WEBVTT 00:00:00.000 --> 00:00:02.680 Welcome back to the Deep Dive. I want you to, 00:00:02.779 --> 00:00:05.980 just for a second, picture something. Something 00:00:05.980 --> 00:00:08.259 I think is pretty much hardwired into the American 00:00:08.259 --> 00:00:10.640 psyche. Okay. You're on a highway, you've just 00:00:10.640 --> 00:00:12.960 passed the city limits, and, you know, the suburbs 00:00:12.960 --> 00:00:14.939 are kind of thinning out, and then you see it. 00:00:15.419 --> 00:00:20.420 A cluster of these long, rectangular homes. Sitting 00:00:20.420 --> 00:00:23.719 on concrete blocks. Exactly. Maybe some of that 00:00:23.719 --> 00:00:26.199 vinyl lattice stuff skirting the bottom. Perjuring 00:00:26.199 --> 00:00:29.449 up. The trailer park. The trailer park. And, 00:00:29.550 --> 00:00:32.909 you know, let's be honest. When that image pops 00:00:32.909 --> 00:00:35.929 into our heads, it comes loaded with a whole 00:00:35.929 --> 00:00:38.390 set of assumptions. Absolutely. You immediately 00:00:38.390 --> 00:00:41.990 think about poverty, maybe transience. You think 00:00:41.990 --> 00:00:45.350 of structures that look like they might not make 00:00:45.350 --> 00:00:48.149 it through a really stiff breeze. It's become 00:00:48.149 --> 00:00:51.469 this symbol for a certain rung on the socioeconomic 00:00:51.469 --> 00:00:53.770 ladder that, you know, most people are trying 00:00:53.770 --> 00:00:56.270 to get away from. It is a symbol for sure. But 00:00:56.270 --> 00:00:57.689 what's so fascinating about symbols is how they 00:00:57.689 --> 00:01:00.090 can stick around long after the reality on the 00:01:00.090 --> 00:01:03.189 ground has completely changed. So while you might 00:01:03.189 --> 00:01:05.629 be driving by and seeing this sort of last resort 00:01:05.629 --> 00:01:08.090 for housing, there's another group of people 00:01:08.090 --> 00:01:10.920 looking at that exact same piece of land. seeing 00:01:10.920 --> 00:01:14.060 something well something entirely different and 00:01:14.060 --> 00:01:16.799 that right there that's the hook for our deep 00:01:16.799 --> 00:01:19.159 dive today yeah because while our culture is 00:01:19.159 --> 00:01:22.359 busy looking down on these communities some of 00:01:22.359 --> 00:01:25.239 the smartest money on the planet I'm talking 00:01:25.239 --> 00:01:27.959 about global finance private equity firms the 00:01:27.959 --> 00:01:30.439 people who actually move markets right they're 00:01:30.439 --> 00:01:34.060 looking at them and they're not seeing trailer 00:01:34.060 --> 00:01:36.859 trash. Yeah. They're seeing what might be one 00:01:36.859 --> 00:01:39.260 of the single most resilient high yield asset 00:01:39.260 --> 00:01:42.200 classes in real estate today. They see a goldmine. 00:01:42.200 --> 00:01:44.939 They see a captive customer base, a barrier to 00:01:44.939 --> 00:01:46.859 entry for competition that's almost impossible 00:01:46.859 --> 00:01:49.379 to get over and a stream of revenue that, you 00:01:49.379 --> 00:01:51.540 know, it outperformed almost every other real 00:01:51.540 --> 00:01:53.500 estate sector during the last few recessions. 00:01:54.439 --> 00:01:56.659 It's a jarring disconnect, isn't it? The gap 00:01:56.659 --> 00:01:58.599 between the stigma and the actual balance sheet. 00:01:58.620 --> 00:02:00.859 It really is. So that's our mission today. We 00:02:00.859 --> 00:02:02.480 are going to try and bridge that gap. We need 00:02:02.480 --> 00:02:04.840 to get into the mechanics of this, this corporate 00:02:04.840 --> 00:02:08.039 gold rush, really understand why Wall Street 00:02:08.039 --> 00:02:10.139 is suddenly obsessed with manufactured housing. 00:02:10.319 --> 00:02:11.939 And then we need to look at the human side of 00:02:11.939 --> 00:02:14.659 it all. The tenant trap, as some sources call 00:02:14.659 --> 00:02:19.000 it, but also these retirement paradises and the 00:02:19.000 --> 00:02:21.340 global picture. Because it turns out the way 00:02:21.340 --> 00:02:25.330 we treat these so -called mobile homes. it says 00:02:25.330 --> 00:02:27.729 an awful lot about how we view property rights, 00:02:27.949 --> 00:02:31.090 class, and, you know, stability itself. And we 00:02:31.090 --> 00:02:33.189 have a whole stack of sources to get through. 00:02:33.250 --> 00:02:35.189 It's going to take us from, like, the boardrooms 00:02:35.189 --> 00:02:38.150 of the Carlyle Group all the way to these punk 00:02:38.150 --> 00:02:41.069 communes in Berlin called Wagenbergs. That is 00:02:41.069 --> 00:02:43.590 a wide spectrum. It is. Okay, so let's start 00:02:43.590 --> 00:02:46.629 with the basics. Terminology. I use trailer park. 00:02:46.939 --> 00:02:48.520 A second ago, because, well, that's what everyone 00:02:48.520 --> 00:02:50.860 calls them. But if I were a developer, I wouldn't 00:02:50.860 --> 00:02:52.819 use that term, would I? Oh, no, you'd be corrected 00:02:52.819 --> 00:02:55.719 very, very quickly. The industry standard, the 00:02:55.719 --> 00:02:59.360 professional term is manufactured housing community 00:02:59.360 --> 00:03:02.539 or maybe land lease community. Trailer is kind 00:03:02.539 --> 00:03:05.300 of a dirty word. It's a relic. It really goes 00:03:05.300 --> 00:03:07.919 back to the travel trailers of the 30s and 40s. 00:03:07.919 --> 00:03:10.639 You picture Lucy and Desi in the long, long trailer, 00:03:10.780 --> 00:03:13.680 literally hitching their house to the bumper 00:03:13.680 --> 00:03:16.860 of a car and just. Driving off. But the homes 00:03:16.860 --> 00:03:18.080 we're talking about today, the ones actually 00:03:18.080 --> 00:03:20.680 sitting in these communities. Yeah. They're not 00:03:20.680 --> 00:03:22.800 really going anywhere, are they? Statistically, 00:03:22.879 --> 00:03:25.699 almost never. And that's maybe the first big 00:03:25.699 --> 00:03:27.539 misconception we have to get out of the way. 00:03:27.599 --> 00:03:30.120 OK. They're built on a steel chassis. And yes, 00:03:30.240 --> 00:03:32.099 they have wheels to get them from the factory 00:03:32.099 --> 00:03:34.680 to the site. But once that manufactured home 00:03:34.680 --> 00:03:37.659 is set on its blocks, skirted and, you know, 00:03:37.659 --> 00:03:41.659 hooked up to water, sewer, electric, it's effectively 00:03:41.659 --> 00:03:43.960 permanent. It's too expensive to move. Incredibly 00:03:43.960 --> 00:03:46.659 expensive. To move even a smaller single wide 00:03:46.659 --> 00:03:50.020 home, you're looking at five, maybe $10 ,000. 00:03:50.259 --> 00:03:52.020 A double wide. Forget about it. You're looking 00:03:52.020 --> 00:03:54.300 at way more. And that's assuming the structure 00:03:54.300 --> 00:03:56.680 can even survive the stress of being pulled apart 00:03:56.680 --> 00:03:59.419 and put back on the road. It's often not possible. 