The Dirt Lease staff recently conducted a team-building retreat in New Mexico. When the doors to the rental car shuttle in Albuquerque airport closed and the chirpy voice intoned, ‘Welcome to New Mexico – Land of Enchantment!’, a wizened airport worker seated across from the staff said, ‘Land of Entrapment.’
Here is what we have learned in the Land of Entrapment:
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You Can Run a Mobile Home Park as a Digital Nomad – Almost.
In the Uber ride to Laguardia, our CFO checked Waterscope and noticed that Water Used in the park in northern New York had increased significantly more than Water Consumed during the past twenty-four hours. He called Mike, the manager at that park, to tell him that there was a leak. By the time the plane landed in Dallas, Mike told him that he had found the leak and had called Safe Dig. When the CFO landed in Albuquerque, Mike had emailed the CFO an estimate for the excavation and repair. While the CFO was arguing with the rental car company, he venmoed Mike the first half of the payment and recorded the payment in Rent Manager and on the payroll app.
Don’t get me started about car rental companies.
Driving from Santa Fe to Roswell, the staff ran into heavy snow conditions. As the convoy passed Vaughn, precipitation decreased, the ground got flatter, and the skies cleared up and got bigger. When the group came within cell reach of Roswell, the phone rang. A rather skittish buyer who had expressed an interest in purchasing a home that an old lady had died in in the central New York park called to say that he would like to pull the trigger. The Chief Marketing Officer told the buyer that he would write up a draft bill of sale and lot lease, which he would send to the buyer that day, and that he would send a PDF of a notarized executed version of the same document to Dee Dee, the manager of that park, as soon as he could find a notary. The first UPS store the team pulled into offered print, notary and scan services under one roof. The notarized closing documents were sent to Dee Dee within an hour of the CMO’s receipt of the call from the customer.
The first mobile home park the founder of Dirtlease looked at was a twenty-lotter in Fort Plain, NY. The real estate agent who tried to sell it told the Founder that, to run a mobile home park, all you need is a cell phone and a checkbook. That is not quite right. The ninety or so days after you first buy a park, you need to put processes in place. That is a fire-hose quantity of work, some of which has to be done on-site. If the park is a turn-around project, you might need to be present for twelve to eighteen months. Some younger park owners move into their parks when they buy them. Two months of the year – April, when tax returns are due, and September, when leases go out – are scut-bombs. But – once processes are in place, you can remove yourself physically from the project from time to time. You need good personnel on-site (Dirtlease is truly blessed to have Mike and Dee Dee), and you need to keep on top of things online, but it is OK to give the parks some slack.
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Park Owners Are not the Most Evil Business People in the World.
Not by a long shot. Nor are bail bondsmen, payday lenders, loan sharks, mob muscle, corporate lawyers or pimps. The worst – the people whose brains will be gnawed on by others in the afterlife – are car rental agencies. If you work in a car rental agency, please, please tell your children you are a sex worker. Their classmates will giggle behind their backs, but they will not stuff them into lockers. If you work at Thrifty Car Rental, sterilize yourself and put existing children up for adoption.
When the Dirtlease COO made rental car arrangements for the corporate retreat, he did what he always does; he booked them on Hotwire. When the reservation from Thrifty Car Rental popped up, the text accompanying it specified that it was (i) for a ‘special’ vehicle and (ii) nonrefundable. When the COO stepped up to the Thrifty Car Rental counter, he was told that the ‘special’ vehicle was an electric vehicle.
Now – we like EVs at Dirtlease. A solid state battery engine is a simpler, more efficient way to power a car than a Rube Goldberg contraption that uses explosions, expanding gasses, pistons, crankshafts, exhaust, lubrication and motion that has to be converted from up-and-down to circular to turn wheels. Our use of fossil fuels is destroying the planet. You can charge an EV from clean, renewable sources. EVs drive better than internal combustion engines, because they are faster, more responsive, quieter and smoother. Until he was censured by Human Resources, the Creative Director at Dirtlease used to say that driving an EV is like being with a black woman –do it once, and there is no going back. We like EVs so much that we keep a Chevy Bolt on the Dirtlease premises.
