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

Blog Posting # 747, Copyright 23 June 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable factory-built housing! And land lease communities (a.k.a. manufactured home communities & ‘mobile home parks’) comprise the investment real estate component of manufactured housing! EducateMHC alone is the online advocate, historian, trend tracker, and text resource for these two business models! To input this blog or connect with EducateMHC, telephone (317) 881-3815; email: gfa7156@aol.com, or visit www.educatemhc.com, to order community Management in the Manufactured Housing Industry. This is the sole professional community management text in print today! And SWAN SONG is a history of land lease communities, and official record of annual MH production totals since 1955; and my autobiography, from SmittyAlpha6 to MHMaven! – describes combat adventures in Vietnam and 40+ years business career in MH and communities.

George Allen, CPM®Emeritus, MHM®Master, Emeritus member of the Manufactured Housing Institute (‘MHI’), RV/MH Hall of Fame enshrine, retired lieutenant colonel of U.S. Marines, and author/editor of 20 books about MH, communities, business & management wisdom & prayer.

Highlights from ‘State of the Nation’s Housing’ 2023

Following information and statistics are quoted from the Harvard Joint Center for Housing Studies (‘HJCHS’) report titled ‘The State of the Nation’s Housing’, aired on 21 June 2023.

“The sharp interest rate hikes over the past year continue to impact housing markets and affordability for both homeowners and renters across the U.S., according to our new (report) released today.”

“Since the beginning of 2020, asking rents in the professionally managed sector are up by 24 percent, while home prices are up 37.5 percent.” Here, ponder the rental homesite rates we’ve seen skyrocketing in recently-purchased portfolio-sized land lease communities, as well as increases in wholesale and retail sale prices of new HUD-Code manufactured homes. Consequently, where the latter stat is concerned – per EducateMHC’s blog posting # 746 last week, new HUD-Code home production is down a whopping 30 percent from 2022 YTD!

“(Mortgage) Payments on median-priced homes shot up from $2,500 to $3,000 as annual interest rate on 30-year fixed-rate mortgages jumped from 4.2 to 6.5 percent. Result was a 22 percent annual decline in number of mortgages originated to first-time homebuyers in 2022, including a year-over-year drop in the fourth quarter of nearly 40 percent, as over 2.4 million potential homebuyers were priced out of homeownership.” How many blog readers out there remember the early 1980s, when 30-year fixed-rate mortgages were in the neighborhood of 10 percent and higher? So, this could get worse before getting better. But let’s hope not!

“Between 2019 & 2021, the U.S. saw the most significant drop in housing affordability in years. The number of cost-burdened homeowners – defined as those spending more than 30 percent of their income on housing – increased more than any time since the housing boom of 2005-2007.” Also remember; it was at the turn of the century, 1998, that our acme level of production (i.e. 372,943+/- new HUD-Code homes) plummeted as well, by year 2009 when only 48,789+/- new HUD-Code homes were produced.

In conclusion, “As pandemic-era assistance programs wind down, housing remains prohibitively costly for millions of households. More lower-cost housing is clearly needed but expanding development will require zoning reforms to support a broader range of housing types and investments in off-site construction methods that could reduce costs.” Did you catch that? The writers, here, are clearly referring to HUD-Code manufactured housing, maybe even ADUs*1 like ‘tiny houses’*2, recreational vehicles like ‘park models’*3, and more*4. This is also a nod to the need for zoning reforms nationwide.

End Note.

1. ADU = Accessory Dwelling Units, a.k.a. ‘granny flats’. Approved in CA. as secondary dwelling on residential building site.

• Tiny Houses now available for purchase as kits from Home Depot; 21 models ranging in price from $4,000 – $40,000. Also marketed by Lowe’s and on Amazon.com

• Park models; less than 400 sq. ft. In size. And other RV configurations.

• Watch for ‘sheds’ & portable cabins to appear on the affordable housing scene. For more information, read ‘Shed Builder’ magazine, where the Shed Price Index pegs $4,887 as the nationwide average price for a 12 X 16 shed (200+/- sq. ft.).

Learn from Apartment Owners/Operators!

Most land lease community homeowners/site lessees (i.e. ‘your residents’) are already online. But are you actively converting positive resident experiences into online reviews? I doubt it.

Here’s guidance for multifamily rental property owners cited in the May/June 2023 issue of ‘Multifamily Executive’ magazine, pp. 16-18

Respond to all Reviews. How? ‘Respond with gratitude and care’. Why? “…this requires constant monitoring, (as) it is key to not only improving and increasing future review (by residents), but also de-escalating negative sentiments.

