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

Blog Posting # 773, Copyright 29 December 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable & attainable 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 is the online advocate, historian, trend tracker, and text resource for these two related business models! Reach EducateMHC by phoning (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 property management text in print today! SWAN SONG is a history of land lease communities & official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven – describes personal combat adventures in Vietnam, a 45 year business career in MH and community ownership/management, and as author/consultant.

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

LAST WEEK = CRE; THIS WEEK = HOMEBUYERS/RENTERS

Last week I shared ‘What to Expect During Year 2024’, where commercial real estate (‘CRE’) &

investing is concerned – quoting from Real Estate Forum magazine. This week I’m quoting from

a Newsmax (January 2024 issue) magazine article penned by David Patten and titled,

‘Skyrocketing Mortgages Drive Homebuyers Out of Market’. Pp. 16 & 17. Spoiler Alert: Not the

sort of news one likes to hear heading into a new year!

“Extraordinary news arrived in the closing weeks of 2023: Nearly 34 percent of all home sales

were cash deals without mortgage loans. (This) meant buyers were spending big bucks to buy

homes and investment properties.”

“Between January 2021 and September 2023, Federal Reserve data shows interest payments

for a median-priced mortgage rose from $8,500 to over $24,300 – a staggering 285 percent

increase.”

“Goldman-Sachs analysts predict a 4 percent decline in housing starts this year. Sales of

previously owned homes will fall to their lowest level since the early 1990s….” And…

“New housing starts for single-family homes fell to a three-year low, dropping 11.3 percent

compared to July.” Meanwhile, new HUD-Code housing production, year to date (‘YTD’),

dropped 24 percent and is not expected to improve. This will likely be a seven year low, with

85,000 units produced during 2023, compared to 81,136 during year 2016. How low can we go?

Well, in year 2009 we produced only 48,789 new HUD-Code manufactured homes.

“Higher mortgages, of course, tend to force consumers to rent instead. But they might not find

much relief there these days. The double whammy of inflation and high demand is forcing

rental costs up as well.”

“Rental costs approached record levels in September – at over $2,000 a month, according to

Redfin and Rent.com Compare that to as recently as (year) 2000, when the average new rental

went for $1,499 a month.” How’s that compare with rental homesite rates in land lease

communities? Well, using the traditional 3:1 ratio, land lease community site rent in year 2000

would have been in the neighborhood of $500/month; today that figure has escalated to

approximately $666/month; and in communities owned/operated by aggressive portfolio

‘players’, expect today’s rate to be closer to $1,000/month.

So, there you have it, over a two week period of time; what to expect in the CRE world during

year 2024, and what to expect where land lease communities are concerned.

OPERATION PINEAPPLE EXPRESS

Were you, like me, disgusted with the way our nation pulled its’ military forces out of

Afghanistan during mid-2021? We abandoned tens of millions of dollars in equipment,

weapons, and related material. We also abandoned Afghani interpreters and special forces

operators who’d worked side-by-side with U.S. troops for years – leaving them to certain death.

I remember hearing, at the time, how private individuals and NGOs (non-government

organizations), mostly former military-related, clandestinely rescued hundreds of their

comrades-in-arms, along with their families – but I never knew the full story, until now.

The recently released 400 pages book, ‘Operation Pineapple Express’ by Lt. Col. Scott Mann

(now retired) tells Incredible Story of a group of Americans who Undertook One Last Mission

and Honored a Promise to Afghanistan.’ And this story is told nowhere else!

“In April (of 2021) an urgent call was placed from a Special Forces operators serving overseas.

The message: ‘Get Nezam, one of the Afghan National Army’s first group of American-trained

commandos, out of Afghanistan now.’ The message reached Nezam’s former commanding

officer, retired Lt. Col. Scott Mann, who can’t face the idea of losing another soldier in the long

War on Terror. He sends out an SOS to a group of Afghan vets (Navy SEALs, Green Berets, CIA

officers, USAID advisors). They all answer the call for one last mission.”

What happened? “Operation Pineapple Express is a true story that reads like a thriller – and

along the way, proves that guts and resourcefulness and honor did not vanish with America’s

Greatest Generation.” Steven Pressfield, author of ‘Gates of Fire’ & ‘The War of Art’.