But – an EV is not suitable for long drives in rural New Mexico during the winter. Even in the summer, the range is too short to get from Taos to Roswell on one charge. Outside of Santa Fe and Albuquerque, charging stations are scarce. Charging stations in areas where they get little use are often out of order.
When the COO asked the desk agent for Thrifty Car Rental if he could substitute a conventional vehicle for the electric vehicle, he was told that he could ‘upgrade’ to a normal vehicle. The desk agent for Thrifty Car Rental told the COO that the upgrade would triple the price of the rental and that the Dirtlease team would have to wait two hours for an available vehicle.
The COO said, ‘You gotta be shitting me, man’.
‘No, sir’, the agent for Thrifty Car Rental said. ‘That is the policy with managers’ special reservations, like yours’.
The COO pulled out his phone. First, he paid Mike for the first half of the water leak repair and recorded the payment in Rent Manager. Then, he went to Hotwire. Another rental company, Ace Car Rental, had a conventional car available for the same rate as that at which the initial reservation had been made.
‘Can I cancel my contract?’, the COO asked the desk agent for Thrifty Car Rental.
‘Yes, sir.’
‘Can I get a refund?’
‘I can cancel the contract, sir.’
‘Will I get a refund?’
‘I can’t tell you that, sir. You will have to call billing to find that out.’
‘What’s their number?’
The desk agent from Thrifty Car Rental pointed at an eight hundred number on a slip of paper. The COO pulled out his phone again and left it on speaker.
A well-dressed man in ski gear came up to the counter and said, ‘I reserved an all-wheel drive vehicle. Is there any reason why you can’t give me one?’ The desk agent from Thrifty Car Rental said, ‘We do not have any all-wheel drive vehicles available now. We only have two-wheel drive cars, but you will have to wait an hour to pick one up. We are short vehicles.’
The COO looked at the man in ski gear and said, ‘You can have an EV, if you want. They are resorting to fraud to get them off the lot.’
The man in ski gear looked at the COO and asked, ‘Who are you?’
‘A pissed off customer, like you.’
The man in ski gear looked at the desk agent from Thrifty Car Rental and said, ‘I reserved an all-wheel drive car. Can I take what you have now, drive it to Santa Fe and swap it for an all-wheeler tomorrow, when I head to the mountains?’ The desk agent from Thrifty Car Rental said, ‘I can’t do that, sir.’
The COO said to the man in ski gear, ‘You have my commiserations’
‘I guess I just have to take to Twitter’, the man in ski gear said.
‘Be nasty’, the COO told him. ‘Go with God.’
After a twenty-minute hold, Thrifty Car Rental corporate told the COO that, since he had made the reservation through Hotwire, he would have to contact Hotwire. When he called Hotwire, Hotwire informed him that, since the reservation was non-refundable, they could not refund it.
‘Does that policy stand even in cases when the reservation was obtained using fraud?’, the COO asked the Hotwire representative.
‘Excuse me?’, the representative asked.
‘The reservation was fraudulently obtained, because you did not inform the customer of material conditions that a reasonable customer would rely on when you advertised it. Can you make an exception to the no-refund policy in cases of fraud?’
‘No, sir.’
‘The policy is to not make an exception to the general policy in cases of fraud?’
‘That’s correct, sir.’
‘What’s the weather like in the Philippines? It is cold and dry here.’
‘Excuse me, sir?’
‘Thank you for your time.’
In the event, the COO cancelled the contract with Thrifty Car Rental and rented a car from Ace Car rental. Thrifty Car Rental collected ten days’ rental fee for a car that remained on their lot. If they managed to rent it to another sucker for all or a portion of the ten-day period for which Dirtlease rented it, that means that they will get paid twice for renting one car, while Dirtlease paid to rent two cars but was only able to use one. If the second sucker pulled out of the contract when he realized that he, also, was defrauded, Thrifty Car Rental will collect three rental fees for one car over one time-period. The business model has unlimited up-side, because it allows for the same car to be rented by infinitely many customers simultaneously. The doctrine of mitigation does not apply to the car rental business.[1]
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People Sell Oxygen
Santa Fe is seven thousand feet above sea level. The thinness of the air at that level is noticeable. We arrived late in the afternoon on a Thursday. After we checked in, the COO stopped whingeing about the rental car because he was out of breath. The head of Human Resources found that, when she climbed a flight of stairs carrying her luggage, she had to stop and hyperventilate. When we went for dinner that night, the Director of Strategy, who is a lush and usually drinks like a lush, was woozy after one beer. When we woke up the next morning, the Founder was able to do a hundred burpees in ten minutes, but he felt like he was drowning.
