NEW YORK: Cliff Cook’s backer in his retirement community roll out under the Lifecare Residences banner, is again attracting adverse publicity via his seniors housing holdings.
Sam Zell controls Equity Lifestyle Properties (ELS), the largest owner of manufactured home communities and RV parks in the USA. ELS is a publicly traded company with a current market value of over $4 billion.
ELS charges people a monthly rent, and in many states, there’s nobody to stop it from raising the rent as much as it wishes. It’s a problem that impacts on retirees and the working poor who live in trailer parks across the country.
If a client 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.
About 20 million Americans live in manufactured housing, and in some states, like South Carolina and New Mexico, almost 20 per cent 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.
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.
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.
For the client, the higher the rent goes, the harder it is to sell.
And moving a modern manufactured home is not as easy as hitching it to a trailer and driving it to greener pastures.
If someone 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 most didn’t realize when buying into the community…