Scott Mann established an informal, unofficial headquarters for Operation Pineapple Express,

and for several months, raised funds, and pulled together resources and personnel needed

to get hundreds of wartime comrades out of Afghanistan. The book is a day by day account of

what happened, in the eyes of the commandos and families being rescued from Afghanistan,

as well as the men and women manning Operation Pineapple Express. And surprising to me,

anyway, was the copious amount of color photographs supporting the narrative. A great ‘read’

for anyone with an interest in U.S. and military history.

Thanks to the organizers of the annual SECO conference in Atlanta, GA., I got to meet Lt. Col.

Scott Mann at their event this past fall. I find it interesting that no other national MH-related

gathering honors our military in this fashion. And it is one of the few, that I know of, national

conferences where, at the very beginning of the program, everyone stands and repeats the

Pledge of Allegiance to the American flag. We need this to happen more often in our industry!

George Allen, CPM, MHM

Blog Posting # 772, Copyright 22 December 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable & attainable 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 is the online advocate, historian, trend tracker, and text resource for these two related business models! Reach EducateMHC by phoning (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 property management text in print today! SWAN SONG is a history of land lease communities & official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven – describes personal combat adventures in Vietnam, a 45 year business career in MH and community ownership/management, and as author/consultant.

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

What to Expect During Year 2024

A different perspective this time around. The December 2023 issue of ‘Real Estate Forum’ magazine featured an article titled ‘2024 VISIONS’. What attracted my attention was how closely the writer’s (Erik Sherman) prescient views of commercial real estate (‘CRE’) apply to the land lease community component of HUD-Code manufactured housing. See if you agree.

Here’re comments, taken out of context, from said article (pp.9-12), to underscore what many of us already realize is happening where our unique income-producing property type is concerned. For some, if not many, this will be a ‘wake up’ call.

“CRE pros are being much more careful and circumspect now.” The only certainty being uncertainty. Yet,

“…the private market is still overpriced.” A seller’s market continues. I know owners/operators who are not selling, simply to protect their homeowners/site lessees from predatory buyers and their high-priced salaried executives or ‘hired guns’. That’s putting resident relations before profiteering!

“…the 30-year bull run is over” where loan originator interest rates are concerned. Furthermore,

“..We’ve enjoyed cheap money for a very long time, but it’s led us to a lot of pricing perhaps that was reliant on that cheap financing.”  I wouldn’t even say ‘perhaps’; it’s a fact.

“…most banks are pretty much out of the lending business.” And we’ve certainly seen this before, e.g. circa 2007-2009.

Uh Oh! “…CRE loan values could drop in the face of falling property valuations, cutting asset values and making it harder to cover further worried (bank) withdrawals.” Another great shakeup on the way?

As “…defaults, workouts, and special servicing are all on the rise….” These are not fun experiences!

“There are more distressed situations and transactions happening because of the way projects were structured because of floating rate debt or even pressure from equity partners to get a faster exit.” And then there’s this…

“…signs of a secret distress market – increased bank CRE charge-offs and higher levels of distressed CRE loans – largely being handled privately and that has not broken out into a fully obvious run on distressed properties.” Yet

“…wake up to higher interest rates and to much higher costs of operating your property, and values are getting impacted. It’s a difficult time to navigate.”

Furthermore, “Credit card debt is at an all-time high and credit card and auto loan delinquencies are on the rise.” Not a CRE observation, but another leading indicator of trouble ahead.

In conclusion, “Consumers had built-up liquidity from Covid, but estimates, including from the Federal Reserve Bank of San Francisco, suggest that is likely gone. Not what you want to see when you’re hoping to avoid a recession, but consumer spending is 68 percent of GDP (gross domestic product).”

REPUTATION

“A man’s reputation is not in his own keeping. It lies at the mercy of the profligacy of others.” William Hazlitt. Profligacy here, meaning ‘reckless extravagance’ of reputation distribution.

If you recognize that quote it’s because you read it at the beginning of a personal memoir of mine titled ‘Got Rep?’ In it I describe my first civilian job as a lumber yard supervisor in Pennsylvania. During an informal going-away party with my work crew, before I relocated to Indiana, I learned of my reputation as a stone cold killer in Vietnam, wielding a Kbar fighting knife. Not true, but that was my ‘rep’, thanks to a Vietnam veteran on that crew.