00:03:59.719 --> 00:04:02.840 So mobile home is a total misnomer. It's a home 00:04:02.840 --> 00:04:06.900 that was mobile exactly one time. One time. On 00:04:06.900 --> 00:04:09.500 its trip from the factory to the pad. That's 00:04:09.500 --> 00:04:13.620 it. It's mobile in theory. but completely stationary 00:04:13.620 --> 00:04:16.860 in practice. And that detail is actually the 00:04:16.860 --> 00:04:19.000 key to the whole economic model, which I know 00:04:19.000 --> 00:04:21.240 we'll get into. It's everything. But, you know, 00:04:21.240 --> 00:04:24.639 despite the reality, the labels mobile and trailer 00:04:24.639 --> 00:04:28.040 just stick. And with those labels comes this 00:04:28.040 --> 00:04:31.660 really specific, really heavy stigma. Yeah, we 00:04:31.660 --> 00:04:33.819 have to talk about the trailer trash slur. It 00:04:33.819 --> 00:04:37.579 feels like one of those terms that's still kind 00:04:37.579 --> 00:04:40.120 of socially acceptable to throw around in a way 00:04:40.120 --> 00:04:42.610 that other class -based insults really aren't 00:04:42.610 --> 00:04:45.170 anymore. It's an incredibly loaded term, isn't 00:04:45.170 --> 00:04:47.149 it? It's not just about being poor. It combines 00:04:47.149 --> 00:04:50.569 classism with a kind of moral judgment. It implies 00:04:50.569 --> 00:04:52.329 that the people who live in these homes are not 00:04:52.329 --> 00:04:54.769 just poor, but somehow lesser. You hear it grouped 00:04:54.769 --> 00:04:57.689 with terms like white trash or ghetto to describe 00:04:57.689 --> 00:05:00.850 people who supposedly lack social decorum or, 00:05:00.910 --> 00:05:03.949 you know, civic pride. And it gets used at the 00:05:03.949 --> 00:05:05.910 highest levels. There's that infamous quote from 00:05:05.910 --> 00:05:07.910 James Carville, who was a top advisor to Bill 00:05:07.910 --> 00:05:09.829 Clinton. It was during the Paula Jones scandal 00:05:09.829 --> 00:05:11.519 back in the 90s. I know the one you mean. I mean, 00:05:11.519 --> 00:05:14.220 he said, drag a hundred dollar bill through a 00:05:14.220 --> 00:05:16.699 trailer park. There's no telling what you'll 00:05:16.699 --> 00:05:19.279 find. It was just a savage thing to say. He was, 00:05:19.379 --> 00:05:23.980 in essence, discrediting a witness by just associating 00:05:23.980 --> 00:05:26.399 her with a trailer park. The implication was 00:05:26.399 --> 00:05:29.800 so clear that people who live there have no integrity. 00:05:29.899 --> 00:05:31.939 Right. That they're desperate, that they're venal, 00:05:32.079 --> 00:05:34.779 that their testimony can be bought for a hundred 00:05:34.779 --> 00:05:37.120 bucks. And that wasn't just some, you know, off 00:05:37.120 --> 00:05:39.860 the cuff mistake. Yeah. It worked because it 00:05:39.860 --> 00:05:42.490 tapped into this. really deep pre -existing cultural 00:05:42.490 --> 00:05:45.370 bias. The idea that if you live in a stick -built 00:05:45.370 --> 00:05:47.769 house, you're a proper citizen. If you live in 00:05:47.769 --> 00:05:50.709 a manufactured home, you're a suspect. That's 00:05:50.709 --> 00:05:52.689 a great way to put it. And that bias has very 00:05:52.689 --> 00:05:55.029 real consequences. It gives local governments 00:05:55.029 --> 00:05:57.490 cover to use zoning laws to keep these communities 00:05:57.490 --> 00:06:00.129 out because we don't want that element here. 00:06:00.329 --> 00:06:03.050 And it lets society as a whole kind of ignore 00:06:03.050 --> 00:06:05.829 the predatory economics that can happen inside 00:06:05.829 --> 00:06:08.519 the gates because, well. It's just a trailer 00:06:08.519 --> 00:06:10.540 park. But as you said, while the culture was 00:06:10.540 --> 00:06:13.540 busy sneering, the capital was circling. That's 00:06:13.540 --> 00:06:16.300 right. Okay, let's get into the money. This is 00:06:16.300 --> 00:06:18.379 the part of the research that honestly, it just 00:06:18.379 --> 00:06:21.579 blew my mind. Because I think I grew up with 00:06:21.579 --> 00:06:24.279 this image that these parks were owned by, I 00:06:24.279 --> 00:06:26.740 don't know, some local guy named Earl who drives 00:06:26.740 --> 00:06:28.860 a pickup and, you know, collects the rent in 00:06:28.860 --> 00:06:31.649 cash every month. And for decades, that was basically 00:06:31.649 --> 00:06:33.930 true. It was a mom and pop industry. You know, 00:06:33.949 --> 00:06:36.029 somebody inherited a piece of land on the edge 00:06:36.029 --> 00:06:38.449 of town. They poured some concrete pads, put 00:06:38.449 --> 00:06:41.050 in a septic system and just generated a steady 00:06:41.050 --> 00:06:44.149 passive income. The industry was very fragmented. 00:06:44.329 --> 00:06:46.649 So when did the sharks show up? When did Wall 00:06:46.649 --> 00:06:49.470 Street start paying attention? The big shift 00:06:49.470 --> 00:06:52.899 really picked up steam in the late 2010s. You 00:06:52.899 --> 00:06:55.199 have to remember the environment then. Interest 00:06:55.199 --> 00:06:57.500 rates were at historic lows. So investors were 00:06:57.500 --> 00:06:59.860 absolutely desperate for yield. Anything that 00:06:59.860 --> 00:07:01.500 could generate a decent return. That money was 00:07:01.500 --> 00:07:04.120 cheap. Exactly. And so they're looking around. 00:07:04.279 --> 00:07:06.259 They look at shopping malls and they see Amazon 00:07:06.259 --> 00:07:08.819 killing them. They look at office buildings and 00:07:08.819 --> 00:07:11.399 that seems risky with remote work starting. And 00:07:11.399 --> 00:07:13.040 then they look over at mobile home parks and 00:07:13.040 --> 00:07:15.800 they don't see risk. They see a cash cow. Who 00:07:15.800 --> 00:07:17.459 are we talking about here? This isn't Earl and 00:07:17.459 --> 00:07:19.800 his pickup truck anymore. No, we are talking 00:07:19.800 --> 00:07:23.519 about the absolute titans of private equity and 00:07:23.519 --> 00:07:27.120 institutional capital. The Carlyle Group, Apollo 00:07:27.120 --> 00:07:32.620 Global Management, TPG Capital, Stockbridge Capital 00:07:32.620 --> 00:07:34.360 Group. These are household names in finance. 00:07:34.560 --> 00:07:36.639 These are firms that manage, you know, hundreds 00:07:36.639 --> 00:07:39.379 of billions of dollars. And for them, these parks 00:07:39.379 --> 00:07:41.839 aren't communities. They're an alternative asset 00:07:41.839 --> 00:07:44.160 class. And just to get a sense of the scale. 00:07:45.259 --> 00:07:47.939 By 2019, how much of the market do they actually 00:07:47.939 --> 00:07:50.560 control? The estimates I've seen suggest that 00:07:50.560 --> 00:07:54.139 by 2019, well over 100 ,000 individual mobile 00:07:54.139 --> 00:07:56.439 home sites in the U .S. were owned by these large 00:07:56.439 --> 00:07:59.279 corporate firms. And that consolidation has only 00:07:59.279 --> 00:08:02.139 accelerated since then. Wow. OK, so walk me through 00:08:02.139 --> 00:08:04.040 the why. You said they're chasing yield. But 00:08:04.040 --> 00:08:06.000 what is it about a trailer park that makes it 00:08:06.000 --> 00:08:08.990 a better investment than, say, A big apartment 00:08:08.990 --> 00:08:11.550 complex. It boils down to two things, really. 00:08:11.670 --> 00:08:14.449 The operating expense ratio and a concept they 00:08:14.449 --> 00:08:17.129 call the moat. The moat. Like a castle. Exactly. 00:08:17.170 --> 00:08:18.790 Think about a normal apartment building. If a 00:08:18.790 --> 00:08:21.129 tenant's toilet breaks, who has to fix it? The 00:08:21.129 --> 00:08:23.970 landlord. If the roof starts leaking... Landlords 00:08:23.970 --> 00:08:26.209 again? Right. But in a land lease community, 00:08:26.629 --> 00:08:29.610 the resident owns the home. The investor just 00:08:29.610 --> 00:08:32.049 owns the dirt underneath it and the utility lines. 00:08:32.710 --> 00:08:36.149 So if the roof on your manufactured home leaks... 