RENTIER CAPITALI$M
Corporate landlords are snatching up mobile home parks and jacking up the rent — here’s why such cheap properties are so appealing to wealthy investors

Vishesh Raisinghani
Mon, January 9, 2023

WHEN THEY GET DESTROYED BY TORNADOES

THE RENTIERS COLLECT ON INSURANCE

Corporate landlords are snatching up mobile home parks and jacking up the rent — 

The hunt for yield has pushed private equity firms and professional investors into new segments of the real estate market.

In recent years, sophisticated investors have snapped up multi-family units and single-family homes. Now, corporate landlords are targeting the most cost-effective segment of the real estate market: mobile home parks.

Americans are paying nearly 40% more for home insurance compared to 12 years ago — here's how to spend less on peace of mind

'Hold onto your money': Jeff Bezos says you might want to rethink buying a 'new automobile, refrigerator, or whatever' — here are 3 better recession-proof buys

The most affordable U.S. housing option

Manufactured homes or mobile homes are considered the most affordable non-subsidized housing option in America. That’s because the owners own only the prefabricated unit and not the land under the home. The land is usually leased from the landlord of a trailer park.

The average monthly rent for a mobile home in 2021 was $593. That’s significantly lower than the average one-bedroom condo rental rate of $1,450. The mobile park rental also often includes utilities and insurance.

Rents typically rise 4% to 6% annually, and renters have the flexibility to move their housing unit to another park. These factors make the manufactured home highly attractive to low-income households.

As of 2020, nearly 22 million Americans lived in mobile homes. That’s 6.7% of the total population, or about one in 15 people across the country.

However, the economic inefficiencies that make these manufactured homes affordable also make them attractive to professional investors.

Investing in mobile home parks

Factors such as below-market rents and disrepair make mobile home parks attractive for investors seeking to add value. The typical mobile home park lot costs $10,000, which means 80 lots would be worth $800,000 on average.

Put simply, the entry price for these parks is much lower than multi-family apartments and condo buildings across the country.

Professional investors can also raise rents significantly to improve the valuation of the property. Attracting tenants with higher incomes or improving the park’s amenities and infrastructure are other value-add strategies that make this asset class appealing.

The fact that moving a typical mobile home costs between $3,000 to $10,000 also means that most tenants are unable to afford the move. This gives landlords immense pricing power.

Meanwhile, the yield is much higher. The capitalization rate (the ratio of net operating income to market price) could be as high as 9%, according to real estate partners Dave Reynolds and Frank Rolfe, who together are the fifth-largest owner of mobile home parks in the U.S.

The largest mobile park landlord is real estate veteran Sam Zell. Zell’s Equity LifeStyle Properties (ELS) owns 165,000 units across the country, and the asset is a key element of his $5.2 billion fortune.

In recent years, larger investors such as Singapore’s sovereign wealth fund GIC and private equity firms such as The Carlyle Group, Brookfield, Blackstone and Apollo have also added exposure to this asset class.

Even Warren Buffett is involved. His firm’s subsidiary, Clayton Homes, is the largest manufacturer of mobile homes in the U.S., and also operates two of the biggest mobile home lenders, 21st Mortgage Corp. and Vanderbilt Mortgage.

You can invest, too

Retail investors looking for exposure to mobile home parks have plenty of options.

Acquiring a park is, perhaps, the most straightforward way to access this asset class. However, publicly listed stocks and real estate investment trusts offer exposure, too.

Sam Zell’s Equity LifeStyle Properties is listed on the New York Stock Exchange under the ticker ELS. Sun Communities Inc. (SUI) owns 146,000 units across the U.S. and some in Canada, while Legacy Housing Corp. (LEGH) builds, sells and finances manufactured homes.

Plus, mobile homes aren't the only accessible option for someone eager to get into commercial real estate.

With the help of new platforms, retail investors — not just the ultra rich — can buy shares of institutional-quality properties.

