Blog # 223 Copyright 2012 9 December 2012
Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’
I.
I’m Happily Moving On with My Business Life!
II.
Symptoms of Troubled Land Lease Lifestyle Communities!
III.
Own LLLCommunities & Want to be Charter Member of MHCA?
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I.
I’m Happily Moving On with My Business Life!
It’s been two months and a day, since 8 October 2012, when I and another dues – paying member of a national manufactured housing advocacy body, were verbally assaulted without warning or cause, before 70 or so of our peers – including but a dozen bona fide owners of land lease lifestyle communities – at a national gathering of fellow manufactured housing industry businessmen and women.
Since then, the elected officers of the parent body hosting said meeting, have dodged responsibility for their colleague’s attack. They confirmed their position in a letter from their attorney, that arrived 30 November, the date I’d set as a personal deadline to get this sorry matter resolved, hopefully with an apology and copy of the script read to castigate the other dues – paying member and myself. Neither happened.
So, why am I not particularly upset, and happily moving on with my business life? As you likely know, I have opportunities and the wherewithal, as an author, to write and publish contemporary histories of the manufactured housing industry, and it’s sister segment, the land lease lifestyle community real estate asset class! *1 My day will surely come….
II.
Symptoms of Troubled Land Lease Lifestyle Communities!
Following data based on 200 rental homesites @ $200/month rent.*2
Yes, some of you reading this posting have seen these ten symptoms before. But since they continue to be one of the most frequently requested training aids, right there along side the…
• ‘Ah Ha! & Uh Oh! Worksheet’ calculates ‘affordable’ & ‘risky’ Price Points, using Area Median Income (‘AMI’) &/or Annual Gross Income (‘AGI’), for new & resale homes sited in LLLCommunities & on realty conveyed fee simple
• Official Industry Standard Chart of (operating) Accounts & the industry averages of Operating Expense Ratios (‘OER’s) for land lease lifestyle communities nationwide.
• Industry Briefing Sheet, contains core benchmark statistics for HUD – Code manufactured housing (e.g. shipment #s, $/sq.ft. costs), and land lease lifestyle community data from the current ALLEN REPORT, a.k.a. ‘Who’s Who Among LLLCommunity Portfolio Owners/operators Throughout North America!’
• Annual ALLEN REPORT, & 11 Signature Series Resource Documents (e.g. National Registry of Realty & Chattel Lenders; List of Freelance Consultants; and nine more…) available nowhere else in the MHIndustry or LLLCommunity asset class than from GFA Management, Inc., dba PMN Publishing.
All the above resources, but one, are available FREE for the asking, by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. The annual ALLEN REPORT is available ‘free’ to paid subscribers to the Allen Letter professional journal; or for $500.00 per copy; again, by phoning the above listed MHIndustry HOTLINE.
Back to the ‘Symptoms of Troubled Land Lease Lifestyle Communities’ It’s OK to ‘set your own standards’, or use ones provided in mathematical examples below. In each instance, however, think or say to oneself; This symptom, ____________, if ‘less or more’ than stated standard, indicates the subject property is ‘troubled’ in this particular area:
1. Physical Occupancy less than 93%, e.g. 186 occupied sites divided by 200 total rental homesites = 93% physical occupancy!
2. Economic Occupancy less than 85%, e.g. 170 ‘occupied & paid’ sites divided by 200 total rental homesites = 85% economic occupancy!
3. Bad debt more than 1% of adjusted gross rent! ‘Adjusted gross rent’ is total (monthly) rental income from a property, based on real or estimated physical occupancy percentage. So, if ‘adjusted gross rent’ is 200 sites X $200 X 95% (.95) occupancy = $38,000. X 1% (or .01) = $380.00. ‘maximum bad debt allowed’ benchmark.
4. Aged rent delinquencies more than 30 days! Some say 60+ days, however, when comparing ‘collection performance’ to conventional apartments, as it oft takes monthly rent from three homesites to equal rent volume from one apartment unit.
5. Aged accounts payable more than 30 days! Often beyond the control of on – site management, but a symptom, nonetheless, of a troubled property operation.
6. Operating cash flow goes negative in consecutive monthly periods! Similar to previous symptom, characterized by ‘holding checks’ till next month rent arrives.
7. Debt service coverage drops below 1.05x in consecutive months! This is margin by which a property’s ‘net operating income’ or NOI, exceeds or covers ‘debt service’ or mortgage payment, usually a10 – 20% margin, expressed as 1.1 – 1.2x
8. Moves by vendors & or suppliers to close property accounts, inhibiting work from being completed or needed supplies from being ordered and inventoried.
