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

Blog Posting # 726, Copyright 3 February 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, factory-built affordable housing, and land lease communities (a.k.a. manufactured home communities & ‘mobile home parks’) are the real estate component of manufactured housing! EducateMHC is online advocate, historian, trend tracker, and text resource for these business models. To input this blog or connect with EducateMHC, telephone (317) 881-3815, email: gfa7156@aol.com, or visit EducateMHC.com, to order Community Management in the Manufactured Housing Industry (Sole MH property management text in the U.S. today!); SWAN SONG, a history of land lease communities, and official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven, from combat in Vietnam to community owner

George Allen, CPM®Emeritus, MHM®Master, Emeritus member of MHI, & RV/MH Hall of Fame


A Challenge to & Suggestion for, the MHIndustry

Last week I emailed the following Challenge & Suggestion to dozens of manufactured housing industry leaders and land lease community owners/operators throughout the U.S. And we’ve been receiving helpful replies; but first, the Challenge & Suggestion (lightly edited. GFA).

“I’m dismayed to hear and read NOTHING from or about MHI’s National Communities Council (‘NCC’) division efforts to address today’s ongoing problem with sharply escalating rental homesite rates in land lease communities from coast to coast. In my opinion, today’s NCC is NOT the organization that 19 community owners, meeting on 8/31/1993 in Indianapolis, IN., had in mind! Part of their original Mission Statement proclaimed the “goal of providing affordable housing and a quality lifestyle”, with one of the Issues of Note identified in that founding document as being: “Avoiding and combating rent control and landlord/tenant legislation”. NONE of this is happening today!*1

“Do I have a suggestion for combating the problem of sharply escalating rental homesite rates in land lease communities? Sure, but it’s one I’m reluctant to make – as a former 40 year owner/operator of this unique income-producing property type.*2

Encourage NCC division members, and realty asset class at large, to ascribe to the decades old (i.e. ‘time-proven’) 3:1 Formula for balancing conventional apartment unit rent, and land lease community site rent, in any local housing market! How so? First, effect a local housing market survey, then ascertain the average monthly apartment rent among 3BR2B or townhouse units. Then, divide that average $ by ‘3’, to estimate what land lease community rental homesite rate should/could be. For example, $1,500 average apartment unit rent divided by ‘3’ = $500.00 per month rental homesite rate.*3 Does this always work? No. It’s already out of sync in markets where community portfolio owners/operators have skewed site rents closer to a 2:1 ratio (e.g. $1,500/apartment unit & $750/rental homesite). However, formally adopting and endorsing the 3:1 Formula would be a major step in the right direction! Question is whether the NCC will be bold enough to take a public stand on this issue, suggesting this & other practical remedies?

An interested business audience is watching to see what occurs during the months ahead!

And as was mentioned earlier, replies to this email challenge have been rolling in of late. Here’s a summary of some of those commentaries:

“George. The 3:1 Rule has been replaced with ‘whatever the market will bear’. Unfortunately, with high moving costs, and counties with move-in restrictions (e.g. age, size), ‘the market’ has no choice but to charge outrageous site rent rates – until residents run out of money.
&
Those who sell their communities for ridiculously low income capitalization rates can’t blame buyers for subsequent rent increase damage to residents – how else can buyers pay such ridiculous prices without substantially increasing rents?” (Edited for space. GFA)

“George. We hear you, but out here in CA we now have more than 100 rent control ordinances designed to protect affordable housing – but the thing everyone forgets is that rent is only a portion of that monthly cost. For example, in Oxnard, CA. we’re allowed limited yearly CPI increases and max of $80 increase upon a home sale. This is very one sided, as residents now sell pre-1976 homes, for which they paid $30,000 in the 70s, for a minimum of $200,000. Furthermore, no new land lease communities have been built in CA for nearly 20 years! We had more than 500,000 rental sites in CA; today fewer than 400,000.
&
If it is such a great business model, why are there less than 150 manufacturing plants throughout the U.S.? I think California now has but six. As you’re aware, location-location drives rents in California. We currently have site rents above $5,000/month and some still under $300/month. The good news is, as a company, we continue to enjoy 100% rent-producing occupancy among more than 13,000 rental homesites because the demand for manufactured housing (i.e. affordable housing) is still a great alternative!” (Edited. GFA)

It’s not too late for you to input your observations and views into this timely and critical conversation. Simply email your thoughts to me via gfa7156@aol.com

End Notes.

1. The complete founding document of the Industry Steering Committee (‘ISC’), i.e. forerunner of the NCC division launch on 1 January 1996, is featured on page #97 in the book SWAN SONG, available for purchase from Educatemhc.com

2. Why reluctant? Because, as a former community owner, I don’t like anyone telling me how to run my business enterprise. But, sad to say, the time has arrived for some sort of definitive action of this sort. Who knows? Perhaps some other organization than the NCC division will pick up this voluntary regulatory baton and run with it. Possibly SECO, ROC USA, even one or more of 500+/- known land lease community portfolio owners/operators.

3. Don’t forget to factor into the estimate, adjustments for amenities and extras like water & sewer charges, CATV, etc…


POSITIVE POSSIBILITIES

Two weeks ago (i.e. blog # 724) I revealed the identity of ‘mystery community owner’ as Dr. Matthew Jenkins, DVM. Well Dr. Jenkins, before his passing in 2017, authored the autobiography, Positive Possibilities. His life story joins nearly a dozen other such books penned by pioneers and noteworthy owners/operators of land lease communities over the past several decades.*1 I recently read Positive Possibilities (available via amazon.com), and here’re selections from the book, as well as my observations.