Prime commercial real estate has outperformed the S&P 500 over a 25-year period. Now, with a single investment, investors can own properties leased by brands like CVS, Kroger and Walmart — and collect stable grocery store-anchored income on a quarterly basis.

https://www.versobooks.com/books/4030-rentier-capitalism

Rentier Capitalism - Verso Books 

Brett Christophers styles this as “rentier capitalism,” in which ownership of key types of scarce assets—land, intellectual property, natural resources, ...

https://www.youtube.com/watch?v=4mASPcIZvQg

How Is Rentier Capitalism Aggravating Inequality? - YouTube 

Jan 23, 2018 ... Is the financialized economy betraying those with "real" jobs? Get ahead of the trends shaping "rentier" capitalism and learn about how it ...

http://www.grahamscambler.com/an-ideal-type-of-rentier-capitalism

An Ideal Type of 'Rentier Capitalism' - Graham Scambler 

May 15, 2021 ... ... new book Rentier Capitalism: Who Owns the Economy and Who Pays for It?, which incidentally I highly recommend. I'm not an economist, ...

https://journals.sagepub.com/doi/full/10.1177/0308518X211062233

A critical contribution to Brett Christophers' Rentier Capitalism 

Dec 6, 2021 ... Indeed, Christophers' analysis of rentier capitalism is largely confined to the ... De Angelis M (2001) Marx and primitive accumulation: The ...

https://progressiveeconomyforum.com/glossary/rentier-capitalism

Rentier Capitalism • The Progressive Economy Forum 

Rentier capitalism is a term currently used to describe the belief in economic practices of monopolization of access to any kind of property (physical, ...

https://pop-umbrella.s3.amazonaws.com/uploads/99e023db-9f48-4a15-aa48-3db6e480b1cb_65e90c9c-b8f1-4102-a3cc-5ca096087a54_DebtBriefOne_26-11-2019_5_.pdf

Rentier capitalism and debt - Amazon AWS 

Rentier capitalism and debt: why workers should be concerned ... form of rentier capitalism. This is a sys- ... Dao, M. C., Das, M., Koczan, Z., & Lian, W.

https://www.theguardian.com/commentisfree/2020/aug/12/ppe-britain-rentier-capitalism-assets-uk-economy

The PPE debacle shows what Britain is built on: rentier capitalism 

Aug 12, 2020 ... Rentier capitalism is an economic order organised around income-generating assets, in which overall incomes are dominated by rents and economic ...

https://www.theguardian.com/commentisfree/2022/may/30/age-of-inflation-economy-rentier-capitalism

This age of inflation reveals the sickness ailing Britain's economy 

May 30, 2022 ... In his book Rentier Capitalism, the social and economic geographer Brett Christophers has shown that the central effect of Thatcherite ...

https://www.moralmarkets.org/book/rentier-capitalism-who-owns-the-economy-and-who-pays-for-it-2020

Rentier Capitalism; Who Owns the Economy, and Who Pays for It ... 

Nov 24, 2020 ... Brett Christophers styles this as 'rentier capitalism', ... Assets can be intangible as well as tangible of course, but I'm not entirely ...

IN 2017 WITH A MAJORITY IN BOTH HOUSES

Radical Republicans ramrodded a law through Congress — and the rich made out like bandits

By David Cay Johnston, DC Report @ Raw Story - Commentary

Published on September 8, 2020
President Donald J. Trump celebrates the passage of the Tax Cuts Act with Vice President Mike Pence, Senate Majority Leader Mitch McConnell, and Speaker of the House Paul Ryan | December 20, 2017 (Official White House Photo by Joyce N. Boghosian)


The first data showing how all Americans are faring under Donald Trump reveal the poor and working classes sinking slightly, the middle class treading water, the upper-middle class growing and the richest, well, luxuriating in rising rivers of greenbacks.

More than half of Americans had to make ends meet in 2018 on less money than in 2016, my analysis of new income and tax data shows.

The nearly 87 million taxpayers making less than $50,000 had to get by in 2018 on $307 less per household than in 2016, the year before Trump took office, I find.

That 57% of American households were better off under Obama contradicts Trump’s often-repeated claim he created the best economy ever until the pandemic.