Boost More Optimistic Reviews. “A healthy online reputation is further supported by the volume of positive reviews.” Don’t be shy about asking residents to post positive reviews!

Hearing the Negative Feedback. “Unsavory events are heightened when low-star reviews are left for anyone to read.” Validate, resolve and communicate are key actions when handling negative reviews.

View Low-Star Reviews as Opportunity. These are often valuable points and a time for growth and improvement.

Bottom line? “As prospective residents begin their search, it is evident online (positive & negative) reviews can set a property apart.” So, make special effort to keep your property’s online reviews as positive as possible!

Business Card Truism

I have collected many business cards during my career. Especially looked for unique messages on the reverse or verso side of said cards – to the point I identified 50 different type messages (e.g. humor, guarantees, mini calendars, appointment templates, mission statements, quotations, HOW TO instructions, photographs, bilingual, mini maps), and 40 more topics. If you have a copy of my ‘Chapbook of Business & Management Wisdom’, there’s an entire section therein titled: ‘Is Your Business Card a ‘Keeper’?’

Anyway, a land lease community owner and veteran independent (street) MHRetailer friend of mine, close to retirement, gave me his newly minted card recently. On the verso side he states:

“I am fully aware my youth has been spent, my ‘get up and go’ has ‘got up and went’.

But I really don’t mind when I think with a grin, of all the places my ‘get up’ has been.

When I was young it was wine, women & song. Now it’s beer, Medicare & sing along with Welk.”

If you have a unique or creative message on the verso side of your business card, please send me a sample copy via GFA c/o Box # 47024, Indianapolis, IN. 46247.

Did You Know?

The abbreviation, or name STAN, is an emergency plea for assistance! The letters stand for:

SEND THE AUTHORITIES NOW!

Blog Posting # 746, Copyright 16 June 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable factory-built housing! And land lease communities (a.k.a. manufactured home communities & ‘mobile home parks’) comprise the investment real estate component of manufactured housing1 EducateMHC alone is the online advocate, historian, trend tracker, and text resource for these two business models! To input this blog or connect with EducateMHC, telephone (317) 881-3815; email: gfa7156@aol.com, or visit www.educatemhc.com, to order Community Management in the Manufactured Housing Industry. This is the sole professional community management text in print today! And, SWAN SONG is a history of land lese communities, and official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven! – describes combat adventures in Vietnam and 40+ years business career in MH and communities.

George Allen, CPM®Emeritus, MHM®Master, Emeritus member of the Manufactured Housing Institute (‘MHI’), RV/MH Hall of Fame enshrinee, retired lieutenant colonel of U.S> marines, and author/editor of 20 books about MH, communities, business & management wisdom & prayer.

‘Oh No, Here We Go (Down) Again!’

Quoting from the Manufactured Housing Institute’s (‘MHI’) Monthly Economic Report for April 2023: “…the 6,676 new HUD-Code manufactured homes produced during that month is a 13 percent drop from the previous month, and 34 percent drop from April of 2022. And, per year to date (‘YTD’), we’re at 27,850 units, down a whopping 30 percent from 2022 YTD #.

Now here’s what’s really scary about this sinking performance: Multiply the 2022 annual MH shipment total of 112,886 units by .70 (70%) – the reciprocal of the 30 percent just cited, and one calculates a possible 2023 year end production performance of only 79,020 new HUD-Code homes! Know what? If that turns out to be the case, one has to look all the way back to year 2016 to find a greater annual production total, i.e. 81,136. Bottom line, if this happens? As an industry, we’ll have regressed seven years!

As I remarked to a fellow manufactured housing aficionado recently; the sad thing in all this talk about falling MH sales and production, is that there is NO national forum where this sort of challenge is presented, discussed, and resolved among major industry ‘players’ – manufacturers, independent (street) MHRetailers, and community owners/operators alike! To my knowledge this sort of strategic planning does not occur at any of our national trade advocacy bodies, maybe only at the annual SECO Conference in Atlanta, GA. @ (10 & 11 September 2023. If you know or believe differently, please let me know via gfa7156@aol.com

‘Who Will Preserve Your Legacy? Answer: You!’

Five years ago I penned and self-published the booklet titled ‘Who Will Preserve Your Legacy? Answer: You!’ Back then we knew of ten published autobiographies of pioneers and leaders from the manufactured housing industry and land lease community ownership. Well, over the years, the booklet went through several printings, and now four additional autobiographies have appeared on the scene. So, it became time to update and expand the coverage of the original booklet.

