On Sundays Last Week Tonight, John Oliver examined the disturbing realities of the mobile home industry notably, a system of land ownership that allows some of Americas richest people to prey upon some of the countrys poorest.
Around 20 million people, one in 18 Americans, live in mobile (or manufactured) homes and purchasing one can seem like a good investment as they cost up to 50 percent less per square foot than traditional site-built houses. But there are multiple risks involved: Like cars, mobile homes typically decrease in value over time; owners pay through risky, higher-interest chattel loans; and roughly one-third dont own the land underneath their homes, forcing them to pay rent and fees to park owners.
That system depends entirely on the business ethics of park owners. In recent years, private equity firms like the Carlyle Group have swooped in to purchase over 100,000 home sites previously run by mom-and-pop businesses, leading to (often massive) spikes in rent/fees or the parks being torn down altogether. And although the mobile in mobile home might imply that owners could easily move to new locations, some of these properties are impossible to transfer without damaging 80.1 percent of them never leave their original spots.
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Oliver also focused on the Warren Buffett-controlled Clayton Homes, which generated pre-tax earnings of $911 million in 2018 through selling and financing homes. A 2015 Seattle Times/Buzzfeed News report found that the company relies on predatory sales, practices, exorbitant fees and interest rates that can exceed 15 percent, trapping many buyers in loans they cant afford.
The host brainstormed solutions to some of these problems but cautioned prospective buyers to stay realistic.
One potential solution is for residents to band together and buy their own park, keeping it out of the hands of speculators or developers and while that sounds inherently like a longshot, there are non-profit groups that have had real success in helping tenants get financing to do just that, he said. What would help is to have laws in every state that give residents the right of first refusal and time to raise funds if the current owner plans to sell. But until laws like that are put in place, which they absolutely should be, there are some key things to bear in mind. If you want to rent a mobile home, thats fine. If you can afford to buy one and put it on land that you own, thats fine. But buying a mobile home and renting the land underneath it can be financially catastrophic. And it is very important that anyone considering doing that knows the risks involved.