Trump policies help the prosperous and rich, including half a million rich people who are not even filing tax returns yet are not being pursued as tax cheats.


The worsened economic situation for more than half of Americans contradicts Trump’s frequent claims that he is the champion of the “forgotten man” and his vow that “every decision” on taxes “will be made to benefit American workers and American families.”

The figures in this story come from my annual analysis of IRS data known as Table 1.4. The income figures are pre-tax money that must be reported on tax returns. I adjusted the 2016 data to reflect inflation of 4.1% between 2016 and 2018 (slightly more than 2% a year).

This is the first data on the first full year when Trump was president. It also is the first year of the Radical Republican tax system overhaul, passed in December 2017. The Trump tax law, the most significant tax policy change since 1986, was passed without a single public hearing or a single Democratic vote.

High Income Households Multiply

Trump policies overwhelmingly favor the top 7% of Americans. And, oh, do they benefit!

Prosperous and rich people, the data reveal, include half a million who are not even filing tax returns. Yet they are not being pursued as tax cheats, a separate report shows.

The number of households enjoying incomes of $200,000 or more soared by more than 20%. The number of taxpayers making $10 million or more soared 37% to a record 22,112 households.

Who Saves on Taxes

The Trump/Republican tax savings were highly concentrated up the income ladder with hardly any tax savings going to the working poor and only a smidgen to the middle class.

Those making $50,000 to $100,000 for example, paid just three-fourths of 1 percentage point less of their incomes to our federal government. People making $2 million to $2.5 million saw their effective tax rate fall by about three times that much.

Now let’s compare two groups, those making $50,000 to $100,000 and those declaring $500,000 to $1 million. The second group averaged nine times as much income as the first group in 2018.

Under the Trump tax law, the first group’s annual income taxes declined on average by $143, while the second group’s tax reduction averaged $17,800.

Put another way, a group that made nine times as much money enjoyed about 125 times as much in income tax savings.

This disparity helps explain Trump’s support among money-conscious high-income Americans. But given the tiny tax benefits for most Americans, along with cuts in government services, it is surprising Trump enjoys significant support among people making less than $200,000.

But realize none of the biggest news organizations do the kind of analysis you are reading, at least not since I left The New York Times a dozen years ago. Instead, the major news organizations quote Trump’s claims and others’ challenges without citing details.
Understating Incomes

The figures I cite here understate actual incomes at the top for two reasons. One is that loopholes and Congressional favors allow many rich and superrich Americans to report much less income than they actually enjoy. Often they get to defer for years or decades reporting income earned today.

Second, with Trump’s support Congress has cut IRS staffing so deeply that the service cannot even pursue growing armies of rich people who have stopped filing tax returns. The sharp decline in IRS auditing means tax cheating—always a low-risk crime—has become much less risky.

Trump Ignores Rich Tax Cheats

In the three years ending in 2016, the IRS identified 879,415 high-income Americans who did not even bother to file. These tax cheats owed an estimated $45.7 billion in taxes, the treasury inspector general for Tax Administration reported May 29.

Under Trump more than half a million cases of high-income Americans who didn’t file a tax return “will likely not be pursued,” the inspector general wrote.

One of the Koch brothers was under IRS criminal investigation until Trump assumed office and the service abruptly dropped the case. DCReport’s five-part series last year showed, from a thousand pages of documents, that William Ingraham Koch, who lives one door away from Mar-a-Lago, is collecting more than $100 million a year without paying income taxes.

Borrowing to Help the Rich

Trump’s tax law will require at least $1.5 trillion in added federal debt because it falls far short of paying for itself through increased economic growth even without the pandemic. Most of the tax savings were showered on rich Americans and the corporations they control. Most of the negative effects will fall on the middle class and poor Americans in the form of Trump’s efforts to reduce government services.

The 2017 income tax law caused only a slight decline in the share of adjusted gross income that Americans paid to Uncle Sam, known as the effective tax rate. Adjusted gross income is the last line on the front page of your tax return and is in the measure used in my analysis.

