Investor's Offer to Mobile Home Renters: Buy or Move Out

A Charlotte-area investment firm says it is offering renters an affordable chance to become owners. Housing advocates say it shifts upkeep costs of "decrepit" single-wide homes to residents.

The small mobile home that Kimberly Knight rents from FG Communities of Brevard Inc. Its problems include a leaky roof and faulty wiring.

BREVARD — Kimberly Knight has set potted plants around the entrance of her 47-year-old mobile home on Tuckaway Lane, just off Asheville Highway.

She’s painted it inside and out and covered its kitchen cabinets with wood-grained contact paper.

But the inviting exterior and tidy interior mask major deficiencies: a leaky roof, non-working, taped-shut windows, wiring so old that she must use an electric skillet in lieu of a stove and a space heater instead of a furnace.

In winter, she said, “You can literally see your breath in there. It’s really cold.”

Knight, 58, is one of the dozen residents at the 27-unit park — officially called FG Communities at Brevard NC —  who rent rather than own their single-wide mobile homes. A new owner has sent all these renters a letter informing them they must either agree to buy their units or move out by Sept. 1.

Knight’s initial response?

“I don’t want to buy this dump.”

Michael Anise, CEO of FG Communities Inc., which bought the five-acre mobile home community in March for $1 million, said the offer is intended to give renters the opportunity to buy homes for the same monthly rate they now pay to rent. Anise also said that, prior to the sales, the company will address the maintenance issues it inherited from the previous owner, Whodat LLC, which did not respond to a request for comment.

But the sale would still place the long-term burden of maintaining decades-old units on the residents rather than the company, said Knight, whose home is appraised by the county for tax purposes at $1,000.

“These mobile homes are old and decrepit and need a lot of work, and it gets the management company out of the responsibility of upkeep,” said Angie Hunter, executive director of Transylvania Habitat for Humanity and one of several housing advocates who have taken up the renters’ cause.

The offered agreements will further reduce the tiny stock of affordable rental properties in Transylvania County, these advocates also say.

Rents in the community range from about $600 to $1,000 per month depending on the size and condition of the units, said Sonya Flynn, senior housing specialist for WNC Source, which runs the federal Section 8 voucher program in Transylvania. Knight’s house, which is only 32 feet long and formerly served as a maintenance shed, she said, goes for $575.

Such prices are far below the cost of the typical apartment in the county, Flynn said, and the Brevard community is one of the few properties in Transylvania affordable through the voucher program.

Three residents there pay rent for FG-owned homes with the help of vouchers, which cannot be used to buy houses, she said, and WNC is planning to request that these renters receive a waiver from the purchase requirement.

“All three of them are either elderly or disabled,” she said, and if FG does not grant the waiver, “they would find it extremely difficult to find a place to rent.”

And though these advocates were not aware of the recent acquisition of other mobile home communities in Transylvania, they are worried about the growing trend of such purchases by large investment firms.

“It leads to the larger problem of corporations buying up trailer parks and wanting to take zero responsibilities for being landlords or protecting tenants,” said Madeline Offen, a lawyer who represents indigent clients for Pisgah Legal Services.

Affordable Housing is Its “Mission,” Company Says

Investment firms have indeed been scooping up mobile home communities across the country, seeing them as an increasingly valuable commodity in the face of an acute nationwide housing shortage.

The initials in Mooresville-based FG Communities refer to its affiliation with publicly traded Fundamental Global Inc., and Anise said some of this larger company’s principals are owners of FG, including co-founder Joe Maglia, the former chairman and CEO of TD Ameritrade described on FG’s website describes as a a “Wall Street luminary.”

But FG is a separate, private entity, Anise said. Its website said it has bought or is buying more than 30 mobile home communities with “over 900 homesites,” in South and North Carolina.

Its June 6 letter to renters states the company is “not trying to force anybody to do the lease-purchase option,” but that if residents want to keep renting, “this community is not offering that option.”

Such residents’ lease agreements will not be renewed after July 1, the letter continues, and they must vacate their homes by Sept. 1 to “avoid eviction.”

Anise said that the current renters have month-to-month agreements and the notice the letter provides is longer than is legally required. Offen, who specializes in housing law, said she cannot comment on tenants’ legal options until she sees their rental agreements, but encouraged them to contact Pisgah Legal with any concerns.