9. Poor curb appeal. Symptomatic of lax routine maintenance, deferred maintenance, lax rules enforcement, and marginal on – site property management.
10. Little to no qualified leasing or sales traffic, along with below average ‘conversion percentages’. Symptomatic of no marketing plan (Consider implementing the ‘5-Ps of Marketing’*3); ineffective advertising; lack of home sales & site leasing training; lax performance supervision (e.g. # of calls converted to visits, & # of visits converted to approved applications, & reporting of same); and, worsening reputation in the local housing market.
III.
Own LLLCommunities & Want to be Charter Member of MHCA?
The following two paragraphs are quoted from a letter I recently mailed to businessmen, still active in the manufactured housing industry and land lease lifestyle community asset class, who attended the historic, strategic planning meeting on 31 August 1993. This was precursor to formation of an Industry Steering Committee (‘ISC’), which in turn was predecessor to the Manufactured Housing Institute’s National Communities Council division – that debuted 1 January 1996.
“Since I’ve been unable to successfully market the ‘products & services’ created and nurtured, during the past 33 years, by the ‘for profit’ GFA Management, Inc., dba PMN Publishing firm, the matter comes down to two courses of action:
• I pull the plug on the ‘for profit’ firm, and walk away from the Research & Resource needs of hundreds of my fellow owners/operators of LLLCommunities nationwide and in Canada, and likely retire. Walking away is the least desirable alternative, but I would like to slow down and spend more time with Carolyn. What’s this mean (to you)? No more weekly blog postings and monthly newsletters, no more annual ALLEN REPORTs, no more annual Networking Roundtables or periodic FOCUS Groups, and no more monthly updates as to identities of real estate and chattel loan originators, freelance consultants, and much more. (Forgot to include: ‘no more exclusive data base, listing 500+/- LLLCommunity portfolio owners/operators in North America!’ & no more Manufactured Housing Manager® or MHM® professional property management training and certification program!’)
-OR-
• We take the above reference ‘for profit’ products and services, and roll them into a new, not for profit (501c3), national trade entity, to be the statistical Research & ‘comprehensive Resource servicing’ arm of the LLLCommunity property type, nationwide and in Canada. All the while, leaving Advocacy work for MHI’s NCC division. In effect, creating a second national MHIndustry (or third, considering MHARR) trade body, (something) we talked about avoiding, even at the 31 August 1993 meeting’ 19 ½ years ago!
So, where are we today? By years end, a call will likely go out to land lease lifestyle community owners/operators, who’ve already expressed their desire to have a direct roll in perpetuating the statistical Research & ‘comprehensive Resource servicing’ they’ve enjoyed these past three decades! Specifically, they’ll be given the opportunity to join and actively support the new, national, not for profit Manufactured Home Communities Association of North America®, or MHCA®, as a dues – paying charter member. Then participation will be opened up to all LLLCommunity owners/operators nationwide.
Know what? You don’t have to wait to get involved! Let me know NOW of your interest, via letter (GFA c/o Box # 47024, Indpls, IN. 46247), the above MHIndustry HOTLINE, or email: gfa7156@aol.com
Again, the new MHCA is envisioned as being the statistical Research (Until the Center for Manufactured Housing Studies, or CMHS, is fully operational) and ‘comprehensive Research servicing’ entity, going forward, to serve land lease lifestyle community owners/operators throughout North America; leaving the Advocacy interests, of the realty asset class, the sole focus of MHI’s National Communities Council division.
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End Notes.
1. Read Development, Marketing & Operation of Manufactured Home Communities, Allen, Alley & Hicks, J. Wiley & Sons, NY, NY, 1994. See appendices B, C, and especially G.. Also, chapter # 2 in, Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing, George Allen, CPM® & MHM®, PMN Publishing, Indianapolis, IN., 2011.
2. Adapted from 6/2007 issue of Affordable Housing Finance magazine
3. 5 – Ps of Marketing: Product (or Service), Price structure, Place (or location), Promotion, & People! Source. Landlease Community Management, George Allen, CPM® & MHM®, PMN Publishing, Indianapolis, IN. 2008; 6th edition, pp. 66 & 67. Also text for Manufactured Housing Manager® or MHM® professional property management training and certification program, via PMN Publishing.
George Allen, CPM®Emeritus, MHM®Master
Box # 47024, Indpls, IN. 46247
(317) 346-7156