Mobile home investing is hot for Warren Buffett, but homeowners get burned
Recently, on Last Week Tonight, John Oliver explained how investors prey on owners of mobile homes — which, as it turns out, cost a hell of a lot more than a tank of gas to move.
These tactics range from offering high-interest loans to buying the land underneath the houses, only to hike the rents on tenants.
Oliver also went on to mention that this is a classic sales hole that Warren Buffett’s company Clayton Homes — the biggest mobile home manufacturer in the US — has been perfecting for years, paving the way for other heartless hopefuls to do the same.
Trailer parks are a big ol’ business
In 2015, more than 20m people lived in trailer parks — and if there’s whitespace in a market, the Oracle of Omaha’s going to find it.
Through Clayton Homes, Buffett has helped sell low-income Americans the dream of ownership since 2003 — and his investment company, Berkshire Hathaway, reaps the rewards (BH also owns the loan company that Clayton urges its buyers to go through).
But, according to The Seattle Times, buyers claim that Clayton relies on predatory sales practices, exorbitant fees, and interest rates that cement buyers into loans they can’t afford, in homes that are almost impossible to sell or refinance.
And now, people like Frank Rolfe exist…
The Oliver segment focused mainly on Frank Rolfe, whose “Mobile Home University” teaches new scumbags, young and old, how to rip people off once they sign on the mobile dotted line — just like Clayton Homes.
The difference is, Rolfe is unabashed. He details best practices for ripping off buyers to his students, likening a mobile home park to “a Waffle House where customers are chained to their booths” — practices that Clayton Homes and Warren Buffett both vehemently deny.
Shill-ionaire of the people
Clayton stayed profitable through the financial crisis. In 2015, Clayton grabbed a record $700m in earnings, while foreclosing on over 8k homes.
Buffett has long been viewed as a corporate hero. The more he complains about his secretary having to pay higher income tax than he does, the more people view Big B as some rich do-gooder.
But Clayton homes’ manipulative business model, which Buffett immediately saw dollar signs in, contradicts many of the ideas of fairness for which Buffett is known.