Tuesday, October 22, 2019
Are Over 55 Mobile Home Parks OK?
Mobile home parks that are registered as adult communities serving seniors and adults aged 55 and over tend to be well maintained and overall good quality neighborhoods. They are often facilities aimed at older people offering swimming, tennis, gated access, etc. In general the only downside is that you own the unit but pay rent for the land underneath it.
This is where things can get dicey for seniors. The government places a series of restrictions on these types of communities since they are being given an exemption to age discrimination laws in exchange for providing a needed community service for our seniors. These restrictions however do not always protect seniors from runaway costs. Recently several out of state investors have been buying up senior living mobile home communities and in several local cases the space rents quickly rose hundreds of dollars. The new owners simply pushed the rent to the maximum level they could. Retirees that had been paying say $500 per month space rent with modest year over year increases of $10-$15 in some parks saw that figure jump to $700 or more.
This is the problem with renting space. The new landlord is rarely as nice as the old landlord. seniors banking on a reasonable level of increase in space rent may be shocked should the owners of the park decide to sell out to greedy investors that are far away in another state like California or Texas.
Mobile homes can be a great way to own outright a detached home and live in a nice retirement community, but when a retiree decides to pursue this path, they should over budget for space rent or stash away extra cash in case the new landlord is of the greedy variety from out of state, and doesn't care about anything other than money, you know the type. Ebeneezer Scrooge... yeah, that guy.
Bear in mind that space rent is different than an HOA. In an HOA the owners of all the units jointly own the land and common areas. Although a poorly managed HOA could get into some trouble leading to cost overruns and increased expenses for all the homeowners, the HOA is in fact all the owners. Each unit owner has a vote in how the operation is run, expenses, upgrades, added fees. In a mobile home park, there is an investor owner that is a landlord like you would have in an apartment building. The landlord can raise the rates to whatever level he or she deems fit and the market will either pay or vacate.