George Allen / EducateMHC Blog Mobile Home & Land Lease Community Advocate & Expert

December 27, 2019

Re-Introducing The Allen Confidential publication

Filed under: Uncategorized — George Allen @ 12:46 pm

Blog # 565 @ 23 December 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is the online national advocate, official ombudsman, asset class historian, researcher, education resource & communication media for land lease communities in North America!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable attainable housing! MHM class: 1/14/2020 in KY

INTRODUCTION: A new year is close upon us; and with it comes both change and opportunity. Change in the nature of the longest running print-now-electronic business newsletter, offering you even more industry news and information than ever before. And opportunity. You’re likely aware of the conversations taking place, coast to coast, these days, relative to the ‘new type’ manufactured home and the impact it might have on land lease communities; threat of national rent control; and other such challenges. The opportunity? To meet together during mid-January in Louisville, KY.

I.

Re-Introducing The Allen Confidential publication

EducateMHC is celebrating a full year of growth and transition, and are now excited to announce the evolution of George Allen’s monthly newsletter publications. Those of you who are currently ‘Basic Edition’ Allen Letter subscribers will begin receiving more rich content than ever before, with a preview of, and access to, monthly Resource Documents! Those who are currently ‘Prime Edition’ subscribers to the Allen CONFIDENTIAL! will continue to receive the ‘Prime Edition’ chock full of MHIndustry hot-off-the-press findings, given George’s unique perspective and access, as a 40+ year veteran and activist in the industry and realty asset class. “Prime Edition’ subscribers will also receive the coveted annual ALLEN REPORT and 12 monthly Resource Documents in their entirety. The two levels (Basic & Prime) of this business journal will be delivered electronically as a PDF, via Email to subscribers. Monthly editions and subscriptions are available via our website www.EducateMHC.com

Beginning January 2020, George Allen’s MHIndustry Business Journal Publications:

The Allen Confidential: Basic Edition @ $240 for 12 monthly issues
(Annual ALLEN REPORT & monthly Resource Documents sold separately)

The Allen Confidential: Prime Edition @ $544.95 for 12 monthly issues
(Subscription includes annual ALLEN REPORT & 12 monthly Resource Documents)

All the aforementioned Resource Documents are listed here for your consideration:

• The annual (31st in 2020) ALLEN REPORT, a.k.a. ‘Who’s Who Among Portfolio Owners of LLCommunities Throughout North America!’ MHIndustry’s longest running data report!

• Official State of the MHIndustry & LLCommunity Asset Class. Covers ALL data points!

• 21st National Registry of ALL Lenders, includes real estate-secured and chattel capital

• ‘Who Ya Gonna Call in 2020?’. Only directory of freelance consultants nationwide

• Directory of MH & LLCommunity Print & Online Media (+) all State MHAssociations

• Official MHIndustry & LLCommunity Lexicon & Glossary of Trade Terminology

• Official MHIndustry & LLCommunity Directory of GSE & NGO Organizations (+) Property Management Training & Certification Programs

• MHIndustry & LLCommunity Trending Topics (+) Definition of Affordable Housing

• MHIndustry & LLCommunity Directory of National Advocacy & Related Organizations

• All HUD-Code Housing Manufacturers; also Community Series Home & CrossMod™

• Industry Briefing Sheet. Only statistical compendium covering industry & asset class

• Statistic Sourcing & Valuable Formulae for MHIndustry & LLCommunity Research

And, from time to time, when a new Resource Document is created, it will be included as a preview in the basic edition of the Allen Confidential, and in its’ entirety in the prime edition of the Allen Confidential.

II.

Will You Help Articulate Solutions, or Be Part of the Problems Affecting Our Industry?

Since I first floated the idea of an industrywide, informal, semi-public meeting of concerned businesspeople, on 1/15 or 1/16, during the Louisville MHShow (Kentucky), I’ve had more than a dozen individuals commit to be present.

Present for what? To identify new and evergreen (‘always present’) issues affecting the manufactured housing industry and land lease communities nationwide. Topics already requested include:

• Desire for more information about CrossMod™ homes – and, whether this emphasis might be a return to the land & home package debacle of the mid to late 1990s.

• Whether GSEs will, soon and finally, effect Duty to Serve (‘DTS’) programs in 2020, restoring reasonable access to chattel capital for home-only loans in communities.