There is a spa in downtown Santa Fe that sells oxygen hits. At the oxygen bar, fifteen minutes of sea-level-concentration oxygen costs $18. Twenty minutes goes for $23, half an hour goes for $33. You can also rent tanks for longer use.
One of the reasons why the manufactured housing industry gets squeezed by regulators is because everyone hates landlords. We hate landlords because they sell us something we need. The basic conundrum of rental real estate is that a dwelling unit is two different things to the person who owns it and the person who lives in it. To a renter, a dwelling unit is home, the place where, when they have to go there, they have to take them in. To the owner of the unit, it is an entry on a balance sheet. We can attenuate the suffering from this tension – we can institute rental insurance, a universal basic income, alternative dispute resolution mechanisms – but we can’t eliminate it. Landlords provide a service for which there is an inelastic demand. That fact that landlords control access to something that people need makes people feel powerless. That pisses people off.
Kind of like selling oxygen.
Landlords are not the only people who sell services for which there is an inelastic demand. Doctors sell access to life. Lawyers sell access to justice. Grocers sell access to food. Bankers sell access to liquidity. Colleges sell access to the middle class. For reasons the Dirtlease staff do not fully understand, property owners get it in the neck in a way that other providers of inelastic services do not. Readers who understand the reason for this are encouraged to write in.[2]
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A Trust Fall is a Group Activity
Every corporate retreat culminates with a trust fall. In our case, we selected some land on a ranch near Roswell as the location for that exercise. When the time came, most of the C-suite was busy doing other things. The CFO was paying protection money. HR was re-writing a policy to clarify that ‘harass’ is one word, not two. The COO was tweeting about car rental agencies. The CMO was selling a bridge. So the Founder performed the trust fall by himself. He made sure to fall backwards towards a homunculus with gray skin, no hair, four fingers, a bulging cranium and large eyes who stood in front of another homunculus who in turn stood in front of yet another homunculus, but they did not catch him. Then again, you can never trust a homunculus.
[1] The doctrine of mitigation is a common-law doctrine that says that, if a tenant’s lease is cancelled early, the property owner can collect rent through the end of the term of the lease, but is under a duty to mitigate, or lease the property to another tenant, and to release the first tenant from the obligation to pay rent for the portion of the remainder of the first tenant’s lease during which the second tenant pays. In New York State, it was codified by a provision of the 2019 Nakba law. That is a section of the Nakba law that is not odious.
Both the desk agent at Thrifty Car Rental and the desk agent at Ace offered the Dirtlease COO something called ‘loss of use insurance’. This is insurance that covers the loss of income to a car rental company if a driver damages one of their cars severely enough to put it out of commission for a period of time. The primary job of car rental agents is to up-sell customers. Most vehicular insurance policies cover rental cars. For example, the insurance policy that covers the Chevy Bolt that is owned by Dirtlease also covers cars rented by the Dirtlease staff. Because of this, if Dirtlease were to buy insurance from a rental car company, it would be spending money for a service that it has already paid for. Nevertheless, car rental companies always try to sell rental-only insurance when to customers when they pick up their vehicle. Customers have caught on to this and now tend to decline redundant coverage. To fill this void, car rental companies now offer loss of use insurance. Loss of use insurance costs an arm and a leg. It is expensive enough to distort the concept of risk shifting and risk spreading. If you were to rent a car twice and decline loss of use insurance in both instances, you would come out ahead if you damaged the second car badly enough to put it in the shop.
In the case of an ordinary industry, an offer of a product like loss of use insurance would be egregious enough for it to be written about in the main text. In the case of the car rental industry, it only merits a footnote.
[2] One theory which has been batted around the Dirtlease break-room is that the inelastic service that property owners provide is both more tangible and more salient than the inelastic service that, say, grocers or doctors provide. Another is that shelter is more closely linked to early memories of attachment and abandonment for most people than health or justice. This is a problem, because psychological prejudices, although they can be exploited by demagogues, should not dictate policy decisions.