FG’s model of owning only its communities’ property, not the homes, is a common practice among large firms in the sector, Anise said.

“It’s known that it’s easier for an operator to maintain the infrastructure of the community rather than maintain the homes,” he said, naming several large corporations that adhere to this pattern.

“It’s an industry-wide thing,” he said.

And though this practice has faced some criticism nationally, the most common complaint about investors who buy such properties is that they either evict residents to sell the land for a higher-value use or dramatically increase rents.

“We’ve seen a lot of investors come in and buy these communities and jack up rents 100 or 75 bucks,” he said. “We don’t do that . . . Our average increase is 20 to 25 bucks on an annual basis.”

In the near term, “rates will stay exactly the same” for renters in the Brevard community, Anise said. “It’s our mission to preserve and improve mobile home communities because we really value and believe in this as a class of affordable housing.”

FG will deduct the $350 lot rental, with the remainder of the monthly fee going to pay off zero-interest loans for these homes, which will likely carry total purchase prices of between $15,000 and $20,000, Anise said.

The newest home the company owns in the community is 20 years old and valued for tax purposes at $5,680, according to county records. Most are at least a decade older than that and several of them, including one built in 1968, are appraised by the county at $1,000.

Anise said taxable values vastly under-represent resale prices of used mobile homes in and near Asheville, which can be as high as $60,000.

Partly for this reason, the company’s offer, which also requires owners to pay $5,000 if they relocate the homes within five years of acquiring them, is a good deal for residents.

“They can actually own the home and have a title rather than just being renters,” he said.

“It’s also a better model because homeowners treat their communities better with respect to their neighbors rather than somebody who is just renting their homes and doesn’t have an investment stake,” he said.

The Renters

Deteriorating awning of the mobile home where resident Jennifer Hale lives with her three children.

Not all the renters are opposed to buying. Ronnie Petit, 73, has lived in his two-bedroom single-wide for 14 years, he said.

He’s added a front porch and flooring to the unit, he said on Monday, and has long helped maintain the community’s deeply shaded grounds.

“It’s a really nice park,” he said. He had not yet received the letter from FG, he said. But even though purchasing his home would mean giving up the Section 8 voucher that now pays almost all of his rent, he said, “I would love to buy.”

Jennifer Hale, 30, on the other hand, said that when she received the letter, “it felt like the rug had been pulled out from under me.”

Hale, the mother of three children, has been approved for a new unit being built by Habitat. But it is not expected to be complete for several more months, she said.

The roof of her mobile home at the park leaks, she said, and one closet is covered with mold due to seepage from an old water heater that has since been replaced. The exterior awning is deteriorating and wooden trim near the front door shows obvious signs of rot.

“I feel like it’s caving in,” Hale said of the home.

Her fear was that she would either have to find a temporary residence until her Habitat home is complete or make the repairs, which is out of the question given her resources as a preschool teacher who also puts in “sweat equity” hours at Habitat’s ReStore.

When she was interviewed on Monday, she had not yet reached out to FG. Anise said on Wednesday that he has recently been made aware of Hale’s situation and that FG will extend her rental agreement as well as repair the home.

Hunter, of Habitat, remains skeptical.

The company “is saying all the right things, but the proof is in the action,” she said.

Will FG, for example, replace the roof of Hale’s home or “just put a Band-Aid on it?” she asked.

And the extension offered to Hale, she said, is “great for Jennifer, but what about the rest of the residents? Where are they going to go and how can they afford to stay there?”

Knight is asking herself those same questions.

What will be the extent of the repairs? How much of the long-term costs will they eliminate and how much will remain for her to absorb? And, of course, how much will FG charge her for a home that, at this point, is all but worthless?

She moved there 17 months ago because it allows her to help care for her 79-year-old aunt, who lives next door. It was an acceptable option because Knight is a widow and the mother of grown children, she said. “It’s just me.”

Though she has a full-time job as the innkeeper of the Inn at Brevard, she can’t afford to make major repairs herself or pay the $1,400 to $1,600 rents she has seen for apartments available in the county.

So what are her plans?

“I don’t know,” she said.

Email: brevardnewsbeat@gmail.com