00:08:36.720 --> 00:08:38.960 Well, that's your problem. So the owner's maintenance 00:08:38.960 --> 00:08:41.580 costs are incredibly low compared to the rent 00:08:41.580 --> 00:08:43.740 they're bringing in. They're minuscule. So the 00:08:43.740 --> 00:08:46.879 profit margins are just, they're significantly 00:08:46.879 --> 00:08:49.620 higher. But then you have the moat, the barrier 00:08:49.620 --> 00:08:52.620 to exit. Let's say I'm your landlord in an apartment 00:08:52.620 --> 00:08:56.559 and I raise your rent by $200 a month. What do 00:08:56.559 --> 00:08:59.299 you do? I'd be angry. And I'd probably start 00:08:59.299 --> 00:09:02.019 looking for a new apartment, hire a U -Haul for 00:09:02.019 --> 00:09:04.330 a few hundred bucks and move out. Right. You 00:09:04.330 --> 00:09:06.730 can leave. But now let's say I own the mobile 00:09:06.730 --> 00:09:09.330 home park and I raise your lot rent by $200. 00:09:09.590 --> 00:09:13.350 Can you leave? Well, no, not really. Like you 00:09:13.350 --> 00:09:15.509 said, it would cost me $10 ,000 to move my house. 00:09:15.710 --> 00:09:18.230 I'm stuck. You are economically trapped. That 00:09:18.230 --> 00:09:20.769 is the captive market we talked about. The investors 00:09:20.769 --> 00:09:22.629 know you can't afford to leave, so they can push 00:09:22.629 --> 00:09:25.029 the rent right up to the absolute breaking point. 00:09:25.330 --> 00:09:27.639 Well, that's a cynical business model. It's cynical, 00:09:27.700 --> 00:09:30.340 but it's an incredibly accurate description of 00:09:30.340 --> 00:09:32.139 the model. I mean, look at Stockbridge Capital 00:09:32.139 --> 00:09:35.240 Group. They're a perfect case study. They bought 00:09:35.240 --> 00:09:38.919 up a portfolio of around 200 parks. Between late 00:09:38.919 --> 00:09:42.500 2016 and the end of 2017, so just over a year, 00:09:42.659 --> 00:09:45.080 they saw a return on their investment and ROI 00:09:45.080 --> 00:09:48.840 of more than 30%. Hold on. Say that again. 30%. 00:09:48.840 --> 00:09:53.190 More than 30%. In one year. In real estate. I 00:09:53.190 --> 00:09:54.909 always thought a fantastic year in real estate 00:09:54.909 --> 00:09:57.529 was, I don't know, 8 or 10 percent. 10 percent 00:09:57.529 --> 00:09:59.789 would be great. 30 percent is. It's astronomical. 00:10:00.529 --> 00:10:02.389 That's the kind of return you normally only hear 00:10:02.389 --> 00:10:05.250 about with like a high risk tech startup that 00:10:05.250 --> 00:10:07.409 strikes gold or some venture capital bet. To 00:10:07.409 --> 00:10:09.990 get that from a boring asset like affordable 00:10:09.990 --> 00:10:13.490 housing is just it's unheard of. How much of 00:10:13.490 --> 00:10:15.889 that is them just, you know, raising rents versus 00:10:15.889 --> 00:10:19.049 some kind of financial wizardry? A lot of it 00:10:19.049 --> 00:10:21.190 is driven by aggressive rent hikes, but there's 00:10:21.190 --> 00:10:23.389 a huge component of financial engineering and 00:10:23.389 --> 00:10:25.690 leverage, too. And this is where the story gets 00:10:25.690 --> 00:10:28.009 either darker or more ironic, you know, depending 00:10:28.009 --> 00:10:30.769 on how you look at it. A huge number of these 00:10:30.769 --> 00:10:33.090 corporate buyouts are financed with government 00:10:33.090 --> 00:10:35.570 backed loans. You don't mean Fannie Mae and Freddie 00:10:35.570 --> 00:10:38.809 Mac? The very same. The government sponsored 00:10:38.809 --> 00:10:42.919 enterprises. Their entire mission, their legal 00:10:42.919 --> 00:10:45.679 mandate, is to promote liquidity and support 00:10:45.679 --> 00:10:49.379 affordable housing in the market. Right. So because 00:10:49.379 --> 00:10:52.259 mobile homes are, on paper, inherently affordable, 00:10:52.759 --> 00:10:56.000 Fannie Mae provides billions of dollars in low 00:10:56.000 --> 00:10:58.360 interest financing to these private equity firms 00:10:58.360 --> 00:11:00.799 to go out and buy the parks. Wait, let me get 00:11:00.799 --> 00:11:03.250 this straight. The United States government is 00:11:03.250 --> 00:11:06.070 subsidizing private equity firms to buy up affordable 00:11:06.070 --> 00:11:09.649 housing, which then allows those firms to jack 00:11:09.649 --> 00:11:12.649 up the rents on residents to generate a 30 percent 00:11:12.649 --> 00:11:14.870 return for their investors. That is the feedback 00:11:14.870 --> 00:11:17.500 loop. Yes. In that Stockeridge deal we just mentioned, 00:11:17.620 --> 00:11:20.759 Fannie Mae provided $1 .3 billion in financing. 00:11:21.080 --> 00:11:23.399 They actually put out a press release labeling 00:11:23.399 --> 00:11:26.179 it as a win for preserving affordable housing. 00:11:26.379 --> 00:11:28.320 But for the person living there, it doesn't feel 00:11:28.320 --> 00:11:30.179 like preservation. It feels like the new owner 00:11:30.179 --> 00:11:32.019 is just there to squeeze them. That is the common 00:11:32.019 --> 00:11:34.759 experience, yes. And the prices for the parks 00:11:34.759 --> 00:11:38.220 themselves are just exploding. I saw a note in 00:11:38.220 --> 00:11:41.950 the research. The Carlisle Group. paid $230 million 00:11:41.950 --> 00:11:45.730 for just four parks in Mesa, Arizona. That was 00:11:45.730 --> 00:11:48.450 a real watershed moment. That deal sent a signal 00:11:48.450 --> 00:11:50.389 to the entire market that these weren't some 00:11:50.389 --> 00:11:52.929 kind of junk asset anymore. These were prime 00:11:52.929 --> 00:11:55.690 institutional grade real estate. But you have 00:11:55.690 --> 00:11:58.980 to think. If a firm like Carwile pays that kind 00:11:58.980 --> 00:12:01.480 of premium price, they have to get a premium 00:12:01.480 --> 00:12:03.559 return for their investors. Of course. And where 00:12:03.559 --> 00:12:05.299 does that money come from? It has to come from 00:12:05.299 --> 00:12:07.919 the pockets of the people living there. The retirees, 00:12:07.940 --> 00:12:10.159 the working class families. It's the only place 00:12:10.159 --> 00:12:12.860 it can come from. And this really brings us to 00:12:12.860 --> 00:12:15.509 what's called the tenant trap. The core vulnerability 00:12:15.509 --> 00:12:18.149 of this whole housing model is that fundamental 00:12:18.149 --> 00:12:21.370 separation of the house and the land. You own 00:12:21.370 --> 00:12:24.230 the depreciating asset, the box, while you rent 00:12:24.230 --> 00:12:26.789 the appreciating asset, the land. It completely 00:12:26.789 --> 00:12:28.870 flips the idea of homeownership on its head. 00:12:28.970 --> 00:12:31.070 I mean, you buy a home to build equity, to have 00:12:31.070 --> 00:12:33.750 stability. But here, you buy the home, but you're 00:12:33.750 --> 00:12:38.850 still basically a tenant. Massive rent hikes. 00:12:38.990 --> 00:12:40.809 And it's worse than being an apartment tenant. 00:12:41.259 --> 00:12:43.279 If you get evicted from an apartment, you lose 00:12:43.279 --> 00:12:45.440 your place to live. If you get evicted from a 00:12:45.440 --> 00:12:47.899 mobile home park, you don't just lose your spot, 00:12:48.000 --> 00:12:49.879 you lose your house. You lose all your equity. 00:12:50.120 --> 00:12:51.720 Because you can't move it. And if you can't afford 00:12:51.720 --> 00:12:54.600 to move it, and most people can't, you often 00:12:54.600 --> 00:12:57.080 have no choice but to abandon it or sell it to 00:12:57.080 --> 00:13:00.059 the park owner for pennies on the dollar. So 00:13:00.059 --> 00:13:02.399 the park owner gets the land back, ready for 00:13:02.399 --> 00:13:04.659 the next person, and they get a home for next 00:13:04.659 --> 00:13:07.179 to nothing that they can then turn around and 00:13:07.179 --> 00:13:10.539 rent out or resell. It sounds almost predatory. 