Residents of a mobile home park in Akron are withholding rent to a Florida real estate company run by a millionaire who pitches these properties as better investments than apartments or flipping homes.
The complaints made by members of the Akron Mobile Home Park Tenants Association include a large rent increase, poor property maintenance and unexplainably pricey water bills that exceed their usage. All of these concerns started after Florida-based Sunrise Capital Investors bought the mobile home park in 2017 for $3.7 million.
At Akron Mobile Home Park, like many across the country, the residents own their trailers or manufactured homes, but rent the land. The residents include disabled veterans, elderly on fixed incomes, young families on some form of public assistance and middle-class, blue-collar workers.
SCI Akron MHP LLC, a subsidiary of Sunrise Capital Investors, this year raised rents by as much as 36 percent and warned residents that within two years they will be paying about double what they did before the company bought the property.
“I live on a fixed income and this is ridiculous,” said John Norton, a Coast Guard veteran and park resident.
Sunrise Capital Investors CEO Kevin Bupp makes no secret of how he turns mobile home parks into profitable investments. On his podcasts he talks about how he raises rents, gets “rid of the idiots” and uses tactics that make residents believe they are still getting a bargain.
Bupp declined interview requests.
Ron Favali, a company spokesman, said: “Our goal is not to raise rents as quick as possible. Our goal is to create safe, enjoyable communities for our residents.”
What is happening in Akron is a microcosm of mobile home parks across the nation that are purchased by investment firms owned by real estate magnates such as Bupp, Sam Zell and Warren Buffet.
Residents of not only Akron’s mobile home park, but others across the country, are reaching out to legislators for help with the rent increases.
“We decided to get a homeowners association and fight back,” said Maribeth Sheedy, president of the Akron Mobile Home Park Tenants Association, who helped launch a rent strike against SCI Akron MHP LLC.
Some lawmakers are listening.
For example, Maryland legislators proposed legal protections against dramatic rent increases. In New York, a senator who represents the northeastern edge of the state has proposed legislation that would require tenants review notice of when a buyer makes an offer and give them an opportunity to match it. But similar bills proposed in the past have never passed.
Erie County Legislator Edward Rath said he personally spoke with Bupp about the concerns raised by resident of the Akron property. Rath said Bupp only gave verbal assurances that he’d work with the tenants and never sent a written response that he requested from him almost a year ago.
“It’s high time that Mr. Bupp and his team sit around the table and talk reasonably and act reasonable with the residents of the Akron Mobile Home Park,” Rath said.
Bupp describes himself in his personal bio as a serial entrepreneur who went from tending bar to real estate investing by the age of 20.
After the real estate crash in 2009, Bupp said on one of his podcasts that he needed to change his investment portfolio. That is when his interest in mobile home parks began.
He describes mobile home parks as better investments than other real estate properties because the residents tend to stay longer and own the homes, and the rents typically are reasonable for those seeking affordable housing.
Bupp said owners of the mobile home parks typically only need to manage rent collection, maintain the roads and common areas and enforce rules; the owner of the trailer is responsible for maintaining the home, which afford a great advantage of rentals and home flipping.
“If the economy goes down, we still have a huge demand,” Bupp said as a guest on one podcast.
He talks about how easy it is to evict tenants by the fact that most of the tenants do not have leases. Moving a mobile home and installing it at a new park can cost as much as $10,000, so it’s not that easy for tenants to pick up and leave.
“Most of the time they can’t move it and abandon it,” Bupp said.
In some cases, Bupp said, “we just offer to pay them for their home, not much, but we will give them something to move on. That way we can go in and rehab it right away and get it sold.”
Bupp talks about raising rents as a simple way to increase profit. For example, he bought a 52-space mobile home park in North Carolina and immediately increased the rent from $165 to $250.
“So in three months we added $600,000 of value,” he said on the podcast.
“Here’s the unique part about that,” Bupp said. “That was the biggest rental increase that we’ve ever done in terms of, proportionally speaking, and we were nervous.”
He said that he included prices at nearby parks in his rent increase letter to tenants. This scares mobile home owners into believing they are stuck.
“We didn’t say this but in other words, consider this a gift, you received a gift for the past 10 years because your previous owner just never raised your rents. Now, we’re just bringing it to market.”
Favali, the company’s spokesman, said Bupp’s podcasts “are not relevant to this situation.”
“They are targeted to individuals interested in real estate investing,” he said.
Bill Damin, a local commercial real estate agent who bought a mobile home park in Lackawanna in 2017, said these large investment firms like Bupp’s have shareholders to whom they must answer. He said he had to get to know and listen to his residents, which he said is much more challenging for an out-of-town company.
“But what [Bupp] is gearing to in his [podcasts] like some of the other people are is get-rich schemes and things like that,” Damin said.
