Welcome to the Mobile Home Park Mastery Podcast where you will learn how to identify, evaluate, negotiate, perform due diligence on, finance, turn-around and operate mobile home parks! Your host is Frank Rolfe, the 5th largest mobile home park owner in the United State with his partner Dave Reynolds. Together, they also own and operate Mobile Home University, the leading educational website for both new and experienced mobile home park investors!
HUD is an acronym for the Department of Housing and Urban Development at the US Government. And there's a new head of HUD, and his name is Scott Turner. And as we're aware, HUD is a very important component of the mobile home park industry. That little metal plate in the back of every mobile home, that's called the HUD seal. So the word HUD is in fact impressed upon every home built since 1976. But what does this new person, this new head of HUD, mean for the mobile home park industry for probably the next four years? This is Frank Rolfe with the Mobile Home Park Mastery Podcast. Wanted to bring you up to date on what we know about Scott Turner and what the impact of his new directives, his new philosophies may be over at HUD.
Well, the first big thing that Turner is talking about doing at HUD is privatizing Fannie and Freddie. Now, as we all know, Fannie and Freddie is a gigantic lending institution. It serves only housing, and it's a big proponent of apartment loans and single family loans and mobile home parks. In fact, over half of all mobile home park transactions in the US based on dollar value are Fannie Freddie.
So privatizing Fannie Freddie would be kind of a big deal. It's been discussed in the past, but it looks like Trump for the first time might really get it done. So what would happen if Fannie Freddie became privatized? Well, the first thing is they would become then a real business, and people who work there would be really accountable for how they do. And what that means is they would be more competitive in all likelihood.
So they might go ahead and make more loans, get more capital out there to mobile home park buyers, those who are doing refinancing. So the general attitude of being more aggressive in the world of lending is positive. If you're a borrower, there's no question of that. But equally importantly, if they were to privatize, it would probably kind of end that tenant bill of rights part of what happens on many Fannie Freddie loans today. Because during the Biden era, Fannie Freddie took on this new turn of events following COVID, where they were part bank and part kind of a moral change advocacy group. And it was really kind of odd. So suddenly, if you had a Fannie Freddie loan, you might have to not evict people as normally, as quickly as the law might allow and make other concessions.
Now, I can't really comment on how many of those concessions really benefited anyone, because a lot of the things that happened there in a post-COVID world was, we all know were extremely anti-landlord not because it made any common sense, but just because there was a government push during that period to penalize those who are capitalist and in business.
But it would sure be mighty nice not to have any of that stuff going on anymore. So privatizing Fannie and Freddie, in my book, that would be a big thumb up. Then you've got another platform of Turner which is building housing on federal land. Now, I did not realize, so I did further research that 50% of all the land in Nevada, Alaska, Utah, Idaho, and Oregon is federal. 50% or more in those states. That is a lot of land that is sitting there. And you might say, well gosh, it must be a lot of national parks. No, only a tiny fraction of that is national parks. The government just for whatever reason historically has ended up owning these massive piles of land.
So what Turner is talking about doing is hey, let's develop that land. If we're short housing in Utah, well, maybe the problem is there's not enough developable land. Let's take this land and get it developed. Build rooftops, build subdivisions. Now, I don't think that will really compete with the mobile home park business because I don't think they're going to be opening these things up for new park development. They might. And we all know that single family homes in America average about $400,000. So even if they're trying to build new rooftops, it's probably going to be in the quarter million category. It's probably not going to take away any of our customers. But I would argue that most of that federal land is fairly remote. It's not just minutes from downtown. And that's probably a good thing for mobile home park owners because if they're going to start developing federal land, they're also going to have to develop more infrastructure to get to the federal land. And by building bigger highways and more roads, that's also going to serve those who live in more of those exurban and super commuter and rural communities.