How is this second edition different from the first? It contains these four new autobiographies; here’re review summaries from the booklet:

Matthew Jenkins, DVM. During his lifetime, Dr. Jenkins was a U.S. Air Force officer, successful veterinarian, portfolio owner/operator of land lease communities, interim president of Tuskegee University, and generous philanthropist. His autobiography, ‘Positive Possibilities, My Game Plan for Success’ was published shortly before his death in 2017. It’s available for purchase via amazon.com (As an aside, I sold Matthew a community back in the early 1980s)

Jim, Ralph & Jeff Scoular of South Dakota, co-authored ‘Leap of Faith’, the ‘Story of an Industry, a Family & Unmovable Values.’ This three generations of Scoular family history in MH and land lease communities is hallmarked by (late) Ralph’s induction into the RV/MH Hall of Fame in 1998, followed by his son Jim in 2005. The book is available directly from the RV/MH Hall of Fame in Elkhart, IN. (Another aside: Scoular family financed much of the new MH exhibit at the RV/MH Hall of Fame in Elkhart, IN.)

George O’Leary’s ‘The O’Learys of Beechwood’, traces O’Leary family history ‘From the Penal Times to the War of Independence and beyond, with memories of my life and career from County Tipperary (Ireland) to Tucson, AZ. This 225 pages family narrative is accompanied by colorful photographs. Available only via George@rinconcountry.com (The aside here? I only recently met George. He’s in his nineties and has ‘seen it all’ in RV & MH environments)

George Allen’s ‘From SmittyAlpha6 to MHMaven’ describes the author’s life from childhood, through college and marriage, to a combat tour in the Republic of Vietnam, then a 40+ year career in MH and land lease communities. Available via www.educatemhc.com (My aside? Sincerely hope this autobiography inspires my peers to begin penning their own stories)

In addition to these review summaries, there are lengthy quotes from each autobiography, making this a comprehensive collection of Lessons Learned by no fewer than 14 industry and realty asset class businessmen (nine of whom are RV/MH Hall of Fame enshrinees).

FYI. I know a couple women entrepreneurs active in MH and communities who’ve started recording their memoirs (i.e. ‘short stories’) and possibly, in time, their autobiographies.

My goal is to put a copy of this HOW TO booklet in the hands of older MH and community practitioners who have a ‘story to tell’, whether it be personal/career oriented, or the story of the business enterprise they founded and nurtured over the years. Cost is $20.00 per booklet (postpaid). Interested? Email me via gfa7156@aol.com – be sure to include your preferred USPS (postal) address. Or mail your check and postal address to GFA c/o Box # 47024, Indpls, IN. 46247.

‘Go Woke, Go Broke’

The phrase ‘go woke, go broke’ has been used a lot of late, to describe effects on an increasing number of firms who’ve decided to prioritize a woke agenda over the sensibilities of their customers. In many cases, this has resulted in significant financial loss.

When queried as to why large firms have been forced to act in what appears to be a self-destructive manner, the answer is oft ‘follow the money’. This, in turn, refers to several dominant investment firms who’ve been leaning on targeted companies to promote progressive values; in particular the ESG agenda (i.e. environmental, social, and corporate governance – or just plain governance). The ESG agenda is intended to be part of a business organization’s strategy to consider needs and ways by which to generate value for all stakeholders – employees and customers alike. Corporate choice? Give in to such demands or suffer severe long-term consequences via their pension funds, directors’ bonuses, and other avenues. To date there are at least 60 large firms who’ve succumbed to this outside pressure.

Watching History Pass…

This time of year (Spring) 30 years ago I was planning the hosting of an historic national gathering of (then) manufactured home community owners/operators. Unbeknownst to the realty asset class in general, several large portfolio firms were quietly preparing to ‘go public’ as real estate investment trusts (‘REITs’) in the near future. But there were two challenges: First; Wall Street analysts were unfamiliar with the workings and profit potential of this unique income-property type; i.e. leasing of rental homesites to manufactured housing homeowners. Second; there was no effective national advocacy for this type commercial real estate investment. The only quasi representation occurred periodically during meetings of a volunteer committee under the auspices of the Manufactured Housing Institute (‘MHI’). That was it!