Point? Protect your reputation, be very careful with it. Why? Because it could emerge publicly, deserved or not, at the most inconvenient of times, for good or bad. Frankly, I’ve see it happen time and again in this industry. And I have reason to believe more missteps may be on the horizon….

Examples.

There have been individuals, over the years, who cultivated (unknowingly or purposely?) a rep for offering whatever price a community seller wanted; then, just before ‘closing’ demanding to renegotiate, even threatening to walk away from the deal. These individuals earned reps as pariahs (‘outcasts’) in our real estate asset class.

Then there are the contemporary real estate investors who overvalue and overpay for land lease communities; then, soon after ‘closing’ jack rents and add ancillary fees paid by homeowners/site lessees. The only ‘winners’ being the sellers and maybe the acquisition firm(s). Time will tell, but that ‘rep’ is already out there, demoralizing folk, and giving rise to landlord/tenant legislation.

Poor operators. At times they seem to be everywhere, and manifest their bad reps in various ways. One New England operator, when asked about the abundance of potholes in his streets, crowed: “Well, at least they slow down traffic!” Another operator waives rental payments and late fees in return for sensual favors. And there’re operators who blatantly discriminate in accords with personal prejudices, in violation of Federal Fair Housing law. Don’t forget the ‘slumlords’ who allow their properties to become eyesores, prejudicing local housing market ‘city fathers’ against new raw land development as land lease communities. And the list goes on…

Yes, there’re more. Like would be trade publishers who drive away writers – and readers. Lenders who burden borrowers and community operators with questionable contract terms. Trade advocacy entities with tunnel vision where across-component issues are concerned, even differing in the reporting of key statistics (i.e. ‘Who to believe?’).

Again, you only have your personal, and at times corporate, reputation to accompany you through your business career. You really don’t want to have peers blackball you, local chambers of commerce shun you, and or state and federal legislators and regulators cast you in a negative light in public and the press. A final example. Recently, on LinkedIn, a land lease community portfolio owner/operator being honored by a trade publication for the firm’s positive work in a particular function area (i.e. Good Rep!), turned-off the Comments feature on that site. (i.e. Fearing a Bad Rep?). So, be careful to cultivate a Good Rep whenever and wherever possible!

FOUR

I bought five copies of the novel ‘FOUR’ as Christmas presents for family members and business friends. With each copy I enclosed this explanation: ‘Why am I gifting you FOUR?’ Here’re some of the reasons cited:

The author, Charles (‘Chuck’) Irion is a longtime business acquaintance and friend in the manufactured housing business out in Arizona. He’s also an artist, world traveler, philanthropist, and adventurer. He’s authored 12 novels in two series: Murdered by Gods, and Summit Murder Mysteries. His five non-fiction books cover remodeling, autograph collecting, used car sales, and divorce, plus a humorous cookbook titled, ‘Roadkill Cooking for Campers’.

FOUR is a standalone ‘men’s mystery & adventure’ novel, and in my opinion, is his very best work to date. (I’ve read them all.) Here quoting from the Amazon book order website:

“FOUR means death for us all. In many Asian cultures, the number four (‘4’) is considered unlucky because the ‘word’ for the number four, and ‘word’ for death, are the same!”

In FOUR, “Forces are in motion around the world. FOUR people have FOUR days to prevent World War FOUR and save the world from destruction.”

Introducing one of those four primary characters: “There was nothing but blue sky above and blue sea below, and from where Colonel George Allen was sitting, it was a little hard to tell the difference. He let his gaze roam the expanse, not really looking at anything in particular, but savoring the experience and the memories it brought. Twenty-odd years ago, this would have been the view from the cockpit window of his F/A-18C Super Hornet, and not merely a high-def projection transmitted back to the Virtual Combat Center – VCC – aboard the USS Enterprise CVN-80-a Gerald R. Ford-class aircraft carrier where Allen Lived the experience vicariously.” Pp. 31 & 32. Chuck wrote me into his latest novel, in recognition of the editing and writing advice we’ve shared these past several decades.

Finally; for clarification, the time frame of FOUR is year 2045, some 22 years into the future, and after World War III, 20 years ago.

The only things I’ll add here, encouraging you to order this 362 page book, are notes I penned to Chuck, as one writer to another: Like the short chapters, the believable albeit futuristic ‘tech talk’ throughout, and your good feel for military hardware and its specialized use. Good character development, right-on descriptions of life aboard ship and ‘on the run’, and exciting active plot development.