00:13:11.120 --> 00:13:13.659 Many critics and residents would argue that predatory 00:13:13.659 --> 00:13:16.279 is exactly the right word for it. The business 00:13:16.279 --> 00:13:18.580 plans for these acquisitions often explicitly 00:13:18.580 --> 00:13:21.399 state that the current rents are below market 00:13:21.399 --> 00:13:23.720 and that there's an opportunity for aggressive 00:13:23.720 --> 00:13:26.519 increases. But market rate doesn't mean anything 00:13:26.519 --> 00:13:29.779 in a captive market. It just means whatever people 00:13:29.779 --> 00:13:32.679 can possibly pay before they go completely broke. 00:13:32.899 --> 00:13:35.580 That's the practical definition, yes. OK, but 00:13:35.580 --> 00:13:37.139 are they at least putting some of that money 00:13:37.139 --> 00:13:40.240 back into the parks? You know, if my lot rent 00:13:40.240 --> 00:13:42.200 goes up 30 percent, am I getting a new playground 00:13:42.200 --> 00:13:44.820 for the kids or, I don't know, better roads? 00:13:45.200 --> 00:13:47.580 The anecdotal evidence and reports from residents 00:13:47.580 --> 00:13:51.340 suggest often no. Because the residents can't 00:13:51.340 --> 00:13:53.200 leave, there's no competitive pressure on the 00:13:53.200 --> 00:13:56.240 owner to improve the amenities. In a normal rental 00:13:56.240 --> 00:13:58.340 market, if the landlord across the street has 00:13:58.340 --> 00:14:01.539 a nicer pool, you move there. Here, that incentive 00:14:01.539 --> 00:14:04.320 for customer service is basically broken. The 00:14:04.320 --> 00:14:07.100 profit model is about extraction, not about adding 00:14:07.100 --> 00:14:10.299 value. That is a grim picture for the people 00:14:10.299 --> 00:14:12.759 living there. But surely this isn't happening 00:14:12.759 --> 00:14:16.120 in a vacuum. Is there any kind of pushback, any 00:14:16.120 --> 00:14:18.779 new regulations to protect these people? There 00:14:18.779 --> 00:14:21.460 is, but it's very much a David versus Goliath 00:14:21.460 --> 00:14:23.720 kind of fight. The laws that govern these communities 00:14:23.720 --> 00:14:25.820 are mostly at the state level, and many of them 00:14:25.820 --> 00:14:28.220 haven't been seriously updated in decades. But 00:14:28.220 --> 00:14:30.559 some states are trying. Some are. Colorado is 00:14:30.559 --> 00:14:32.360 probably the best example right now. What's going 00:14:32.360 --> 00:14:35.019 on in Colorado? They pass legislation that gives 00:14:35.019 --> 00:14:37.440 residents what's called an opportunity to purchase. 00:14:37.860 --> 00:14:41.340 So basically, if a park owner decides to sell, 00:14:41.480 --> 00:14:43.879 say, to one of these big private equity firms, 00:14:44.059 --> 00:14:46.580 they first have to give the residents official 00:14:46.580 --> 00:14:48.899 notice. A chance to buy it themselves. A chance 00:14:48.899 --> 00:14:50.860 to make a counteroffer, yes. They usually get 00:14:50.860 --> 00:14:54.600 90 days. 90 days. That seems impossibly short. 00:14:54.759 --> 00:14:57.960 Yeah. How are you supposed to organize, you know, 00:14:57.980 --> 00:15:00.200 100 different families, get them all on the same 00:15:00.200 --> 00:15:03.919 page and find financing for a multimillion dollar 00:15:03.919 --> 00:15:06.279 property in three months? It is an incredible 00:15:06.279 --> 00:15:09.580 sprint. It's so, so difficult, but it's not impossible. 00:15:09.960 --> 00:15:12.620 It has happened. There are nonprofits like an 00:15:12.620 --> 00:15:14.879 organization called ROC USA, that's resident 00:15:14.879 --> 00:15:17.519 owned communities, that specialize in helping 00:15:17.519 --> 00:15:20.159 these groups navigate the process and find financing. 00:15:20.320 --> 00:15:22.659 And when it works? The whole dynamic must change. 00:15:22.700 --> 00:15:24.840 It flicks completely. Because when the residents 00:15:24.840 --> 00:15:26.799 own the park as a co -op, they're not trying 00:15:26.799 --> 00:15:29.399 to squeeze out a 30 % profit for outside investors. 00:15:29.720 --> 00:15:31.399 They just need to cover the mortgage and the 00:15:31.399 --> 00:15:33.620 operating costs. So rents stabilize, sometimes 00:15:33.620 --> 00:15:36.440 for years. That seems like the only real structural 00:15:36.440 --> 00:15:39.320 solution, then. You have to reunite the ownership 00:15:39.320 --> 00:15:42.659 of the home with the ownership of the land. It's 00:15:42.659 --> 00:15:45.299 definitely the most effective fix. But it's a 00:15:45.299 --> 00:15:47.879 tough battle. They're often competing against 00:15:47.879 --> 00:15:50.980 all cash offers from huge firms that can close 00:15:50.980 --> 00:15:54.399 a deal in like a week. And sometimes it's not 00:15:54.399 --> 00:15:56.799 even about rent hikes. I read about a case in 00:15:56.799 --> 00:15:58.679 San Antonio at the Mission Trails community. 00:15:58.840 --> 00:16:01.870 That was about just. Erasing the park entirely. 00:16:02.230 --> 00:16:04.169 That's the other existential risk. The highest 00:16:04.169 --> 00:16:07.590 and best use risk. Mission Trails was a community 00:16:07.590 --> 00:16:10.509 right on a beautiful river. A developer, a company 00:16:10.509 --> 00:16:13.110 called White Conley, they looked at that land 00:16:13.110 --> 00:16:15.309 and they didn't see a mobile home park. They 00:16:15.309 --> 00:16:18.470 saw luxury waterfront condominiums. So they just 00:16:18.470 --> 00:16:20.049 bought the land to bulldoze the whole community. 00:16:20.269 --> 00:16:22.409 Exactly. The residents were all displaced. They 00:16:22.409 --> 00:16:24.809 got some money for relocation. But for many of 00:16:24.809 --> 00:16:27.149 them, the community they had spent decades building 00:16:27.149 --> 00:16:30.240 was just... It just highlights that no matter 00:16:30.240 --> 00:16:32.279 how long you've lived there, no matter if you've 00:16:32.279 --> 00:16:35.799 paid your rent on time for 20 years, if the land 00:16:35.799 --> 00:16:38.120 under your home becomes valuable enough, you're 00:16:38.120 --> 00:16:40.399 just in the way. You're an obstacle to profit. 00:16:40.720 --> 00:16:42.860 OK, I want to pivot a little bit here because 00:16:42.860 --> 00:16:46.740 if we only focus on this exploitation narrative, 00:16:47.019 --> 00:16:50.299 we're missing a huge and very different part 00:16:50.299 --> 00:16:52.820 of the manufactured housing world. Right. We 00:16:52.820 --> 00:16:54.559 have to talk about the places where people are 00:16:54.559 --> 00:16:56.879 literally lining up. fighting to get in, not 00:16:56.879 --> 00:17:00.100 trying to get out. The whole 55 and over phenomenon. 