The overall effective tax rate slipped from 14.7% under Obama to 14.2% under Trump.
Curious Anomaly

In what might seem at first blush a curious development, Americans making more than $10 million received a below-average cut in their effective tax rate. The effective tax rate for these 22,000 households declined by less than half a percent.

THE 1% ARE THE RENTIER CLASS
The reason for that smaller-than-average decline is that these super-rich Americans depend less on paychecks and much more on capital gains and dividends that have long been taxed at lower rates than paycheck earnings.

The new tax data also show a sharp shift away from income from work and toward income from investments, a trend which bodes poorly for working people but very nicely for those who control businesses, invest in stocks and have other sources of income from capital.

Overall the share of American income from wages and salaries fell significantly, from almost 71% in 2016 to less than 68% in 2018.

Meanwhile, if you look just at the slice of the American income pie derived from business ownership and investments, it expanded by nearly one-tenth in two years. Income from such investments is highly concentrated among the richest Americans.
Infuriating Fact

There’s one more enlightening and perhaps infuriating detail I sussed from the IRS data

The number of households making $1 million or more but paying no income taxes soared 41% under the new Trump tax law. Under Obama, there were just 394 such households. With Trump, this grew to 556 households making on average $3.5 million without contributing one cent to our government.

Again, Trump seems to have forgotten all about the Forgotten Man. But he’s busy doing all he can to help the rich, then stick you with their tax bills.

Rentier capitalism - Wikipedia

en.wikipedia.org › wiki › Rentier_capitalism

Rentier capitalism is a term currently used to describe the belief in economic practices of ... Hence the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by 'clipping coupons' [in the sense of collecting interest ...

‎Usage by Marxists · ‎Current usage

Class, Rentier | Encyclopedia.com

www.encyclopedia.com › applied-and-social-sciences-magazines › class-re...

Aug 6, 2020 - BIBLIOGRAPHY. Rentier is a class of people who derive their incomes from financial titles to property. Though the term makes an analogy with the old rent-earning class of great landowners, rentiers are characterized by their more distant relationship to the property they own.

Rentier Class financial definition of Rentier Class

financial-dictionary.thefreedictionary.com › Rentier+Class

For example, a landlord who agrees to rent out a house for a set amount each month for a year is a member of the rentier class. So is a pensioner living on a ...

Dilemmas of the Rentier Class - The Baffler

thebaffler.com › salvos › dilemmas-of-the-rentier-class

But of course at the other end of the socioeconomic spectrum, we have lavished all sorts of tax breaks—such as cuts in capital gains and estate taxes—on the ...

Mainstream Economics Has Become a Celebration of the ...

evonomics.com › mainstream-economics-become-celebration-wealthy-rent...

Mainstream Economics Has Become a Celebration of the Wealthy Rentier Class. The One Percent have found a pressing need for the services of mainstream ...

Rentier capitalism does not come with a reset button

www.newstatesman.com › politics › economy › 2019/09 › rentier-capitalis...

Sep 20, 2019 - The rentier class is not an aberration but a common recurrence, one which tends to accompany periods of protracted economic decline.

What's Wrong with Rent and the Rentier? | Section on Marxist ...

marxistsociology.org › Blog article

Dec 19, 2019 - It is of course true that monopoly power is not unique to rentierism. It frequently characterizes other forms of capitalist enterprise as well.

What is Rentier Capitalism? - The Prindle Post

www.prindlepost.org › Ethics News › Business

Mar 12, 2019 - Economic rent is the unearned value within a profit. The term “rentier” refers to someone who obtains private capture of this unearned value. In ...

CHINA

The Fall and Rise of the Rentier Class

Wealth will accumulate around rentiers at an increased rate, and wealth inequality will become a potential catalyst of social instability.


Wu Xiaobo Dec 18, 2016 

Wu XiaoboWriter

Wu Xiaobo is a financial writer and a publisher. 

He is best known for his book, ‘Storming 30 Years: 1978—2008 Chinese Enterprises.’


“Are you one of this fund’s LPs?”