As it turned out, the historic national gathering of community owners/operators occurred on 31 August 1993. At that time 19 executives met for a daylong strategic planning meeting in Indianapolis, IN. The long-ranging results of that meeting are documented in a book titled: ‘The first 20 Years!’, authored by the late Bruce Savage.*1

As it turns out, the 30^th anniversary of that historic meeting will be celebrated during August of 2023. So, watch for a blog posting, in that timeframe, that will identify who those community pioneers were – and what they’re doing today. For now, however, suffice it to say, this meeting was the precursor to the launching of MHI’s National Communities Council (‘NCC’) division on 1 January 1996 under the leadership of Jim Ayotte, CAE. So, more later….

End Note.

1. This book still available for purchase via www. Educatemhc.com It is also archived in the George Allen Corporate Library Collection as part of the RV/MH Hall of Fame library in Elkhart, IN.

Average National Apartment & Community Rent Rates

According to ‘Multifamily Executive’ magazine, for May/June 2023, $1,706 is the average U.S. apartment asking rent in April; this us $3.00 from March 2023 – per Yardi Matrix. Know what this means? Applying the widely known and used Traditional 3:1 Formula for calculating rental homesite rates in any local housing market; the average national land lease community rental homesite rate during April 2023, was $569.00/month. Specifically: $1,706 divided by ‘3’ = $569.

INFAMOUS QUOTE OF THE WEEK

“What difference does it make?” (re: Benghazi). Hilary Clinton

George Allen

Blog Posting # 745, Copyright 9 June 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable factory-built housing! And land lease communities, (a.k.a. manufactured home communities & ‘mobile home parks’0 comprise the investment real estate component of manufactured housing! EducateMHC alone is the online advocate, historian, trend tracker, and text resource for these two business models! To input this blog or connect with EducateMHC, telephone (317) 881-3815; email: gfa7156@aol.com; or visit www.educatemhc.com, to order Community Management in the Manufactured Housing Industry. This is the sole professional community management text in print today! And SWAN SONG is a history of land lease communities, and official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven – describes combat adventures in Vietnam and 40+ years business career in MH and communities.

George Allen, CPM®Emeritus, MHM®Master, Emeritus member of the Manufactured Housing Institute 9’MHI’), RV/MH Hall of Fam enshrine, retired lieutenant colonel of U.S. Marines, and author/editor of 20 books about MH, communities, business & management wisdom  & prayer.

California no longer a state, it’s a hedge fund!

“Things are crazy here in California, with most rental homesite rates in land lease communities averaging more than $1,000.00 per month! However, this has not affected new manufactured home sale prices in communities where they’re selling for $250,000 to $400,000 apiece.” How so? Prospective homebuyers “…are selling their stick-built homes for $750,000 to $1,000,000, then paying cash for new homes in these communities, and putting more than $500,000.00 in the bank – and still living in the area where they’ve resided for decades.”

“And installation costs have recently jumped 25 to 30 percent, to as much as 60 percent of new home cost! Also, we’ve seen an increases in new home cost go from $70 to
$110 per square foot on custom manufactured homes.”

Finally, as you’ve noted in previous blog postings, “despite the current demand for affordable housing, no new land lease communities are being built here in California. There have been fewer than five new communities built during the past 10 years!”  (Lightly edited, with the use of contemporary trade terms homesite and land lease community. GFA)

The previous three paragraphs are quoted from recent correspondence with a land lease community portfolio owner/operator headquartered in southern California.

Know what I miss most about no longer publishing the Allen Letter for community owners/operators? Just this: providing a public platform where businessmen and women across the U.S., can share their experiences, hopes, successes & shortfalls relative to their enterprises. And frankly, this is a big reason why I continue to move forward posting a weekly blog. So, if you’d like to vent or share about anything relative to manufactured housing and or land lease communities, consider this an invitation to do so. Simply email me via gfa72156@aol.com or send correspondence to GFA c/o Box # 47024, Indianapolis, IN. 46247.

‘FFF’ as Antihero of Manufactured Housing Installation

In literary terms, an antihero is a protagonist who conspicuously lacks heroic qualities. From a manufactured housing perspective, Frost Free Foundations are the default antihero of contemporary installation methodology! Meaning, in the minds and experience of veteran home installation specialists, the FFF ‘Alternative Shallow Frost Protected Foundation Design for Manufactured Homes’ – placed on rental homesites within land lease communities, on privately-owned homesites in subdivisions, and scattered building sites, when properly installed are superior to virtually every other type economical installation design.

In today’s world, the life of an FFF installation antihero is oft lonely and misunderstood.