00:17:00.200 --> 00:17:03.159 Yes. This is the complete flip side of the coin. 00:17:03.240 --> 00:17:06.440 If you go places like Florida, Arizona, Palm 00:17:06.440 --> 00:17:09.019 Springs, you'll find these manufactured housing 00:17:09.019 --> 00:17:11.660 communities that, well, they look more like country 00:17:11.660 --> 00:17:13.680 club resorts than what we think of as a trailer 00:17:13.680 --> 00:17:15.839 park. And these are the communities that operate 00:17:15.839 --> 00:17:18.390 under OPA. The Housing for Older Persons Act. 00:17:18.589 --> 00:17:21.230 Correct. OTPIA is a federal law that creates 00:17:21.230 --> 00:17:23.529 an exception to the Fair Housing Act, allowing 00:17:23.529 --> 00:17:25.569 these communities to legally discriminate based 00:17:25.569 --> 00:17:28.630 on age. So they can say no kids allowed. They 00:17:28.630 --> 00:17:31.670 can. The rule is typically that at least one 00:17:31.670 --> 00:17:34.150 resident in the home must be 55 or older, and 00:17:34.150 --> 00:17:36.910 they can and do strictly prohibit anyone under 00:17:36.910 --> 00:17:39.250 18 from living there. No screaming kids by the 00:17:39.250 --> 00:17:41.759 pool. That is the number one selling point. It 00:17:41.759 --> 00:17:44.859 creates this very controlled, very quiet, very 00:17:44.859 --> 00:17:47.099 predictable environment that a lot of retirees 00:17:47.099 --> 00:17:49.640 are looking for. And because these residents 00:17:49.640 --> 00:17:52.099 are often retirees who have savings, who have 00:17:52.099 --> 00:17:55.240 equity from a previous home, the whole power 00:17:55.240 --> 00:17:57.299 dynamic is different. Tell me about the amenities. 00:17:57.619 --> 00:17:59.480 We're not talking about a rusty swing set and 00:17:59.480 --> 00:18:01.480 a patch of grass here. No, no. We are talking 00:18:01.480 --> 00:18:04.500 about heated swimming pools, massive clubhouses 00:18:04.500 --> 00:18:07.170 with... Commercial grade kitchens for events, 00:18:07.569 --> 00:18:10.509 pickleball courts, shuffleboard, pudding greens. 00:18:10.990 --> 00:18:13.329 Pickleball, of course. Of course. And, you know, 00:18:13.349 --> 00:18:15.990 a full social calendar of events run by an on 00:18:15.990 --> 00:18:18.210 -site manager who also makes sure the lawns are 00:18:18.210 --> 00:18:20.509 perfectly manicured. And what about the homes 00:18:20.509 --> 00:18:22.869 themselves? Are they different? They're often 00:18:22.869 --> 00:18:25.410 much higher end. Many of them are ground set, 00:18:25.529 --> 00:18:27.490 which means they're lowered into a shallow pit 00:18:27.490 --> 00:18:30.450 so the floor is flush with the ground. No stairs 00:18:30.450 --> 00:18:34.000 to climb. Inside, you'll find drywall, granite 00:18:34.000 --> 00:18:37.180 countertops, two car garages. I mean, if you 00:18:37.180 --> 00:18:39.099 didn't know it was a manufactured home, you wouldn't 00:18:39.099 --> 00:18:41.420 know. But the legal structure is identical, right? 00:18:41.460 --> 00:18:43.160 They're still renting the land. That's the great 00:18:43.160 --> 00:18:46.339 irony of it all. Even in these luxurious million 00:18:46.339 --> 00:18:49.460 -dollar parks, they are still land lease tenants. 00:18:49.619 --> 00:18:52.400 They don't own the dirt. So why does it work 00:18:52.400 --> 00:18:55.950 there? Because they have leverage. They have 00:18:55.950 --> 00:18:58.109 the financial means to leave. They could sell 00:18:58.109 --> 00:18:59.930 their home and go buy a condo or a traditional 00:18:59.930 --> 00:19:02.049 house down the street. So the park owners have 00:19:02.049 --> 00:19:05.190 to treat them like valued customers, not captives. 00:19:05.309 --> 00:19:07.730 The note isn't poverty. It's lifestyle. Exactly. 00:19:07.750 --> 00:19:09.829 They stay because they want to be there, because 00:19:09.829 --> 00:19:11.990 they like the community and the amenities, not 00:19:11.990 --> 00:19:13.910 because they're trapped. So the model itself 00:19:13.910 --> 00:19:17.829 isn't inherently broken. It can work, but only 00:19:17.829 --> 00:19:19.910 if the residents have enough economic power to 00:19:19.910 --> 00:19:22.329 keep the landlord honest. That's it in a nutshell. 00:19:22.410 --> 00:19:24.230 It's not the type of house that creates the misery. 00:19:25.109 --> 00:19:27.890 The lack of leverage. Let's talk geography for 00:19:27.890 --> 00:19:29.910 a minute. We've mentioned Florida and Arizona 00:19:29.910 --> 00:19:33.170 for the 55 plus parks. But is this whole thing 00:19:33.170 --> 00:19:36.170 mostly a sun built phenomenon or a deep south 00:19:36.170 --> 00:19:38.710 thing? Culturally, yeah, we associate them with 00:19:38.710 --> 00:19:41.009 the south and with rural areas. But the reality 00:19:41.009 --> 00:19:43.130 is they're everywhere. Every state has them. 00:19:43.329 --> 00:19:46.390 But there's this really strange paradox happening. 00:19:46.589 --> 00:19:49.220 What was that? Even though the demand for affordable 00:19:49.220 --> 00:19:51.420 housing in this country is just through the roof, 00:19:51.619 --> 00:19:54.339 the number of new mobile home parks being built 00:19:54.339 --> 00:19:57.519 is practically zero. Why is that? You'd think 00:19:57.519 --> 00:19:59.140 if they're so profitable, developers would be 00:19:59.140 --> 00:20:00.980 building them everywhere. Oh, it would be incredibly 00:20:00.980 --> 00:20:03.019 profitable to build new ones. The problem is 00:20:03.019 --> 00:20:06.940 you're literally not allowed to. It's pure NUBism. 00:20:07.140 --> 00:20:09.720 Not in my backyard. The one and only. So towns 00:20:09.720 --> 00:20:12.460 and cities just ban them. They don't usually 00:20:12.460 --> 00:20:15.160 pass a law that says mobile home parks are banned. 00:20:15.680 --> 00:20:18.299 They're more subtle. They just use zoning codes 00:20:18.299 --> 00:20:21.400 to make it impossible. They'll require, you know, 00:20:21.420 --> 00:20:24.599 minimum lot sizes that are too big or they won't 00:20:24.599 --> 00:20:27.660 zone any land for that specific use. Or they'll 00:20:27.660 --> 00:20:29.660 just pass a moratorium. Like what happened in 00:20:29.660 --> 00:20:32.460 Maine. Exactly. Look at Dover -Foxcroft, Maine. 00:20:32.640 --> 00:20:35.400 The town select board there had a serious debate 00:20:35.400 --> 00:20:38.099 about putting a moratorium on any new mobile 00:20:38.099 --> 00:20:40.519 homes being brought into town. What's the official 00:20:40.519 --> 00:20:43.329 argument against them? Why do local governments 00:20:43.329 --> 00:20:45.690 hate them so much? It comes down to two things. 00:20:46.049 --> 00:20:49.599 The tax base and prejudice. A mobile home park 00:20:49.599 --> 00:20:52.440 consumes municipal services schools for the kids, 00:20:52.700 --> 00:20:55.880 police, fire, road maintenance, just like any 00:20:55.880 --> 00:20:58.220 other neighborhood. Right. But because the homes 00:20:58.220 --> 00:21:00.859 themselves are often taxed as personal property, 00:21:01.000 --> 00:21:03.839 like a car, instead of as real estate, the town 00:21:03.839 --> 00:21:06.740 collects far less in tax revenue compared to 00:21:06.740 --> 00:21:08.900 a subdivision of, you know, big stick -built 00:21:08.900 --> 00:21:10.960 houses. So the town accountant looks at it and 00:21:10.960 --> 00:21:13.700 sees a net loss. They see a drain on the budget 00:21:13.700 --> 00:21:16.579 and, frankly, a drag on the property values of 00:21:16.579 --> 00:21:18.359 the surrounding homes. So they just zone them 00:21:18.359 --> 00:21:20.440 out of existence. But here's the kicker. Go on. 00:21:20.559 --> 00:21:24.019 This scarcity, this refusal to build new parks, 00:21:24.119 --> 00:21:26.440 it actually helps the private equity firms. Oh, 00:21:26.460 --> 00:21:28.869 basic supply and demand. If you can't build any 00:21:28.869 --> 00:21:31.190 new supply, the existing supply becomes infinitely 00:21:31.190 --> 00:21:33.930 more valuable. You got it. The nimby wise who 00:21:33.930 --> 00:21:36.470 are trying to