An investors’ reception at No. 27, the Bund, Shanghai. As attendees murmur politely to one another under the clink of glasses and raucous toasts, this seems the most natural of questions.

No. 27 is located in the center of the Bund, Shanghai’s waterfront promenade. From here, you can take in the Oriental Pearl Tower, the Citigroup Tower, and the Shanghai Tower in a single glance. Originally the headquarters of British trading company Jardine Matheson, the building was reclaimed by the Chinese government after the Communist Party took power in 1949. Today, it is the most prominent of the Bund’s many fashionable landmarks, housing the largest wine cellar in Asia, and the House of Roosevelt that stands on the site frequently hosts conferences and other events. Of these, the most common are LP receptions.

LP, or “limited partner,” refers to a limited liability partner of a venture capital firm. LPs invest in business projects but are not responsible for the intricacies of management. In the parlance of political economists, this group is referred to as the “rentier class” — people in possession of real estate, stocks, securities, or bills, and who, simply through the accumulation of interest, dividends, and rent, can generate a stable or even expanding stream of revenue.

If we were to divide a person’s income into two categories — income from wages and income from assets — then a proportional increase in the latter would signify an increase in securitization. If all of a person’s income is derived from assets, then they have escaped the confines of employment and become a rentier in toto. Traditionally, socialist countries have held rentiers in very poor regard, frequently equating them to “parasites.”

Nikolai Bukharin, an early 20th century Russian political theorist, even wrote a book on this topic, entitled “Economic Theory of the Leisure Class,” in which he expounded a Marxist criticism of rentiers, who formed the so-called leisure class of his treatise. Bukharin believed that rentiers were detached from production, making them the part of the bourgeoisie furthest removed from the proletariat. Their life’s goal was to use securities and underlying financial capital to extract surplus value from capitalists working in the sphere of production. As a result, these capitalists diverted some of the surplus value produced by workers into financial capital. Therefore, according to Bukharin, the existence of the rentier class demonstrated capitalism’s waning entrepreneurial spirit and was a clear sign of capitalism’s decline.

The last group of rentiers in Chinese society disappeared around 1966, before the start of the reform and opening-up period. In September 1954, China’s State Council passed its “Provisional Regulations Regarding the Joint Public-Private Management of Industrial Enterprises,” which declared that “enterprises under joint public-private management will be publicly led; the relevant government administrations will send representatives to oversee management in cooperation with private representatives.”

The regulations meant that private owners had essentially lost the ability to manage their own businesses. This corresponded with the State Council’s release of a new profit distribution program, in which dividends to investors — including shareholders’ stock dividends and bonuses for managers, factory directors, and members of the board — only made up around 25 percent, while the majority of the company’s profits went to the government and workers.

Data from the Chinese Academy of Social Sciences’ Institute of Economics show that at the time, the country contained 710,000 private business owners who were employed but received fixed-interest payments, and 100,000 “economic agents” who lived off on interest alone. These 810,000 people were the remnants of the rentier class. Once the Cultural Revolution broke out in 1966, their income sources dried up entirely, and the entire country was purged of private capital.

Wealth will accumulate around rentiers at an increased rate, and wealth inequality will become a potential catalyst of social instability.
- Wu Xiaobo

The re-emergence of rentiers probably began sometime in the latter half of the 1990s. A number of families were able to increase their asset-based income by investing in the stock market and real estate. Large-scale emergence of rentiers, however, is undoubtedly a phenomenon of the last five years, and there are several reasons for this.

First, China’s financial market entered an era of securitization. The growing popularity of trusts, funds, bonds, and equities as avenues for investment, along with the rising prevalence of business mergers and acquisitions, has allowed the realm of personal finance to massively expand its borders; concurrently, securitization has vastly increased the number of profit opportunities available. It was this foundation that heralded the rise of the true professional investor.

Second, many businessmen born in the ’50s, ’60, and ’70s have found themselves caught in a production bottleneck, as their firms require industrial upgrading, suffer from a lack of innovation, and experience competition from younger entrepreneurs. This has led many older businessmen to free up enormous sums of money and try to break into the investment and financial markets instead. This group, in turn, has become a formidable investment force that is completely distinct from the stock market’s retail investors.

