It always amuses me to see articles about how profitable it is to own a trailer park in America.http://www.theguardian.com/lifeandstyle ... investment
“We were a family park when we first started. [But] about 20 years ago, I couldn’t get on the property because a drug dealer had separated from his girlfriend in the park across the street ... and there was a long line of cars because she was undercutting her boyfriend.”
Lee, 70, says she was advised that if she took in sex offenders the drug dealers would leave. “So, I started taking in sex offenders, and I have a very clean property. Sex offenders are watched by the news media, the TV, the sheriff’s department, probation, the department of corrections ... so when they are in there, the drug dealers and the other people don’t like to be around.”
Sex offenders have been good for Lee financially, with park occupancy running at “1,000%”. She rents trailer pad spots for about $325 a month. The trailers are either owned by the tenant or rented from a third party. Many trailers are divided into three bedrooms, for which tenants are charged $500 a month per room.
I only have one friend who lived in a Trailer Park. And she lived on the other side of the country. I was invited to her modest wedding. (For which I was very
honored to be one of the few guests invited). I can't say that I thought too much of the situation back then (granted, I was sitting in a hotel and we never really met at her place). It does make me curious what life is like in a trailer park, but these sorts of subjects are always hard to discuss ya know? As the article notes, it is very hard to discuss the situation of trailer-park housing without accidentally insulting the tenants.
Later, I learned of the fact that Warren Buffet has been investing heavily into trailer parks. Since then, I've had a casual interest in the economics of trailer parks and mobile homes. I'm glad to finally see some solid numbers in an article.
I think the discussion of the Sex Offender trailer park was specifically mind-opening. I know that a lot of sex-offenders got their status off of nonsense. That's just one of the tags in today's culture that gets you marked for life. I've actually thought about the pathway for felons / criminals the past couple of weeks on and off... and I think housing and jobs that explicitly cater to those folk need to exist. There needs to be a way to climb out of the status of "convicted felon" and put your life back together. A few years of being clean with a good job and a house (even in a mobile home) ought to be enough to bootstrap a person back into a successful life.
Now the video associated with the article makes it a bit more clear about what is going on. The $500/month figure is about trailers that sell to individuals. So the individuals split a trailer into three rooms, and then rent out the space to three different individuals for $500 each. When you own a trailer in a "sex offender park", and you know your tenants have no where else to go... I guess that's what happens. But its not like anyone at a trailer park is actually paying $1500 (which seems to be the implication in the quote above).
Still, the discussions of trailer park pads were pitting the price from $350/month to $550/month for the pad... not counting the $20k or so for the trailer. Assuming the "trailer" is a down-payment, this would be roughly equivalent to a $110k house. (A condominium has condo-fees associated with it... which can be as much as $250/month. Since condo-fees change from community to community, its hard to actually compare the fixed $500ish/month cost of a trailer-park pad to a condo).
The general "personal finance" estimate is to spend no more than 1/3 of your income on housing. If you're spending $500 on a trailer park pad, that's targeting an income of $18,000/year... still slightly above the minimum wage. I don't think the standard advice of "1/3rd of your income on housing" actually scales down very well (it's not like you can spend less money on food / living expenses). Still, at least the math works out in theory, although I've never thought about how a budget of a person on minimum-wage looks like.
I did a quick check on Washington Post, and here is their article on Trailer Parks
. It seems like trailer parks are especially lucrative because counties are beginning to ban them across the country.
Weissman, a University of Michigan economics graduate, attributes his newfound calm to the supply-demand equation in the trailer-park industry. With more of the U.S. middle class sliding into poverty and many towns banning new trailer parks, enterprising owners are getting rich renting the concrete pads and surrounding dirt on which residents park their homes.
[David Protiva] noticed that until 2008, most people coming into his parks were moving up; they owned nothing before buying a trailer. Since 2009, half of his residents have come to him from conventional homes, moving down, he says.
Weissman and Shlachter take pride in improving the lives of residents in some of the more rundown parks they’ve bought. And they say owning trailer parks has taught them what it’s like to be poor in the United States. Many tenants can’t get bank accounts, because they have wretched credit. Instead, they use prepaid debit cards that charge a fee of as much as $4 to load just $20 onto them.
If there really is a supply-crunch of low-income housing in America, then there's the real problem. I know most people look down upon low-income housing. From inner-city ghettos, to trailer parks. Heck, even apartments that are built in residential neighborhoods "bring down" the property values of homes across suburbia. Furthermore, with huge swaths of the population buying homes on 5x leverage or more (aka: 20% down or less), small changes in property value have a huge effect on your net worth. So the need to "protect your investment" is real.
Still, if the country fails to build more low-income housing, there will definitely be long term harm.
Oh yeah, and if anyone has the wrong idea about trailer homes...
Two hours after the deal closed, while Shlachter was heading out to surf on the California coast, the park manager called to tell him his new asset had made the national news. A SWAT team had descended on a trailer whose owner was suspected of blowing up a house nearby for the insurance money and flattening part of a subdivision in the process, killing two. The trailer owner and two others were charged with arson and murder.
Later, a squatter on meth chased the park manager with a metal pipe. The county health department delivered a stack of violations eight inches high.
“When you stop maintaining anything, it goes bad,” Shlachter says. “When you stop maintaining a mobile-home park, it goes real bad, real fast.”
First Strike +1/+1 and Indestructible.