protect their property values are 00:21:36.470 --> 00:21:38.690 accidentally making the private equity investors 00:21:38.690 --> 00:21:41.309 even richer by creating a government enforced 00:21:41.309 --> 00:21:43.890 monopoly. It's a perfect storm. I want to touch 00:21:43.890 --> 00:21:46.210 on one more specific American stigma before we 00:21:46.210 --> 00:21:49.730 go global. The weather. The whole tornado magnet 00:21:49.730 --> 00:21:53.089 myth. Is there any real truth to that? Or is 00:21:53.089 --> 00:21:55.769 it just that the TV news cameras only show up 00:21:55.769 --> 00:21:58.579 at trailer parks after a big storm? It's a classic 00:21:58.579 --> 00:22:02.180 mix of physics and confirmation bias. Historically, 00:22:02.200 --> 00:22:05.059 yes, there was some truth to it. Older mobile 00:22:05.059 --> 00:22:09.019 homes pre 1976 were lighter. They weren't well 00:22:09.019 --> 00:22:11.359 anchored and they were just structurally weaker 00:22:11.359 --> 00:22:13.700 than a site built home. The wind could get underneath 00:22:13.700 --> 00:22:16.180 it and just flip it. It's basically a big wing 00:22:16.180 --> 00:22:19.160 sitting on some blocks. Right. But after 1976, 00:22:19.420 --> 00:22:21.819 and especially after Hurricane Andrew devastated 00:22:21.819 --> 00:22:26.039 Florida in 1992, the federal HUD codes for construction 00:22:26.039 --> 00:22:28.680 got much, much stricter. Modern manufactured 00:22:28.680 --> 00:22:31.460 homes are built to specific wind zone standards 00:22:31.460 --> 00:22:33.720 depending on where they'll be located. What does 00:22:33.720 --> 00:22:35.759 that mean in practical terms? Are they just bolting 00:22:35.759 --> 00:22:38.339 them to the ground? Essentially, yes. They use 00:22:38.339 --> 00:22:40.279 things called hurricane straps, which are these 00:22:40.279 --> 00:22:43.180 heavy -duty galvanized steel ties that anchor 00:22:43.180 --> 00:22:45.559 the home's steel chassis directly into concrete 00:22:45.559 --> 00:22:47.740 footings that are poured deep into the ground. 00:22:47.900 --> 00:22:50.279 They're engineered to withstand very specific 00:22:50.279 --> 00:22:53.259 wind loads. So a new modern home that's properly 00:22:53.259 --> 00:22:55.119 installed isn't going to just blow away like 00:22:55.119 --> 00:22:57.140 Dorothy's house in The Wizard of Oz. The data 00:22:57.140 --> 00:22:59.279 is very clear. They perform extremely well in 00:22:59.279 --> 00:23:02.099 high winds. But that image, that stereotype, 00:23:02.440 --> 00:23:05.640 it just persists. And I think for a lot of us, 00:23:05.660 --> 00:23:08.039 that image was permanently burned into our collective 00:23:08.039 --> 00:23:11.339 memory in 2005. Hurricane Katrina. The FEMA trailers. 00:23:11.859 --> 00:23:15.220 After Katrina wiped out New Orleans, FEMA rushed 00:23:15.220 --> 00:23:17.579 in thousands and thousands of what were basically 00:23:17.579 --> 00:23:19.779 travel trailers, not permanent manufactured homes, 00:23:19.880 --> 00:23:23.380 but small, temporary travel trailers to house 00:23:23.380 --> 00:23:25.680 all the displaced people. I remember those images. 00:23:26.250 --> 00:23:28.809 Just endless fields of these little white boxes. 00:23:29.049 --> 00:23:31.809 It was a necessary humanitarian response, but 00:23:31.809 --> 00:23:33.990 it was an absolute public relations disaster 00:23:33.990 --> 00:23:37.029 for the manufactured housing industry. Why? Because 00:23:37.029 --> 00:23:38.890 those trailers were designed for weekend camping 00:23:38.890 --> 00:23:41.009 trips, not for people to live in for months or 00:23:41.009 --> 00:23:43.470 years. They were flimsy. They had major issues 00:23:43.470 --> 00:23:46.470 with formaldehyde off gassing. But because the 00:23:46.470 --> 00:23:48.289 media and the public just called them trailers, 00:23:48.670 --> 00:23:51.289 everyone conflated them with actual legitimate 00:23:51.289 --> 00:23:54.490 manufactured housing. So it reinforced this idea 00:23:54.490 --> 00:23:56.789 that this type of house. is substandard or for 00:23:56.789 --> 00:23:59.849 emergencies only. Exactly. It became this visual 00:23:59.849 --> 00:24:02.309 shorthand for government failure and desperation 00:24:02.309 --> 00:24:05.910 instead of being seen as a viable permanent housing 00:24:05.910 --> 00:24:09.069 solution. OK, let's zoom out way out. We've been 00:24:09.069 --> 00:24:11.630 very focused on the U .S. so far, but people 00:24:11.630 --> 00:24:14.450 live in small prefabricated homes all over the 00:24:14.450 --> 00:24:18.210 world. Does the trailer park, as we know it, 00:24:18.230 --> 00:24:20.829 even exist in other countries? It does, but the 00:24:20.829 --> 00:24:23.730 cultural meaning and the legal framework around 00:24:23.730 --> 00:24:26.569 it can shift dramatically. The same physical 00:24:26.569 --> 00:24:28.690 object can mean something completely different 00:24:28.690 --> 00:24:31.230 when you cross an ocean. Okay, let's start down 00:24:31.230 --> 00:24:34.349 under. Australia, they have a huge caravan culture, 00:24:34.450 --> 00:24:36.589 right? They do. In Australia, the line between 00:24:36.589 --> 00:24:38.890 what we'd call a trailer park and an RV park 00:24:38.890 --> 00:24:40.930 is very blurry. They just call them all caravan 00:24:40.930 --> 00:24:43.289 parks. And while they certainly have long -term 00:24:43.289 --> 00:24:45.609 residents, there's also this massive cultural 00:24:45.609 --> 00:24:48.750 phenomenon called the Grey Nomads. The Grey Nomads. 00:24:48.750 --> 00:24:51.210 I love that name. Isn't it great? It refers to 00:24:51.210 --> 00:24:53.789 retirees who sell their big family home in the 00:24:53.789 --> 00:24:56.630 suburbs, buy a massive caravan or motorhome, 00:24:56.809 --> 00:24:58.930 and then spend their golden years just endlessly 00:24:58.930 --> 00:25:02.009 circling the continent. It's not seen as a step 00:25:02.009 --> 00:25:05.430 down. It's seen as the ultimate adventure. It's 00:25:05.430 --> 00:25:07.950 a version of the Australian dream. So living 00:25:07.950 --> 00:25:10.130 in a caravan park in Australia can actually be 00:25:10.130 --> 00:25:13.309 a badge of freedom, not poverty. To a large extent, 00:25:13.410 --> 00:25:15.490 yes. Now, there are still parks that are primarily 00:25:15.490 --> 00:25:18.130 for low income housing, but the overall stigma 00:25:18.130 --> 00:25:21.450 is really diluted by this very popular, very 00:25:21.450 --> 00:25:24.250 visible recreational culture. OK, let's jump 00:25:24.250 --> 00:25:27.089 to the UK. I watch a lot of British TV and there's 00:25:27.089 --> 00:25:29.710 always a crime scene at a static caravan park 00:25:29.710 --> 00:25:32.769 on the coast. The static caravan. Yes, a true 00:25:32.769 --> 00:25:35.890 British institution. In the UK, these are overwhelmingly 00:25:35.890 --> 00:25:38.250 used as holiday homes. It's not where you live 00:25:38.250 --> 00:25:40.150 full time. You buy one in a park, usually by 00:25:40.150 --> 00:25:42.470 the seaside, and you go there for weekends or 00:25:42.470 --> 00:25:44.289 for a few weeks in the summer. So it's kind of 00:25:44.289 --> 00:25:46.029 like a vacation cottage for the working and middle 00:25:46.029 --> 00:25:48.369 classes. That's historically been its role, yes. 00:25:48.549 --> 00:25:50.589 Though some of them are getting incredibly fancy 00:25:50.589 --> 00:25:52.890 now. But here's the really interesting legal 00:25:52.890 --> 00:25:56.450 twist. Most of these holiday parks have a clause 00:25:56.450 --> 00:25:59.710 in the contract that prohibits year -round occupancy. 