defamatory.”
“If he’s angry, he only has himself to blame,” Antypas said. “Lashing out by telling falsehoods to reporters doesn’t help anyone. Our attorneys have contacted his attorneys about these falsehoods and are taking action.”
To other mobile home park owners in Colorado, Zimmet has this message: “Just be aware of the options that are out there in this world.”
Selling to Residents
That is a lesson Matt Bransfield knows well. He has owned four mobile home parks and sold three of them. His most recent sale was in Leadville.
“We would get letters in the mail pretty much every day with people that would have offers to buy it,” said Bransfield.
Even though the park was drawing a lot of interest, he said he decided early on to sell to the residents. “We view that as a very good thing for securing that level of affordable housing, especially in Colorado mountain towns,” Bransfield said. He called it a win-win.
He got the money he was asking for, and left the transaction knowing the families were in good hands.
“If [park owners] truly care about the resident’s wellbeing post-transaction, I would say they need to exercise a little bit of patience,” said Bransfield.
This story is part of a series about mobile homes in Colorado. “Colorado Voices: Sold: The Land Under Mobile Homes” airs Thursday, July 28 at 7 p.m. on Rocky Mountain PBS.
Sonia Gutierrez is a multimedia journalist at Rocky Mountain PBS. You can reach her at firstname.lastname@example.org.