• What’s can be done to ameliorate the threat of national rent control, now that three states have adopted this form of landlord-tenant legislation.

• Where does the work of the understaffed NNC division of MHI leave off, and lobbying effort of the National Association of Manufactured Housing Community Owners begin?

The foregoing gives you an idea of what’s on the minds of concerned MHIndustry & LLCommunity businessmen and women these days. All good reasons for convening an industrywide, informal, semi-public meeting on 1/15 or 1/16, during the Louisville MHShow in Kentucky.

If you are seriously interested in participating, let me know via email (gfa7156@aol.com) or phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Details of the meeting location and time will be shared at that time.

George Allen, CPM, MHM
EducateMHC

December 19, 2019

Deep Thinkers Respond to FHFA Frustration: ‘Too Few ‘new type’ Homes Financed to Date’

Filed under: Uncategorized — George Allen @ 7:26 am

Blog # 564 @ 12 December 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is the online national advocate, official ombudsman, asset class historian, researcher, education resource & communication media for land lease communities in North America!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!. Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable attainable housing! MHM class: 1/14/2020 in KY

INTRODUCTION: This week’s blog posting (#564) is how I’ve long wanted this online communique to function; as a means of two way communication between you and me! In Part I we have three bona fide Deep Thinkers, from the manufactured housing industry, sharing their considered views on a lively and timely topic. Wish every week was like this! And Part II? One more clear example of how the 250 page text, Community Management in the Manufactured Housing Industry, is the One Stop Resource for anyone owning and or operating a land lease community in North America today. If you don’t already have a copy of this tome in hand, you should! GFA

I.

Deep Thinkers Respond to FHFA Frustration:
‘Too Few ‘new type’ Homes Financed to Date’

In other words, ‘Why so-few CrossMod® home loans effected, to date, via Fannie Mae’s MHAdvantage & Freddie Mac’s CHOICEHomes DTS programs?

YES, that was the question raised in last week’s blog posting (#563). The sole answer offered, at the time, was this: “Along with new type of homes comes a new class of home seller – the Developer. Their projects don’t develop quickly.” Along with this answer came this apt caution, based on sorry historic (1989-2002) precedent: Independent (street) MHRetailers and ‘company stores’, envisioning themselves as contractors, must indeed be capable, experienced and motivated to do this complicated and expensive work properly and expeditiously!

Ended Part I of last week’s blog discussion with an open invitation to share ‘your take’ on this and related matters.

And respond ‘some of you’ did! Interestingly, three ‘deep thinkers’ from three distinctively different, and geographically distant-from-one-another local housing markets (i.e. Southeast, Midwest, and West) did so.*1 The important point here, to keep in mind, is how ‘all real estate is local’. With that said, here’s a summary of salient points made by these sage individuals:

• “Not at all thrilled with the CrossMod® name.” No aesthetic appeal whatsoever!

• “Manufactured housing is a housing type. Why purposely diminish that type, by creating a subset whose purpose is to say it is better?” Think about that. Revives the question: Is manufactured housing the epitome of ‘affordable housing’, or simply ‘big box = big bucks’ housing? Difficult to both well simultaneously.

• “The ‘new type’ (manufactured home) will not make a significant impact until developers begin to use the product in subdivisions of many homes.”*2

• Independent (street) “MHRetailers have never succeeded in attracting, in any meaningful way, conventional homebuyers. Conventional (home) buyers don’t go to a (sales) lot to buy; they go to a (subdivision) development.”

• In one region, “…the market for traditional manufactured housing remains strong”; so, “No motivation to expand into new markets” using ‘new type’ homes!

• In that same region, “…there has been push back from homebuilders (re) Fannie’s 4:12 & Freddie’s 5:12 minimum roof pitch requirements” as lower sloped roof pitches are preferred.

• And again, in that region, “…manufactured housing is zoned out of many urban and suburban areas….”; and, though legal challenge is favorable, ‘no sense of urgency at this time’.

• In a distinctly different and distant housing market, ”Recently a number of rental home developments have been site-built here. They are renting like hot cakes. (Perhaps) This is the model” for placement of CrossMod® homes.