Hope you enjoy the ‘read’!                                                                George Allen, CPM, MHM

Blog Posting # 771, Copyright 15 December 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable & attainable 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 is the online advocate, historian, trend tracker, and text resource for these two related business models! Reach EducateMHC by phoning (317) 881-3815; email: gfa7156@aol.com, or visit www.educatemhc.com, and to order Community Management in the Manufactured Housing Industry. This is the sole professional property management text in print today! SWAN SONG is a history of land lease communities & official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven – describes personal combat adventures in Vietnam, a 45 year business career in MH and community ownership/management, and as author/consultant.

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

Manufactured Housing’s Conundrum

(‘a riddle; hard question’)

Without land cost, the average HUD-Code manufactured home today costs $127,300 and average new single floor site-built house costs $430,808.*1

The Conundrum. In light of the previous paragraph, and our nation being in the midst of a perennial national affordable housing availability crisis, how can HUD-Code manufactured housing prices, up 77 percent between years 2017 & 2022, experience manufactured housing production down 24 percent year to date (‘YTD’) 2023???*2

WHY? I don’t know the answer to that question.*3 That conundrum is the very reason I proposed, months ago, our manufactured housing industry leaders should be discussing this matter among themselves, and including entrepreneur business people who have vested interests in this industry and realty asset class in the conversation! Is this happening? Not that I know of! IF it’s happening within the confines of national advocacy trade group gatherings (i.e. MHARR & MHI), it’s not apparent to those of us on the outside and wondering what the future holds for us.

A suggestion. Perhaps the meeting planners and hosts of the upcoming Louisville MHShow (17-19 January 2024) would plan a public session where this conundrum is front and center! Several key individuals could be tapped to prepare in advance, brief personal or corporate reasons and solutions to this conundrum. Distribute these position papers at the door, then publicly discuss during said session. Who to invite? Heads of MHI & MHARR, as well as top executives of the ‘Big Three C’ HUD-Code manufacturing firms: Clayton, Skyline-Champion, & CAVCO. Limit each presenter to five minutes of explanation, followed by five minutes of controlled, moderated discussion; ending with a ten minute summation by the moderator. That’s one hour’s time to get our industry’s conundrum out into the open and, hopefully, stimulate action and resolution!

What do you think? If you agree with this suggestion, and are a member of either or both national advocacy groups cited above, reach out to them and suggest they encourage the Louisville MHShow organizer/host get started on this right away!

End Notes.

1. According to the U.S. Department of Housing & Urban Development (‘HUD’), U.S. Census Bureau Manufactured Housing Survey (‘MHS’), and Survey of Construction (‘SOC”)
2. Information from a Lending Tree Survey dated 12/23

• Some say 1) lack of easy to access ‘home only’ loans & presently high interest rates, 2) pandemic era high prices on building components & lack of available labor, 3) local regulatory barriers to all forms of affordable housing, 4) too few housing sales centers, a.k.a. independent (street) MHRetailers & ‘company stores’, and lately, 5) challenges working with local permitting and engineering authorities, even when land planning and zoning boards approve development of raw land into land lease communities and subdivisions.

Where Were You in 1968?

Me? During most of year 1968 (April through December), I was a young U.S. Marine lieutenant in the Republic of Vietnam. I share those adventures in my autobiography, ‘From SmittyAlpha6 to MHMaven’. (Google: From SmittyAlpha6 to MHMaven, & tap the educatemhc.com prompt)

Well, there’s a new book about to debut (January 15, 2024) covering that timeframe. It’s Rick Robinson’s ‘1968: A Primer for Understanding Baby Boomers’. I’ve already ordered my advance copy from amazon.com You’re probably already aware that Robinson is an accomplished and popular novelist (Think ‘Opposition Research’), besides being a primary resource at manufacturedhomes.com

Here’s what the book press release has to say about Rick’s book: “…a small-town deep-dive into one of the most significant and controversial years in American history. Vietnam, the assassinations of Martin Luther King, Jr., and Bobby Kennedy, civil rights protests at home and abroad, Nixon versus Humphrey, all made 1968 a seminal year. It offers a lens of understanding how this year helped shape not only baby boomers but all generations that followed.”