Matthew was strongly influenced by his large family while growing up in Alabama. Here he describes a typical table conversation led by his mother who’d: “…gather us around the breakfast table and talk about life. She spoke of integrity, values, and setting goals, success, honesty, discipline, hard work, getting along with people, and finding a lifetime mate” – and in her words, ‘If you want to be successful, your word is your bond. If you tell a person you are going to do something, do it. Take pride in everything you do. If the job must be done, do it well. Be careful about the friends you choose. Make sure their values are consistent with yours.’ Pp. 32 & 33.

A lesson to his children and business associates: “…your reputation is all you have. If you tarnish it, doors of opportunity well slam shut. So my advice to any youngster is this: ‘Don’t half do anything. To see a botched job appalls me. If you can’t do it right, keep trying until you get there. If you’re really stumped, ask for help from someone you respect’.” P.60

His Success Formula? “…train your mind to look for positive possibilities in any situation, no matter how bleak it may seem. Tough situations test your character. Many people miss out on opportunities during tough times – discrimination, hard financial times, and countless other challenges.” P. 87

Matt’s advice to land lease community owners/operators and independent (street) MHRetailers? “…customers are your greatest advertisers. If you treat them right, they will recommend you to others. This seems elementary, but too many business owners forget this. The customer may not always be right, but they should always be treated right. You can’t have angry customers talking badly about you. It will destroy your business.” P.139. Know what? Considering our realty asset class’ struggle with extravagant rental homesite increases these days, this advice just might be the Achilles ’ heel that leads to the landlord/tenant ‘shakeout’ many of us fear is in the not too distant offing. Matthew, goes on to say, “What I see in this country right now is a scourge of greed in the business world.” P.170

Dr. Jenkins was a voracious reader. Four daily newspapers. And this, “Learn to discipline yourself to read instead of watching television. I read because it inspires me, often ushering me into a state of comfort and tranquility, and it can do the same for you.” P.146

So, how did I get to know Dr. Matthew Jenkins? He bought my 500 rental homesites land lease community during the early 1980s; and in the process, he, his wife Roberta, Carolyn and I dined a couple times in a fine French restaurant in Mooresville, IN, that no longer exists. His musings on our business model? “Overall, I feel eminently fortunate to have unwittingly discovered the mobile home park investment opportunity.”p.150 (&) “At our peak, we owned 18 parks in eight different states.” P.154

His final word of advice? “Hard work, discipline, and sacrifice channeled into the implementation of a well-researched strategic game plan is an age-old formula for success in any endeavor.” P.167

So, those of us who knew Dr. Matthew Jenkins were blessed to know a true and honorable business man. Hopefully, some day, he’ll be selected for induction into the prestigious RV/MH Heritage Foundation’s Hall of Fame.

End Note.

1. Here’s a summary list of manufactured housing and land lease community autobiographies housed in the RV/MH Hall of Fame library in Elkhart, IN. Also indications as to where you can obtain copies to read. Suggest you save this list for future reference.

• Kristian Jensen, Sr., authored A Danish American. The first such life story, but long out of print, and available for reading, only in the RV/MH Hall of Fame library in Elkhart, IN.

• John Crean, with Jim Washburn, co-authored The Wheel & I. A leather-bound tome with gilded pages and engraved cover. Available via amazon.com & the RV/MH Hall of Fame

• James Clayton, with Bill Retherford & Amy Nolan, co-authored First a Dream. Available for purchase via amazon.com & the RV/MH Hall of Fame. (800) 378-8694 Ask for Jose.

• The life & Times of B.M. Vukovich, a family-produced photo-autobiography chronicling the personal adventures & business career of the late Borislav (‘Boro’) Vukovich. Available for reading only in the RV/MH Hall of Fame library.

• Harrell & Darrell Cohron, with Matt Cohron, co-authored The Trailer Twins. Available only from the RV/MH Hall of Fame, and for reading at the RV/MH Hall of Fame library.
• Mike Conlon’s Unconventional Wealth reads like the first half of this author’s life story. Available via amazon.com, and for reading in the RV/MH Hall of Fame library.

• George N. Goldman authored The Road Less Traveled. George’s perfect bound book is available for purchase via amazon.com, & for reading at the RV/MH Hall of Fame library.

• Alvan L. Schrader’s No Respect At All…A PATH TO MILLION$, is considered by some to be ‘required reading’ about manufactured housing. Available from RV/MH Hall of Fame.

• Samuel Zell authored Am I Being Too Subtle? Published by Penguin Random House in 2017; title is available via amazon.com & for reading at the RV/MH Hall of Fame library

• Jim, Ralph & Jeff Scoular co-authored Leap of Faith, ‘The Story of an Industry, Family & Unmovable Values’. Available for purchase only from the RV/MH Hall of Fame

• Dr. Matthew Jenkins, DVM, authored his autobiography, Positive Possibilities, ‘My Game Plan for Success’, in 2017. Available for purchase via amazon.com

• George Allen, CPM®Emeritus, authored semi-autobiographical SWAN SONG to preserve annual MH production totals from 1955 forward. In 2021 EducateMHC published George’s autobiography, From SmittyAlpha6 to MHMaven, to commemorate his retirement. Both books available from EducateMHC.com and the RV/MH Hall of Fame.

Only a few copies of the memoir HOW TO booklet, Who Will Preserve Your Legacy (as a manufactured housing or community businessperson)? remain, a new updated edition is being prepared for distribution to 2023 RV/MH Hall of Fame inductees. If you’d like to receive a free copy of the updated booklet when ready, simply communicate your desire to me via gfa7156@aol.com GFA