A lot to ponder here! Do these eight summary points stimulate further thought, on this matter, from your perspective? If so, let me know ASAP, via gfa7156@aol.com

Now here’s a troubling thought. If we, as an industry, are unable to popularize CrossMod® homes now and in the near future, will said ‘failure’ provide pause and excuse for GSEs, NOT to work further on similar chattel capital DTS programs for home-only loans on new HUD-Code homes going into land lease communities onto rental homesites?

SPECIAL ANNOUNCEMENT. HUD-Code housing manufacturers, MHRetailers, land lease community owners/operators, even a rep or two from the FHFA and GSEs have asked me to arrange for an informal, semi-public, face-to-face meeting of concern-minded individuals (i.e. Relative to present day and future of manufactured housing shipment volume, and land lease community operations where the threat of national rent control, are involved!). If YOU are sincerely interested in participating in such a meeting, on 15 or 16 January, during the Louisville MHShow, let me know; again, via gfa7156@aol.com. Once I have the meeting location and times established I will let you know.

End Notes.

1. Deep thinker, in this instance? Present day and recently-retired business executives, each with a minimum of 35 years experience in the manufactured housing business; and, two of whom are RV/MH Hall of Fame members.

2. This deep thinker went on to say, These are “still trailers in the minds of some purchasers, and a significant marketing effort will be needed here. For example, in the Midwest, basements are essential and these (CrossMods®) are equivalent to slab on grade site-built homes that lack storage available in basements.”

II.

ANSWERS to Challenges in Land Lease Community Ownership/Operations…

Did YOU Know? There is an Official Quality Classification System for Land Lease Communities, Large & Small, Nationwide?

Yep, there sure is. But first a little history. Back in the 1960s, up through the mid-1970s, a company called Woodall’s published a telephone directory-like reference listing all mobile home parks throughout the U.S. The company had a staff of property inspectors, who doubled as advertising salespersons, and routinely visited these properties to categorize them as being of 1 Star, 2 Star, 3 Star, 4 Star, & 5 Star quality, with 5 Star being the highest level.

Then these inspectors would ‘change hats’, so to speak, and sell these same communities ads in the Woodall directory. (Hmm. Wonder if bigger ads resulted in a better grade?) This system worked well enough for a decade or two, as long as mobile homes were small enough to be towed behind personal automobiles, and those relocating benefitted from such a directory. This cozy arrangement came to an end around 1976. Since then, at least until the mid-1990s, there was no follow-on property quality grading system. Unfortunately, many real estate brokers have continued the Star Rating myth, to their ends, for the past 40 years.

Enter the ABClassification System for Manufactured Home Communities. This new ‘do it yourself’ evaluation system features seven areas of quality measurement: Appearance (i.e. ‘curb appeal’), Layout, Individual Homesites, Individual Homes, Infrastructure, Amenities, and Community Management. For each of the seven areas, user is challenged to determine whether the property is A = One of the Best; B = Better than Most; C = Good or Average; or D = Fair-Poor. And within each of the seven areas evaluated, the user allocates 100 points; all to one category, or more often than not, split between two adjacent quality grades, e.g. Appearance = A @ 100 points; or maybe B = 50 points & C = 50 points. When all seven areas have been ‘weighted’, the point totals under each of the four (A,B,C,D) categories are totaled, providing an overall ‘value’, often split unevenly between two adjacent values (e.g. A&B or B&C, or C& D…)

The ABClassification System is easier to use than perhaps it sounds/reads. And it does provide a far more detailed quality summary of any given land lease community, large or small.

The system has had an interesting history. First proposed to MHI’s National Communities Council (‘NCC’) for adoption, during the late 1990s, it met covert resistance from one or more of four existing REITs at the time. Why? There was concern, Wall Street analysts, already wreaking havoc with unrealistic quarterly profit expectations (i.e. treating illiquid real estate assets as growth stocks), would seize upon a quality grading system to fine-tune buy-sell stock recommendations of said REITs and property portfolios. So there was no approval or adoption forthcoming from the NCC.

But ever since then, for the past two decades, a standard form used to effect A, B, C, D quality gradings (also referred to as being of 1, 2, 3, 4 ‘diamonds’ quality), has been a popular professional property management tool among land lease community owners/operators wanting to categorically know their property(ies) quality firsthand, rather than relying on a real estate broker’s opinion, oft times couched in defunct STAR grades.

