Blog Posting # 751, Copyright 21 July 2023. EducateMHC
Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-gassed, 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+ year business career in MH and community ownership/management.
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, and prayer.
RVs as Affordable Housing
I’m asking for some help here. For the past year or so I’ve been researching and preparing an academic article on the subject of ‘RVs as Affordable Housing’. It’s been a fascinating, but at times frustrating, journey. While it’s well-known there’s more than a million ‘fulltime RVers’ in the U.S. today, there’s absolutely no handle, so to speak, on the number of RVs being used as fulltime housing. And that’s where you might come in – as a source of information for me. If you have any experience whatsoever with folk living fulltime in one or another type of RV – as their residence, please write or call and let me know what you can tell me. See introductory paragraph, above, for contact information. And Thanks for helping.
A few more scattered thoughts on this subject. Early in the article I’ll be defining ‘affordability’ in terms of the commonly-accepted 30 percent Housing Expense Factor (‘HEF’); i.e. ‘Housing is affordable when an individual or household’s Annual Gross Income (‘AGE’), or local housing market’s Area Median Income (AMI’) – identified by postal zip code & available online via zipwho.com, can lease a conventional apartment and or buy a home (or RV) in this local housing market, using no more than 30 percent of said AGI or AMI for shelter & its’ related household (utility) expenses.’ E.g. $50,000 AGI/AMI X .3 HEF = $15,000 or $1,250/month available for rent or mortgage and PITI (principal, interest, taxes, insurance) and household expenses. That’s ‘affordability’ defined.
I also realize RVs are not built to any of the housing codes (including HUD-Code), since they are intended to be temporary shelter as one travels, vacations, and otherwise. It’s the ‘otherwise’ I’m attempting to build this affordable housing case upon. How so? Well, for decades I’ve experienced itinerant construction workers living in RVs on rental homesites within land lease communities; same with homeowners/site lessees who own and live in a manufactured home in northern climates during spring, summer and fall, but relocate to their parked RV ‘down south’ along the Rio Grande in Texas, throughout Florida, and other Sunbelt regions. Can you provide additional examples of real or quasi-residency in recreational vehicles? Sure would appreciate your input!
Manufactured Housing’s Achilles’ Heels!
Do you know the story of Achilles’ Heel? In Greek mythology, Achilles’ mother Thetis, to make her newborn son immortal, submerged him while holding him by one heel. Later in life, Achilles was killed by Paris’ arrow striking that unprotected part of Achilles’ body. Since then, the weak point of a person or object is referred to as its’ Achilles’ Heel. For example; with nuclear power, the Achilles’ Heel is the difficulty in getting rid of radioactive waste.
With that said; as I perused Harvard Joint Center for Housing Studies’ (‘HJCHS’) recent study:
‘Comparing the Costs of manufactured and Site-Built Housing’, I came across a street view (labeled as Figure 1) of a CrossMod Home, with this comment: “…currently only comprising a small percentage of total manufactured homes sold annually….” And, once again, asked myself ‘Why is this so?’
Went back and looked at the photo closely. Know what? There are no gutters and downspouts shown on this particular CrossMod Home. This is important because the study goes on to state: “CrossMod’s enhanced appeal is a function of a set of specific design standards intended to make the homes less distinguishable from site-built homes.” Well there it is! CrossMod’s Achilles’ Heel! No gutters and downspouts! When was the last time you saw a brand new, ready-to-move-into site-built home without gutters and downspouts? Never. YES, this is indeed a small, a minor point – and not ‘the first time around’.
What do I mean by that? Ever since there’s been conventional stick-built housing on scattered building sites conveyed fee simple and in subdivisions, there’ve been private contractors advertising ‘roofing, siding, and gutter’ services. Early on, ‘mobile homes’ needed none of those services, as they featured metal roofing, metal siding, and no gutters – or in a word, three Achilles’ Heels! Well, we first replaced metal with aesthetic appealing siding material and addressed the first Achilles’ Heel. Then we replaced metal roofing with shingles, addressing the second Achilles’ Heel. And now we should consider how much better HUD-Code manufactured housing would/will look with gutters and downspouts. That is to say, do away with the third and final Achilles’ Heel of manufactured housing. What do you think?