Blog Posting # 770, Copyright 8 December 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable & attainable 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 is the online advocate, historian, trend tracker, and text resource for these two related business models! Reach EducateMHC by phoning (317) 881-3815; email: gfa7156@aol.com, or visit www.educatemhc.com, and to order Community Management in the Manufactured Housing Industry. This is the sole professional property management text in print today! SWAN SONG is a history of land lease communities & official record of annual MH production totals since 1955; and my autobiography, From Smittyalpha6 to MHMaven – describes personal combat adventures in Vietnam, a 45 year business career in MH and community ownership/management, and as author/consultant.

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

An Exciting Personal ‘Read’ & Holiday Gift!

Charles (‘Chuck’) Irion is a longtime business acquaintance and friend in the manufactured housing business, brokering and managing land lease communities in the Southwest. He is also an author, world traveler, philanthropist, and adventurer.

Chuck has authored 12 novels in two series: Murdered by Gods, and Summit Murder Mysteries. His five non-fiction books cover remodeling, autograph collecting, used car sales, and divorce, plus a cookbook titled, ‘Roadkill Cooking for Campers’.

His recent release, ‘FOUR’ is a standalone ‘men’s mystery & adventure’ novel; and in my opinion, is his very best work to date! Quoting here from the Amazon book website:

“FOUR means death for us all. In many Asian cultures, the number four (‘4’) is considered unlucky because the ‘word for number four, and ‘word’ for death, are the same!”  So, in FOUR,

“Forces are in motion around the world. FOUR people have FOUR days to prevent World War FOUR, and save the world from destruction.”

One of the FOUR people driving this tale? “There was nothing but blue sky above and blue sea below, and from where Colonel George Allen was sitting; it was a little hard to tell the difference. He let his gaze roam the expanse, not really looking at anything in particular, but savoring the experience and the memories it brought back. Twenty-odd years ago, this would have been the view from the cockpit window of his F/A-18C Super Hornet, and not merely a high-def projection transmitted back to the Virtual Combat Center – VCC – aboard the USS Enterprise CFN-80- a Gerald R. Ford-class aircraft carrier where Allen Lived the experience vicariously.” Pp. 31 & 32. This book is set 20 years into the future, 20 years after WWIII.

Irion drives his stories with action and intrigue, not sex scenes and profanity. A terrific ‘read’ or gift, and available via Amazon.com  I’ve purchased five copies for family members and friends.

Getting Down to Business!

As MHI, MHARR, and EducateMHC, point out, the annual production of new HUD-Code manufactured homes continues on a downward slide! Through October 2023, our YTD production is down 24 percent from a year ago! MHI’s ‘seasonally adjusted annual rate’ (a.k.a. ‘SAAR’) also continues its’ downward trend, dropping from a 97,919 estimate in September to 97,919 through October. And EducateMHC estimates the ‘end of year’ SAAR to be in the neighborhood of 86,000 new HUD-Code homes to be produced during all of year 2024. ‘Ugh!’

With that gruesome (‘horribly repulsive’) foretelling, it’s encouraging to hear and read of individuals within MH, and among land lease community owners, who’re experiencing ‘good times’ and or expect year 2024 to be better, far better, than what we endured during year 2023. This from Amy Bliss, executive director of the Wisconsin Housing Alliance:

“Merry Christmas to you and your family as well George! Things are looking up in Wisconsin. We have a good deal of development being planned and hopefully (it) will come to fruition within 2024 or early 2025. First time we have heard of such talk, but the time is right because we need a lot of housing here, and people are starting to accept us (i.e. manufactured housing & communities) as a solution. I am feeling positive about the next couple years.” ‘Hoorah!’

So, make it a point to climb aboard the optimistic wagon of manufactured housing performance, and plan now to attend the annual Louisville MHShow, 17-19 January 2024! While I deferred (i.e. postponed) planning and hosting an industrywide meeting (to ID and discuss sensitive industry issues) at this seminal event, I – and many others, plan to be present to see and buy new manufactured homes and interact with our peers from throughout the U.S.

And, while you’re at it, mark your personal planning calendar with the date 9-12 September 2024. These are the dates for SECO 24, at the Renaissance Waverly Hotel in Atlanta, GA.

George Allen, CPM, MHM