The ABClassification System is featured in the Community Management in the Manufactured Housing Community textbook as Appendix # 47. To order the text, visit www.educatemhc.com

George Allen, CPM, MHM
EducateMHC

December 5, 2019

MHs Mixed Bag of ‘#s & $s’; Rick Robinson’s new gig 7& new book!

Filed under: Uncategorized — George Allen @ 1:41 pm

December 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is the online national advocate, official ombudsman, asset class historian, researcher, education resource & communication media for land lease communities in North America!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemh;c.com

Motto: ‘U Support US & WE Serve U!” Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable attainable housing! Next MHM class: 1/14/2020

INTRODUCTION: As an industry that ‘keeps score’ by tracking new home shipment volume, rather than new home sales, we are slipping backwards, and hardly anyone seems to notice! Read Part I here. And Part II? Read how one of the most popular executives at MHI, during recent years, and who’s since gone elsewhere –might be embarking on a new job adventure every bit as exciting as the thrillers he authors! Part III? Our way at EducateMHC to let you know of the many practical resources available via www.educatemhc.com

I.

Mixed Bag of Manufactured Housing Production Volume & Value, and Finance

Last week’s blog posting (#562) began with this observation from Listening Session # 1 in St. Louis, MO:

“Fannie Mae & Freddie Mac are frustrated and disappointed with the too few ‘new type’ HUD-Code manufactured homes (Now, CrossMod® homes according to MHI) financed via their respective MHAdvantage & CHOICEHomes programs to date.”

This was followed with a request by James Gray of the FHFA, for readers of this blog to recommend, ‘How to generate more consumer interest in these two real estate-secured finance products for manufactured homes?’

Well, readers responded. This from a middle level executive at one of our HUD-Code housing manufacturers:

“Why (did it take) 11 months for the first MHAdvantage home in Texas to be sold? Along with a new type of homes comes a new class of home seller – The Developer. Their projects don’t develop quickly. So, not many MHAdvantage or CHOICEHomes are coming out of the ground yet.”

Point made and taken. There’s a cautionary message here as well – supported by a 20 year old memory dating back to the day when these ‘big box = big bucks’ Developer Series homes were all the rage (Recalling 372,943+/- new HUD-Code homes shipped during year 1998!). The Achilles’ heel then, were independent (street) MHRetailers who wrongly marketed themselves as developer/contractors. Not. Their lack of contracting expertise, and resulting installation shortfalls, pretty much doomed that brief second renascence for the manufactured housing industry. Corollary point? Let’s not repeat the same industrywide mistake! Ensure our developers and installers KNOW what they’re doing, and they’re doing it right this time around!

Personally? I think the plethora of names and labels emerging to describe this, now two years old, ‘new type’ HUD-Code manufactured home is leading to far more confusion than consensus, e.g. CrossMod® (MHI), MHAdvantage (Fannie Mae), CHOICEHomes (Freddie Mac), Genesis series (Skyline/Champion), and going back a few years, ‘MHSelect’.

Back to that mixed bag of MH production volume – and value. Everyone knows the pace of new HUD-Code housing shipments has slowed during the past couple years, but few have taken time to ‘work the numbers’. Here’s how bad the situation really is:

Between 2015 & 2016, we enjoyed an increase of 10,592 new HUD-Code homes shipped
Between 2016 & 2017, we enjoyed an increase of 11,766 new HUD-Code homes shipped
Between 2017 & 2018, saw an increase of only 3,653 new HUD-Code homes shipped
Between 2018 & 2019, likely 5,009 fewer new HUD-Code homes will be shipped by year end.

How so? Extrapolate 82,942 new HUD-Code homes shipped through October 2018 with that year’s total of 96,555; then with 79,912 new HUD-Code homes shipped through October 2019. Result is an estimated total of 93,027 new homes to maybe be shipped by year end, or 3,528 fewer new HUD-Code homes than previous year shipment pace! And certainly fewer than the 100,000 industry goal for year 2019. Startled yet? You should be. And should be asking, ‘Why?’

Moving on to value. As official statistician for the land lease community real estate asset class, EducateMHC is forced to continue using Dr. Stephen C. Cooke’s HUD-Code housing ‘production value’, computed using base year 2013 cost factors. MHI continues to promise an update, even expansion, to this key data, but it hasn’t occurred to date. SO, are we, in terms of production value, a $3 billion industry (2018), using six year old data, or closer to $4 billion?