How so? Well, looking back to early 2010, when there was no Frost Free Foundation methodology, a veteran installation consultant experienced a genuine epiphany; realizing water, soil and gravity, when properly controlled pursuant to the installation of a HUD-Code manufactured home, negates all need for extensive excavation, below grade piers, and other expensive measures! Yes, you read that right.

Next steps? Bring Emmanuel Levy of SBRA into the picture,*2 and find a civil engineering firm (Hayman Engineering*3) who’d research and prepare a White Paper describing a shallow frost protected foundation design for manufactured homes. Money was raised from various businessmen in the industry and from community owners/operators to fund this research and foundation design. When the final report was completed and circulated it received widespread attention and approval. HUD-Code manufacturers (e.g. Champion) began writing Installation Manual Addendums featuring the FFF design. HUD even came on board for a while.

So, just what are Frost Free Foundation protocols? First, when buying a manufactured home, obtain manufacturer’s official Installation Manual for that home. Ensure FFF design is a clearly approved method of home installation, sometimes including a Site Procedure Checklist. Then have a local registered engineer prepare a FFF plan tailored to the specific property or building site where home is to be installed. Ensure FFF plan does not violate any local ordinances, etc…

Proceed with home installation per FFF plan, using Site Procedure Checklist, if available, to include, but not be limited to:

• Soil test by a licensed soil tester
• All drainage diverted away from the home
• Homesite not in a flood hazard area
• Footings placed on undisturbed soil or fill compacted to 90% maximum relative density.
• Ground water table during winter season is below the local frost line
• Home has perimeter enclosure (‘skirting’) installed
• Where perimeter support is required (e.g. openings 4 ft. or greater), one of the following required: Option 1 = Installed according to adjustable brace per manufacturer’s instructions; Option 2 = Footing extended below the frost line
• The local authority having jurisdiction has accepted the FFF design for use under home.

The above information summarized from SBRA and Installation Manual Addendum for FFF per Hayman Engineering. This is neither legal nor engineering advice.

So where does FFF appear to stand relative to HUD installation protocols for HUD-Code manufactured homes? It’s a mixed bag. FFF does not occur in HUD-administered states because HUD inspects all home installations. However, in states san HUD-administration, regulation continues to be pretty much in accords with housing manufacturer’s Installation Manual guidance, often including FFF.

Over time, properly emplaced Frost Free Foundations under manufactured homes continue to validate design principles of keeping ground water away from under homes and necessity of properly installed skirting. Proof? How many, if any, complaints from consumers about properly installed FFFs?

Yes, it’s time for HUD to once again evaluate the Frost Free Foundation ‘Alternative Shallow Frost Protected Foundation Design for Manufactured Homes’.  

End Note.

1. Epiphany. ‘A sudden, intuitive perception of or insight into reality or the essential meaning of something, often initiated by some simple commonplace occurrence.’

• SBRA = Small Business Research Alliance, NY, NY. (212) 496-0900X10; affiliated with the Manufactured Housing Institute (‘MHI’) in Arlington, VA.

• Hayman Engineering, Inc., Paul W. Hayman, MS, PE.

George Allen

Blog Posting # 744, Copyright 2 June 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable factory-built housing! And land lease communities, (a.k.a. manufactured home communities & ‘mobile home parks’) comprise the investment real estate component of manufactured housing! EducateMHC alone is the online advocate, historian, trend tracker, and text resource for these two business models! To input this blog or connect with EducateMHC, telephone (317) 881-3815; email: gfa7156@aol.com; or visit www.educatemhc.com, to order Community Management in the Manufactured Housing Industry. This is the sole professional community management text in print today! And, SWAN SONG is a history of land lease communities, and official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven! – describes combat adventures in Vietnam and 40= years business career in MH and communities.

George Allen, CPM®Emeritus, MHM®Master, Emeritus member of the Manufactured Housing Institute (‘MHI’), RV/MH Hall of Fame enshrinee, retired lieutenant colonel of U.S. Marines, and author/editor of 20 books about MH, communities, business & management wisdom & prayer.

Drs. Samuel (‘Sam’) & Laurie Landy

Curry College, located in Milton, Massachusetts, recently bestowed honorary doctorate degrees on Samuel A. Landy, Esq. and his wife Laurie for their respective achievements in the business marketplace and charitable social work.

Sam is well known and respected as CEO of UMH Properties, a REIT that provides workforce housing in the form manufactured housing and land lease communities (a.k.a. manufactured home communities). He founded the not-for-profit Open Space Pace, an organization dedicated to raising awareness about equine and agricultural industries in the state of New Jersey. Sam, a 1982 graduate of Curry College, by dint of his and his wife Laurie’s philanthropic generosity, brought the Landy Family Student Services Area in the college’s Learning Common into existence.