00:26:00.160 --> 00:26:02.319 What do you mean? You are legally required to 00:26:02.319 --> 00:26:04.519 vacate the property for a few weeks a year, usually 00:26:04.519 --> 00:26:06.859 in the dead of winter, like in January or February. 00:26:07.160 --> 00:26:09.619 Why? It's a legal mechanism to prove it's not 00:26:09.619 --> 00:26:12.180 your primary residence and to prevent you from 00:26:12.180 --> 00:26:15.059 gaining permanent tenancy rights. That's a very 00:26:15.059 --> 00:26:17.779 strange loophole. It is. But there is a second 00:26:17.779 --> 00:26:20.819 category called park homes, and those are for 00:26:20.819 --> 00:26:23.779 retirees, much more like the American 55 -plus 00:26:23.779 --> 00:26:27.960 model. Manicured gardens, very quiet, very respectable. 00:26:28.380 --> 00:26:31.099 In Britain... Moving to a park home is marketed 00:26:31.099 --> 00:26:34.019 as a smart, sensible downsizing decision, not 00:26:34.019 --> 00:26:36.319 a sign of failure. OK, let's cross the English 00:26:36.319 --> 00:26:38.920 Channel to France. The French are famous for 00:26:38.920 --> 00:26:41.319 their rules and bureaucracy. How do they deal 00:26:41.319 --> 00:26:43.819 with mobile homes? With typical French rigor 00:26:43.819 --> 00:26:46.740 and logic. In France, it is generally illegal 00:26:46.740 --> 00:26:49.019 to live in a mobile home as your permanent residence, 00:26:49.319 --> 00:26:51.339 full stop, even if you own the land it's sitting 00:26:51.339 --> 00:26:53.799 on. Wait, really? So if I buy a beautiful field 00:26:53.799 --> 00:26:55.819 in Provence, I can't just park a mobile home 00:26:55.819 --> 00:26:58.950 on it and live there? No, you cannot. A mobile 00:26:58.950 --> 00:27:01.849 home is legally defined as a leisure accommodation. 00:27:02.269 --> 00:27:04.509 You are not allowed to stay in it for more than 00:27:04.509 --> 00:27:07.130 three consecutive months. If you want to live 00:27:07.130 --> 00:27:09.769 on that land permanently, the state requires 00:27:09.769 --> 00:27:13.130 you to build a proper building. That's a fundamental 00:27:13.130 --> 00:27:15.109 difference in the whole philosophy of what a 00:27:15.109 --> 00:27:17.769 home is. It absolutely is. They place a much 00:27:17.769 --> 00:27:19.930 higher value on the aesthetic and structural 00:27:19.930 --> 00:27:23.170 permanence of the landscape of the village. The 00:27:23.170 --> 00:27:25.869 American model of just permanent mobile living 00:27:25.869 --> 00:27:28.630 is effectively zoned out of existence there. 00:27:29.009 --> 00:27:31.049 All right, let's go to Germany. Our research 00:27:31.049 --> 00:27:33.430 team found something here that is just fascinating. 00:27:33.809 --> 00:27:38.180 The concept of the Wagenberg. Ah, yes. This might 00:27:38.180 --> 00:27:40.619 be my favorite example of how the same physical 00:27:40.619 --> 00:27:42.880 object can have a completely opposite cultural 00:27:42.880 --> 00:27:46.039 meaning. In the U .S., as we've seen, the trailer 00:27:46.039 --> 00:27:49.059 park is becoming a tool of hypercapitalism. In 00:27:49.059 --> 00:27:51.700 Germany, the Wagenberg is a tool of anti -capitalism. 00:27:51.700 --> 00:27:54.069 Okay, you have to explain that. So starting back 00:27:54.069 --> 00:27:57.410 in the late 70s and 80s, alongside the punk and 00:27:57.410 --> 00:27:59.809 squatter movements in cities like Berlin and 00:27:59.809 --> 00:28:02.150 Hamburg, people started creating these communities 00:28:02.150 --> 00:28:05.190 called wagonbergs, which translates to wagon 00:28:05.190 --> 00:28:07.650 forts. Wagon forts. That sounds defensive. It 00:28:07.650 --> 00:28:10.289 was meant to be. They would get old construction 00:28:10.289 --> 00:28:13.230 trailers, a bow wagon or old circus wagons, anything 00:28:13.230 --> 00:28:15.869 on wheels. They'd retrofit them with wood burning 00:28:15.869 --> 00:28:18.490 stoves and insulation and then arrange them in 00:28:18.490 --> 00:28:20.970 a circle on a piece of abandoned industrial land 00:28:20.970 --> 00:28:23.559 or a vacant lot. So this wasn't about a corporation 00:28:23.559 --> 00:28:25.900 providing affordable housing. This was a political 00:28:25.900 --> 00:28:28.339 act. It was a radical political statement. It 00:28:28.339 --> 00:28:31.240 was a total rejection of the mainstream rental 00:28:31.240 --> 00:28:34.200 market, a rejection of bourgeois living standards. 00:28:34.480 --> 00:28:37.720 They are almost always collective, self -governing 00:28:37.720 --> 00:28:40.140 communities. Do they still exist today? They 00:28:40.140 --> 00:28:42.259 do, though they are under constant threat from 00:28:42.259 --> 00:28:44.740 gentrification as cities clean up those vacant 00:28:44.740 --> 00:28:47.559 lots. But if you walk into a Wagenberg in Berlin 00:28:47.559 --> 00:28:49.440 today, it's like entering another dimension. 00:28:49.640 --> 00:28:52.660 It's vibrant. It's chaotic. art everywhere. It 00:28:52.660 --> 00:28:55.839 is the absolute antithesis of a manicured, corporate 00:28:55.839 --> 00:28:58.660 -owned retirement park in Florida. That is amazing. 00:28:58.880 --> 00:29:01.660 The object is the same, a box on wheels. But 00:29:01.660 --> 00:29:04.980 the entire ideology is flipped 180 degrees. It's 00:29:04.980 --> 00:29:06.720 incredible. And then you go next door to the 00:29:06.720 --> 00:29:08.400 Netherlands and you find a completely different 00:29:08.400 --> 00:29:12.160 debate about camping versus living. Right. The 00:29:12.160 --> 00:29:14.559 Dutch love their rules and order. Oh, absolutely. 00:29:14.960 --> 00:29:18.160 Everything is planned. They have authorized caravan 00:29:18.160 --> 00:29:20.839 parks, but the government is obsessed with the 00:29:20.839 --> 00:29:23.299 distinction between recreation and residence. 00:29:23.720 --> 00:29:27.099 There's this huge gray market of people who are 00:29:27.099 --> 00:29:29.700 secretly living permanently on vacation campsites. 00:29:29.700 --> 00:29:32.680 Why? Because the rent is dirt cheap. Maybe 1 00:29:32.680 --> 00:29:35.940 ,000 or 1 ,500 euros for an entire year. That's 00:29:35.940 --> 00:29:38.220 nothing. It's incredibly cheap. And the government 00:29:38.220 --> 00:29:40.200 kind of tolerates it up to a point, but then 00:29:40.200 --> 00:29:42.160 periodically they'll crack it. down, because 00:29:42.160 --> 00:29:43.779 if you're officially living at a campground, 00:29:43.900 --> 00:29:45.960 you might not have a legal address, and that 00:29:45.960 --> 00:29:48.700 messes up the whole population registry and can 00:29:48.700 --> 00:29:51.200 make you fall out of the social safety net. We 00:29:51.200 --> 00:29:53.039 can't really talk about mobile living in Europe 00:29:53.039 --> 00:29:56.599 without addressing the most sensitive aspect 00:29:56.599 --> 00:29:59.559 of it, the groups for whom mobility isn't a housing 00:29:59.559 --> 00:30:02.400 choice, but a core part of their ethnic identity. 