Third, as the middle class has expanded to number in the hundreds of millions, high-net-worth individuals at the top of the pyramid have become increasingly fond of investing in securities. Due to the profit-seeking nature of capitalism, these individuals tend to have much easier access to quality assets, further stimulating their enthusiasm for investment.

According to data recently released by Zero2IPO Research, a renowned research organization focusing on venture capital and private equity trends in the greater China region, the rentier class made 698 investments in the third quarter of 2016. Figures were released for 631 of the investments, involving a total sum of 21.76 billion yuan ($313 million). Hovering around these financial investment organizations is China’s up-and-coming rentier class.

In early June 2016, the Boston Consulting Group’s Global Wealth Report found that China’s millionaires — people with investable assets (cash, stocks, and debt securities) not including real estate valued in excess of $1 million — consisted of approximately 2.1 million families. This is the second largest group of rentiers in the world today.

The effects of a growing rentier class on a country’s economy are topics of heated debate. In 2013, French economist Thomas Piketty rocked the world with the release of “Capital in the Twenty-First Century,” his award-winning book. Piketty discovered that throughout the history of human wealth distribution, the powerful forces driving apart capital and labor have never truly diminished. In fact, apart from during wartime, most developed nations show a steady increase in inequality, and this rate of increase is accelerating.

Piketty has also studied China specifically. His findings show that as an emerging world power, China’s economic growth over the past 30 years indicates a clear bias toward those in the top 10 percent of income-earners. This means that return on capital has greatly exceeded economic growth, and also points to a gradual expansion of the rentier class.

Looking on the bright side of things, a massive rentier class will give rise to a new business philosophy. Rentiers will find more enjoyment in “intellectual consumption,” promoting literature, sports, tourism, and other industries. Well-educated rentiers will bring about a brand-new aesthetic of consumption, and more and more people will devote themselves to social charity and public welfare projects. Because of this, China will leave behind the barbaric age of unfettered materialism, and its abundance of human potential will be put to new use.

On the other hand, wealth will accumulate around rentiers at an increased rate. Particularly during periods of long-term quantitative easing, wealth inequality will become a potential catalyst of social instability. At the same time, social classes will become more and more sclerotic.

Above the fireplace in the House of Roosevelt’s visiting room hangs an enormous oil painting of the former American president from whom the space takes its name. Off to one side, the iconic red pop-art portrait of Che Guevara seems to float into view, his face expressionless, his eyes gazing into the distance.

From the point of view of a radical socialist revolutionary, Bukharin’s ideas — that all rentiers are immoral, and that only violence can restore equality — have a certain allure. Yet from the point of view of a reformer, Roosevelt’s philosophy seems to be the true crowd-pleaser. As he saw it, creating a sound social security net and instituting tax reforms to facilitate redistribution of wealth were both methods for eliminating inequality.

Since the start of the 21st century, Western economists have returned to the question they faced more than a hundred years ago. They’ve begun to seriously consider the topic of fairness in wealth distribution, and vast numbers of influential scholars have expressed their views on the subject. China, meanwhile, will need to face up to this difficult question within the next decade. Growing prosperity cannot cover up emerging conflict, and instituting reform is a race against time.

Looking out from the full-length windows of No. 27, the resplendent facades of the Pudong financial district loom large opposite the Bund, testaments to the spoils of affluence and excess. They don’t look real, and neither do they reflect the real status of the Chinese economy. Like the champagne-filled glasses at the LP’s reception, the markets are overflowing with kaleidoscopic, scintillating bubbles.

(Header image: Visitors look at a monitor displaying an image of the Shanghai World Financial Center in Shanghai, Feb. 2, 2013. Tomohiro Ohsumi/Bloomberg via Getty Images/VCG)

We are a team of writers, editors, and researchers from within China and abroad. We belong to Shanghai United Media Group, and share our offices with our sister publication, The Paper. https://www.sixthtone.com