This info readily available from EducateMHC via its’ monthly MHShipment ‘#s & $s’ Report, published as an integral part of each monthly issue of the Allen Letter and the Allen CONFIDENTIAL! business newsletter. Visit www.educatemhc.com to subscribe.

Finally finance. Easy to describe. Real estate-secured new home financing is available from a variety of local, regional, and national sources. Personal property (i.e. chattel capital) lending continues to be elusive for home-only transactions occurring on leased land, e.g. new and resale homes on rental homesites within land lease communities. And of course this mixed bag of housing finance resources is complicated by the S.A.F.E. Act and regulations implemented by the Consumer Finance Protection Bureau (‘CFPB’).

Always happy to learn ‘your take’ on these business dampening matters: gfa7156@aol.com

II.

Rick Robinson, esquire, joins MANUFACTUREDHOMES.COM Team as
VP of Industry Relations

Congratulations Rick! We’ll miss your presence and yeoman’s work at the Manufactured Housing Institute (‘MHI’) – especially where Federal Fair Housing is concerned. We now know far more about that important program, and how it relates to land lease community ownership and operations, than we did before you. Who will take up that torch at MHI; or will this be part of your work at Manufacturedhomes.com? An inquiring public would like to know…

Brad Melms, president of Manufacturedhomes.com, in a recent press release describing Rick’s job change stated, he’ll “…be working to bring a new level of consumer technology to those buying homes and residing in communities.” Hmm. While ‘time will surely tell’ what Bruce means by that statement, one wonders if this might be akin to ‘throwing down the gauntlet’, figuratively speaking, in the direction of MHVillage, the manufactured housing industry’s premier and perennial marketer of resale homes ‘for sale’ on-site in land lease communities?

In the meantime, if you haven’t already heard or read, Rick has a new novel (thriller) available for purchase: Opposition Research. I read it over the Thanksgiving holiday and had difficulty putting it down! Includes a couple examples of the influence manufactured housing has on his creative writing. The book is available for purchase from Amazon.com

III.

ANSWERS to Challenges in Land Lease Community Ownership/Operations…

Industry Standard Chart of Operating Accounts and Operating Expense Ratios (‘OERs’)

Know the most frequent questions I’m asked as consultant to the land lease community real estate asset class? ‘What and where are the operating expense industry standards for land lease communities?’ Answer: In two appendices # 32 & 33 of the Community Management in the Manufactured Housing Industry 250 pages textbook! That’s right, the official Industry Standard Chart of Operating Expense Accounts & accompanying Operating Expense Ratios (‘OERs’) are easily available to land lease community owners and managers alike. The historic genesis of this unique property type information makes for an interesting tale.

This story was first told in SWAN SONG (History of the Land Lease Community Real Estate Asset Class & Official Record of Manufactured Housing Shipments, 1955 to present day’), but blog readers will likely find it engaging to read again.

During the spring of 1992, while a Major in the USMC reserves, I was called to active duty for service during the Desert Storm initiative in Iraq. However, by the time I was cleared medically, that brief conflict had come to an end – so I was ordered to Honduras along with several other staff officers. While there we supported helicopter air strikes (interdictions) against drug stills in the mountain region of that country. Not much publicity about it back in the U.S., but we believed our Marines were shot at with more intensity in Honduras, than they would have been over in Saudi Arabia.

Combat environs are famously known for days and week long periods of relative peace and nonconflict, abruptly interrupted by inconvenient moments of intense conflict with, and maneuvering against, one’s adversary at the time. And this is the way it was in Honduras. Some days were hot and boring, others just as hot, but as physically and mentally demanding as you can imagine.

Well, it was during one of those periods of relative peace and nonconflict I found myself, sitting on a camp stool, pondering mobile home park operating expense statistics I’d gathered during research conducted while writing for the Manufactured Home Merchandiser magazine. Given I had nothing else of importance to do at the time, ‘the numbers just seemed to come together’ in a very cogent fashion, especially operating expense ratios. So, when I returned to the U.S. a month or two later, the two new resources found their way into my column at the Merchandiser, then an earlier edition of Manufactured Home Community Management.

Today, that text and its’ 13 chapters and 52 appendices are available for purchase from EducateMHC via the website: www.educatemhc.com

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