00:30:02.990 --> 00:30:06.069 The travelers. Right. This is by far the most 00:30:06.069 --> 00:30:08.390 complex and contentious part of this whole landscape, 00:30:08.569 --> 00:30:11.490 especially in the UK and in Ireland. We're talking 00:30:11.490 --> 00:30:14.089 about traditionally itinerant ethnic groups like 00:30:14.089 --> 00:30:16.730 the Romani people and Irish travelers. And the 00:30:16.730 --> 00:30:18.569 term they use for designated sites over there 00:30:18.569 --> 00:30:21.730 is a halting site, correct? Yes. A halting site 00:30:21.730 --> 00:30:25.150 is a government provided authorized area for 00:30:25.150 --> 00:30:27.569 these groups to stop and live for a period of 00:30:27.569 --> 00:30:29.609 time. And this just opens up a conflict that 00:30:29.609 --> 00:30:31.950 goes back centuries, doesn't it? The fundamental 00:30:31.950 --> 00:30:34.829 tension. between a settled landowning society 00:30:34.829 --> 00:30:38.130 and a nomadic one. It's exactly what it is. Modern 00:30:38.130 --> 00:30:41.509 property law, zoning, taxes, all of it is designed 00:30:41.509 --> 00:30:44.289 for sedentary people. It has a very hard time 00:30:44.289 --> 00:30:46.369 accommodating a culture that's based on movement. 00:30:46.529 --> 00:30:48.970 So you have these authorized sites, which are 00:30:48.970 --> 00:30:51.410 legal but often in short supply or poorly maintained, 00:30:51.730 --> 00:30:54.990 and that leads to unauthorized encampments. That's 00:30:54.990 --> 00:30:57.539 when a group pulls their caravans on too. like 00:30:57.539 --> 00:31:00.579 a public park or a farmer's field. Yes. And this 00:31:00.579 --> 00:31:03.240 is where you get massive social friction. The 00:31:03.240 --> 00:31:06.579 local settled population complains about trespassing, 00:31:06.660 --> 00:31:09.299 about a lack of sanitation, because these sites 00:31:09.299 --> 00:31:11.400 obviously don't have sewage or waste disposal, 00:31:11.680 --> 00:31:14.740 and often about crime or antisocial behavior. 00:31:15.099 --> 00:31:17.019 And the police get stuck right in the middle. 00:31:17.119 --> 00:31:19.680 They're caught in an impossible position. They're 00:31:19.680 --> 00:31:22.160 trying to enforce private property rights evicting 00:31:22.160 --> 00:31:25.380 trespassers while also trying to uphold human 00:31:25.380 --> 00:31:27.559 rights legislation that... protects the traveler's 00:31:27.559 --> 00:31:30.039 traditional way of life. It's a legal and cultural 00:31:30.039 --> 00:31:32.299 minefield. But it really highlights that for 00:31:32.299 --> 00:31:35.559 some people, living on wheels isn't an economic 00:31:35.559 --> 00:31:37.819 decision or a political statement. It's just... 00:31:38.879 --> 00:31:41.700 It's their identity. So we have covered a ton 00:31:41.700 --> 00:31:44.420 of ground here from, you know, the private equity 00:31:44.420 --> 00:31:46.940 boardrooms of Apollo Global Management all the 00:31:46.940 --> 00:31:49.779 way to the punk squatter camps in Berlin. When 00:31:49.779 --> 00:31:52.119 you take a step back and look at this whole sprawling 00:31:52.119 --> 00:31:54.240 picture, what's the big takeaway? What's the 00:31:54.240 --> 00:31:56.519 synthesis? For me, I think the central theme 00:31:56.519 --> 00:31:58.819 that runs through all of this is the decoupling 00:31:58.819 --> 00:32:01.269 of the home from the land. Expand on that a bit. 00:32:01.410 --> 00:32:04.250 For most of human history, if you owned your 00:32:04.250 --> 00:32:07.230 house, you owned the dirt it sat on. They were 00:32:07.230 --> 00:32:11.190 a single unit. This model, the manufactured housing 00:32:11.190 --> 00:32:14.950 land lease model, it breaks that link. And what 00:32:14.950 --> 00:32:18.170 we are seeing in stark terms is that in a modern 00:32:18.170 --> 00:32:20.789 capitalist system, the person who controls the 00:32:20.789 --> 00:32:23.769 land holds all of the power. The house itself 00:32:23.769 --> 00:32:26.410 is almost just a detail. It's the anchor that 00:32:26.410 --> 00:32:28.559 keeps you paying rent on the land. It's exactly 00:32:28.559 --> 00:32:30.380 that. It's the hook. It doesn't matter if you're 00:32:30.380 --> 00:32:33.519 a retiree in a luxury park in Florida or a working 00:32:33.519 --> 00:32:36.619 family in a struggling park in Ohio. If you do 00:32:36.619 --> 00:32:39.240 not control the ground beneath your feet, your 00:32:39.240 --> 00:32:41.380 sense of security is ultimately an illusion. 00:32:41.720 --> 00:32:43.640 And the corporate consolidation we talked about 00:32:43.640 --> 00:32:46.539 is just that dynamic playing out on an industrial 00:32:46.539 --> 00:32:48.980 scale. It's the financialization of that insecurity. 00:32:49.440 --> 00:32:51.059 Wall Street figured out that there is immense 00:32:51.059 --> 00:32:53.420 profit to be made by becoming the landlord to 00:32:53.420 --> 00:32:55.519 people who have no other options. Landlord of 00:32:55.519 --> 00:32:58.400 last resort. And because land is finite and the 00:32:58.400 --> 00:33:01.039 demand for affordable housing is basically infinite, 00:33:01.240 --> 00:33:03.480 the value of that dirt is only going to go up. 00:33:03.559 --> 00:33:05.559 The pressure on these communities is only going 00:33:05.559 --> 00:33:08.079 to get more intense. It really fundamentally 00:33:08.079 --> 00:33:10.960 challenges the whole American dream of homeownership, 00:33:10.960 --> 00:33:13.539 doesn't it? We tell people, buy a home, build 00:33:13.539 --> 00:33:16.759 wealth. But for millions of people in these homes, 00:33:16.859 --> 00:33:18.480 they did the first part. They bought the home. 00:33:18.960 --> 00:33:21.440 But they're not building wealth. They're just 00:33:21.440 --> 00:33:24.240 building a revenue stream for a real estate investment 00:33:24.240 --> 00:33:27.519 trust. They are capturing all of the depreciation 00:33:27.519 --> 00:33:30.099 of the physical structure while the investor 00:33:30.099 --> 00:33:32.539 captures all of the appreciation of the land. 00:33:32.700 --> 00:33:35.980 It is a perfect economic trap. So here's the 00:33:35.980 --> 00:33:37.759 thought I want to leave everyone with. We tend 00:33:37.759 --> 00:33:39.500 to think of the trailer park. That's a kind of 00:33:39.500 --> 00:33:41.619 relic, right? A throwback to a different time. 00:33:41.880 --> 00:33:44.319 But given everything we've just discussed, the 00:33:44.319 --> 00:33:47.200 housing affordability crisis, the massive influx 00:33:47.200 --> 00:33:49.420 of private equity, this broader shift in our 00:33:49.420 --> 00:33:51.839 economy towards a subscription model where you 00:33:51.839 --> 00:33:53.859 rent everything from your music to your car. 00:33:54.019 --> 00:33:56.160 Are we actually looking at the future? Exactly. 00:33:56.480 --> 00:33:59.079 It's the model of the land lease community where 00:33:59.079 --> 00:34:01.299 you might own the walls around you, but you will 00:34:01.299 --> 00:34:03.880 never, ever own the place where you stand. Is 00:34:03.880 --> 00:34:06.259 that actually the future of housing for more 00:34:06.259 --> 00:34:08.610 and more of the working and middle class? If 00:34:08.610 --> 00:34:11.090 the smartest money in the world is betting billions 00:34:11.090 --> 00:34:13.869 of dollars that it is, the answer might be yes. 00:34:14.690 --> 00:34:16.969 It's a pretty sobering thought. The next time 00:34:16.969 --> 00:34:19.150 you drive past one of those communities, don't 00:34:19.150 --> 00:34:21.889 just glance at the vinyl sighting. Think about 00:34:21.889 --> 00:34:25.170 the land and ask yourself who really owns it. 00:34:25.409 --> 00:34:27.550 Indeed. Thanks for diving deep with us. We'll 00:34:27.550 --> 00:34:28.170 see you on the next one.