Think I exaggerate? Here’s yet another example of an Achilles’Heel holding our industry/realty asset class back from widespread social and consumer acceptance. Consider the perennial image-challenges our industry faces where land lease communities are concerned. There are some (maybe many?) fine communities throughout the U.S., but the ones who routinely tarnish our rep are those with visible indicators of marginal to poor property management! Seriously. Capable, experienced, professional property managers make all the difference as to whether a land lease community, in the local housing market, is a patent eyesore or promotes a desirable lifestyle. Professional property management has been and continues to be, in my opinion, the veritable Achilles’ Heel of this unique type investment real estate. Consider this: no other form of commercial real estate has fewer trained and certified property managers at work on-site than among land lease communities nationwide! A first step in the right direction? Purchase a copy of ‘Community Management in the Manufactured Housing Industry’ (via www.educatemhc.com) and commit to implement professional property management at your property or properties!
So, it’s ‘gutters & downspouts’ for manufactured homes and ‘professional property management’ for land lease communities! It’s time to rid ourselves of all Achilles’ Heels!
ESG Distorts Markets & Drives Up Costs of Insurance & Housing
In a recent MHI newsletter they described Bill Boor’s ((MHI Vice Chairman & Pres/CEO of Cavco Industries) recent testimony before a Housing & Insurance Subcommittee, titled ‘How Mandates Like ESG Distort Markets & Drive Up Costs for Insurance & Housing’.
What’s ESG? A politically popular effort to stimulate investment in corporations embracing Environmental, Social, and corporate Governance policies and measures, ostensibly addressing the good of society at large. While ESG has been around since 2004, it only recently has become accused of ‘greenwashing’, i.e. green marketing deceptively used to promote products as being environmentally friendly.
In any event, Bill Boor criticized the Department of energy’s (‘DOE’) Energy Conservation Standards for Manufactured Housing “…as an example of a federal agency implement an environmental policy without fully understanding the broader consequences.” Specifically, DOE fumbled its’ effort to address ‘E’ (environmental) at the cost of ‘S’ or social consequences; i.e. higher cost of new HUD-Code manufactured homes.
RV/MH Hall of Fame Draws Nigh…
Where will you be the evening of Monday, 21 August 2023? Hopefully with many of your manufactured housing industry peers at the annual RV/MH Hall of Fame Induction Banquet in Elkhart, IN. I certainly plan to attend, along with a dozen other close friends – so far. Give the matter some thought, then join us for the festivities. For tickets, phone (574) 293-2344.
If you have time to spare – and need firsthand training on marketing and selling new HUD-Code homes on-site in land lease communities, plan to stay over on the 22nd & 23rd, to attend IMHA/RVIC’s annual MH FacTOURy tours and seminars at the RV/MH Hall of Fame. For more info, phone (317) 247-6258.
Some of us make it a point to arrive a day early, on Sunday the 20th, to do some topnotch networking at the Hilton Garden Inn, along the interstate north of Elkhart. Phone (574) 970-4444 for reservations. Then, the next morning, travel the short distance to the Hall of Fame facility to tour the still new Manufactured Housing Exhibit Hall. Well worth the visit. And then, some of us will adjourn to the library upstairs to meet and discuss a variety of topics. This year, I’m bringing a supply of the recently updated booklet, Who Will Preserve Your Legacy? Answer: You! We just completed a mass mailing to dozens of executives around the U.S. who have compelling stories to tell – personally and corporately. Feel free to join us – but let me know ahead of time of your interest, so I’ll have enough copies of the booklet to hand out.
So, do you get the idea, this is where to be on the 20th– 23rd of August 2023? It surely is. Hope to see you there!
Estimated National Rental Homesite Rate?
According to the July/August 2023 issue of ‘Multifamily Executive’ magazine, quoting Yardi Matrix, $1,716 is the average U.S. conventional apartment asking rent rate. Applying the widely-referenced 3:1 Rule, 1/3rd of $1,716 is approximately $572.00. So ‘maybe’ the estimated national rental homesite rate within investment grade land lease communities is close to $572.
George Allen, CPM, MHM