And as we all know, that's where most of the mobile home parks are. Now that platform is [0:05:11.9] ____ have a lot of impact in most of the other states. This is a very state specific item. But nevertheless, I would think that by developing the federal land into more stick built homes, it will definitely also help park owners in those states. Also, Turner plans to continue to push opportunity zones. Opportunity zones are those in which you get tax advantages from trying to bring impoverished areas back to life. I haven't seen a Lot of mobile home park deals happen in opportunity zones, but some have. But once again, there's a whole lot of mobile home parks that lie outside of urban areas. And a lot of the opportunity zones are in fact located more in suburban areas. And this would definitely benefit communities and that would, as a byproduct, help out park owners.
So once again, I think it's probably a good thing. This next one is really big for the mobile home park industry, and that's Turner's platform to put more help to rural areas. In fact, he wants to change the name of HUD. He does not like the use of the word urban in the Department of Housing and Urban Development. He wants to take urban out because he feels that by having urban in the name, it implies that they treat urban cores with greater deference than suburban and rural areas. So he wants to refocus on everywhere, not just the big cities, small towns, super commuter areas, those type of things. And there's a lot of mobile home parks in those areas.
So by revitalizing rural areas, he will also be revitalizing the general community, which a lot of mobile home parks are located. I would say that one item is huge for the mobile home park industry. You rarely see a mobile home park in an urban core area. I know in St. Louis, the closest major city to me, there's not one single mobile home park in the entire urban footprint of St. Louis. All of the parks are suburban, exurban, super commuter, rural, but there's none that's urban. So if you take HUD and you start giving it more of a non urban flavor, that's definitely going to be to the taste of most mobile home park owners.
Next, he wants to remove a lot of the regulations and go back to a free market. And of course all park owners should like that.
We have suffered under so many rules and regulations from HUD stemming all the way back to the 1976 takeover, the manufacturing side of the industry. Prior to that, there were hundreds of mobile home manufacturers, some would argue some of those early models based on a comparison today, were perhaps even better built. So it would be nice to let the free market reign again and stop all this needless government intervention, which really hasn't helped at all. If you look at how we're doing as a country when it comes to affordable housing, we're way, way down the list. Just as we are in education, ranked dead last of all of the major developed countries, we're not doing that very good in housing either. And maybe a part of it is we got away from the basic fundamentals of blocking and tackling and the free market and capitalism, which has always served our interests well. And that's why our country is a capitalist country by nature, because we think that's a better system. So the bottom line is, when you add it all together, Scott Turner may just be the best thing to happen to HUD in my lifetime.
I know that we had a lot of hope for improvements at HUD back in Trump's first term, but the problem was the industry kind of squandered that, the manufacturing side of the industry decided to put all the focus during that era on this concept of cross mod, a cross between a mobile home and a modular home. They even brought one out on the old Capitol grounds and Ben Carson, then head of HUD, walked through it and said, oh yeah, this is a great idea, but nothing ever came of it because you can't really put them anywhere. You're not going to put them in a mobile home park, and they violate the Uniform Building Code in most cities. Horrible waste of opportunity. This time around, with Turner's platform, which is much more focused than what Carson had, I feel that nothing but good things can come of all that. However, the one thing I do hope that the industry focuses on during Turner's regime that fits in with all of his platforms is getting rid of the HUD installation guidelines. It's been a real curse for the industry and a curse for people trying to live in mobile homes and mobile home parks now for quite a while.
In Texas, for example, if you want to prepare a lot, to put a mobile home on it, you have to crown the earth so it can't retain moisture, but you don't have to put in a concrete pad, piers, or runners. The idea is highly flawed because supposedly in doing this, the home will settle less. And to that I can only say it's probably true. But it costs only a few hundred dollars to level a home and you might do it, I don't know, every five years or so. So by spending 10 or $20,000 in extra preparation for the lot, you save the end user, what, $600, doesn't even dent his annual interest cost in doing so. It's a really inefficient concept and I'm hoping the industry, if we can only get one extra thing accomplished with Scott Turner, that that's where we'll focus, because that would be wonderful for park owners, it would be wonderful for those who buy mobile homes to get rid of that big unnecessary cost. But the bottom line is I'm very optimistic with Scott Turner. I've read a lot about him, what his viewpoints are, what he feels his role will be.
So I think we should definitely do everything we can to help him. I think he'll be great for the mobile home park business. This is Frank Rolfe for the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.