WOULD YOU DO THIS DEAL EVEN IF IT WAS A MOBILE HOME PARK? : THE STIGMA WALL
by Frank Rolfe
My introduction to mobile home park investing began with an offer I couldn’t refuse: an 83 space mobile home park at half occupancy for $400,000 with only $10,000 down and $390,000 seller financing. It took that much of an effort to get me to overcome my fears founded on the stereotype that mobile home parks are dangerous. Not a single person I talked to supported my concept of buying that property, telling me that “trailer parks are nasty and you’ll never make any money with it”. Fast forward seven years later and I sold that same mobile home park for around $1.5 million. And that’s the typical mobile home park story: overcoming myths and legends to make serious money. We call this impediment to investment the “stigma wall”.
What created the “Stigma Wall”
While Hollywood loved trailer parks in the 1950s and 1960s (Elvis lived in a mobile home park in two movies 1) It Happened at the World’s Fair in 1963 and 2) Speedway in 1968) by the 1970s that relationship had taken a dangerous turn. Television and movies started to depict trailer parks as the epicenter of sex and violence, imagery that spiked ticket sales and viewership. Eminem’s 8-Mile, Trailer Park Boys, Myrtle Manor and COPs are just a few of the programs that have used the media stereotype of mobile home parks to gain viewers. Never in American history has one sector of real estate had to endure such an endless blitz of false narratives.
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How it makes you money
The byproduct of the “Stigma Wall” is greatly reduced competition concerning investors trying to buy mobile home parks. The stigma is so strong that most investors will not even consider the basic concept of trailer parks, and instead focus on the housing types of single-family and apartments. While there is nothing wrong with these sectors, they are much more overworked than mobile home parks. So the “Stigma Wall” serves to reduce the total number of park buyers and, as a byproduct of supply and demand, keeps prices low.
What the truth is
Mobile home parks have nothing to do with the stereotype. There are around 44,000 mobile home parks in the U.S., and maybe 1% of these support the notion that they are filled with dangerous hardscrabble tenants. The other 99% of the mobile home parks in America more closely resemble high-density subdivisions. They have attractive entrances, amenities such as playgrounds and even pools, paved roads, meandering streets and a strong pride-of-ownership with manicured lawns. Mobile home park owners own the land and the residents offer their homes – all parties are stakeholders in the business model. This is not scary or depressing. And 8% of the U.S. population lives in mobile homes.
Why the truth will never get out
So if the truth about mobile home parks has nothing to do with the stereotype displayed on TV and the movies, when will the “Stigma Wall” ultimately come down? I mean, even the Iron Curtain was taken apart during Ronald Reagan’s tenure as President. Well, the odds are extremely low. The problem is that there is simply too much money in the concept of “trailer park” for Hollywood to pass up. Even Disney has jumped on the bandwagon with their new cartoon “Trailer Trouble” which follows the adventures of a kid who is dropped off at his aunt’s mobile home, and each episode features a chase scene on motorcycles, a shootout, or similar trashy escapade. Since the media holds all the cards on public relations – and mobile home park owners devote zero dollars to changing their image – it’s unlikely that the “Stigma Wall” will ever come down.
Conclusion
For mobile home park investing to become mainstream, it will have to get rid of its “Stigma Wall” – and that’s unlikely to ever occur. Until then, mobile home parks will be more profitable than all other real estate sectors due to reduced competition.