Laurie is a social entrepreneur with a degree in Occupational Therapy. Along with her husband Sam, founded Special Strides, a non-profit organization dedicated to improving the lives of individuals with disabilities through therapy, recreation, and education on a farm. Every week, approximately 130 clients enhance their lives through the partnership of the natural environment and engagement with horses.

Together, Sam and Laurie were honored by Curry College with honorary doctorate degrees.

Do You Have a Sam Zell Tale to Tell?

Last week, in blog # 743, I announced the passing of land lease community portfolio magnate Samuel Zell, founder and chairman of real estate investment trust MHC, Inc., cum ELS, Inc. Also recommended reading his interesting and entertaining autobiography ‘Am I Being Too Subtle?’ Told a personal tale or two relative to visits to Sam’s office in the early 1990s – and how Sam’s support was germane to the forming of an Industry Steering Committee in 1993, for better national advocacy, and consequent founding of the Manufactured Housing Institute’s (‘MHI’) National Communities Council (now division) in 1996. That alone is an historic achievement!

Well, as is oft said, ‘the ink was hardly dry’ on that manuscript when I started receiving notes and tales from readers regarding their experiences and memories of Sam Zell. Here’s one I found to be especially interesting….

“I went to Sam’s office building. He had each floor dedicated to a type of property. One floor had the operations for the manufactured home REIT, another for the office REIT, another for the industrial REIT, etc. In a large outer office, outside Sam’s private office…was a large motorcycle. It was Sam’s, who rides it to the office building, (then up in) a freight elevator…and to this outer office. He sits us in front of his very large desk. Behind this desk, on the wall, is a large picture of a very fierce-looking bald eagle in attack mode. The eyes are large fierce-looking, the beak  open and ready to pounce. Below the picture of the bald eagle is a picture of Sam in the same position of the eagle. In our half hour conversation I could not keep my eyes off the pictures of Sam and the eagle. Sam noticed I kept looking at his picture, then of the eagle. Finally he asked me what I thought his reason for putting the two pictures in that positon. I gulped and said, “Two birds of prey”. He said that was close enough, and thanked me for my honesty and candor.”

A final observation relative to the business wisdom of the late Samuel Zell. Here quoting from his autobiography, “This has always been a fatal flaw in U.S. real estate: the volume of development has been related to the availability of funds, not to demand.” Think about that. In good economic times what gets built? Whatever dream a developer has, whether really needed or not. Like when downtown condominiums are overbuilt – then converting them to apartments as the only way to fill them. Conversely – like today, when our nation is faced with a serious affordable housing crisis (i.e. record high demand), local regulatory barriers to all forms of affordable housing prevent the development of much-needed land lease communities just about anywhere in the U.S. If you haven’t done so already, visit amazon.com and order a copy of ‘Am I Being Too Subtle?’ by Sam Zell, and avail yourself of more of his business wisdom.

National Average Site Rent in 2022

According to a recent Wells Fargo Multifamily Capital press release, “the national average monthly site rent (in land lease communities, a.k.a. manufactured home communities & MHCs) was $613 for all-age communities and $686 for age-restricted (55+) communities. This compares to a national average conventional multifamily (apartment) rent of $1,715. MHCs continue to lead the housing sector in affordability and sustainable rent growth across the majority of U.S. markets.”

So, what’s your reaction to those statistics? Mine? Applying the Traditional 3:1 Rule for estimating rental homesite rates in any local housing market, divide the $1,715 figure by ‘3’. The answer suggests land lease community rental homesite rates nationwide should be in the neighborhood of $572.00 – considerably less than either of the survey totals put forth in the press release. All this confirms the widespread belief that community owners/operators are pricing themselves out of the affordable housing market! Which then raises the question, ‘How can MHCs continue to lead the housing sector in affordability and sustainable rent growth?’*1

End Note.

1. There is one offsetting rejoinder to the statistics cited above. For the most part, these rental homesite rent rates are characteristic of what we generally refer to as being ‘institutional investment grade-sized land lease communities’, i.e. properties containing more than 100 rental homesites apiece. Smaller properties, which actually comprise 75-80 percent of the national inventory of this investment real estate asset class, generally charge lower site rent rates per month than aforementioned ‘institutional investment grade-sized communities’.

Infamous Quote of the Week

“I believe you should be able to prove who you say you are when you vote.” Senator Kennedy from Louisiana.

George Allen