“But once you own the park, what people don’t realize is it’s not just collecting checks. There’s work that has to be done, there’s management, it’s not just you sit here, take the money in and wait and figure out how you’re going to spend it all because that’s not how it works.”
Indeed, many of the tactics Bupp describes in his podcasts are what he deployed in Akron.
Residents fight back
The Akron Mobile Home Park opened in 1969 and SCI is only the third owner of the park, buying it with a down payment of close to $1 million.
Before the sale, the previous owners had increased the rent by $10, which put the amount at $260 per month for a single-wide trailer and $290 per month for a double.
Soon after SCI took ownership, residents said the company tried to increase the rent again. SCI backed off because it is illegal in New York to push two rent increases within a year.
In October 2018, SCI notified residents by letter that the rent would increase to $360. The letter stated that by October 2021, they will be paying “market rate.”
The question many residents had was what is market rate?
The New York State Homes and Community Renewal agency, whose mission is to build, preserve and protect affordable housing and increase home ownership, only requires mobile home owners to register with the agency; they do not require them to disclose rental rates. The agency reports that there are 70,294 mobile homes in 1,944 parks across the state.
SCI Akron MHP’s letter stated that based on its “extensive market research,” comparable market rents range from $500 to $540 per month. The company cited four other mobile home properties with rates ranging from $450 to $600 per month.
“Rent increases were necessary to provide basic services to residents and prepare for future improvements,” Favali said.
“The former model is no longer sustainable. Rents at Akron Mobile Home Park are currently still below market values.”
But residents said SCI did not use comparable properties, instead picking some of the nicest mobile home parks in the region, that have age restrictions and amenities like community centers.
Even Bupp said during a June 4, 2017, podcast that the average rent for mobile home parks across the country is between $300 to $350.
News 4 Investigates contacted comparably sized mobile home parks in Western New York that lack any amenities and found the monthly rental rates ranged from $265 to $390, including water. When News 4 pointed this out to the SCI spokesman, he said “our market analysis is incredibly thorough and accurate.”
Residents have also complained about the lack of maintenance.
SCI told residents by letter in March 2018 that it plans to make a substantial investment over the coming months and years “to improve the community for all residents.”
But residents said they haven’t seen much improvements at the park, certainly not any that could explain a large rent increase. SCI refused to disclose how much it has invested in the park.
Instead, Favali said since purchasing Akron Mobile Home Park, SCI has hired full-time staff to live on site, and that residents agreed that maintenance issues had been resolved.
“The maintenance is subpar,” Sheedy said. “They are above telling the truth, that I can tell you.”
Water bills at Akron Mobile Home park are another contentious issue with residents.
Instead of billing quarterly, SCI began to bill monthly. Residents started to get bills for far more water than they used.
“We have had issues with the readings being accurate since they took over,” Sheedy said.
“For example, we had a water bill last February for 5,000 gallons. We checked to insure there were no leaks and asked that we get a day to day reading for that month. It showed we had used 4,000 gallons on only one particular day in the middle of the month. This was inaccurate, and this is how it has been for the last 12 months.”
Favali, the company spokesman, said: “We have communicated with residents that we are in the process of confirming exact water bill charges and will make adjustments if needed. This is separate from outstanding rent.”
The Akron Mobile Home Park residents on rent strike have some options, including making a run at buying out SCI – a strategy that has already proven successful for a mobile home park in Marilla.
Threat of eviction
At last month’s Akron Mobile Home Park Tenants Association meeting, a burly man with a longbeard spoke about how the Marilla Country Village became a community-owned park.
Dennis Jakubowski, the president of the mobile home park in Marilla, said residents formed a nonprofit with a board of directors to buy the park seven years ago from a limited liability company called Bush Gardens.
“They told us that ‘we’re going to raise the rent until we get to $500,’ they don’t care,” Jakubowski said.
“It would appear they were in it for the money. So when we bought the park for $4.6 million, we didn’t have to raise the rent. We’ve only raised it once the last seven years.”
Jakubowski said rates at his park are $395 for a single-wide lot and $405 for a double-wide lot. He offered guidance to the Akron mobile home residents if they decide to try buying their park from SCI.
“You won’t ever lose your home because of somebody just raising the rent,” he said.
SCI said it is open to any “market value offers for any of our properties.”
Meanwhile, the rent strike that Sheedy and others are leading is in its third month. All of the rent is placed in escrow until SCI agrees to meet with them to discuss the future of the park.
In January, SCI attorneys sent the residents on rent strike a 30-day notice informing them that they are delinquent and a letter warning them that SCI can recover all the expenses for the evictions, “effectively doubling their total delinquent balance.”
As a result, many of the mobile home residents are on edge.
“It’s terrible,” Sheedy said.
“It scared many people, I mean that is their intention, to put fear in people for their own profit.”