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

December 12, 2010

And, ‘He-r-e’s Grayson & Friends; Many of You Feel My Pain; & 4 Good Reason to be in Louisville, KY @ 11 – 14 January 2011!

Filed under: Uncategorized — George Allen @ 10:57 am

And, ‘He-r-e’s Grayson & Friends!’
Many of You Feel My Pain…
Four Good Reasons to be in Louisville, KY., 11-14 January, 2011.


For ‘rest of the story’, read Allen Letter professional journal each month! *1


Two weeks ago, in the blog posting titled, ‘Whose Responsibility is Housing Affordability?’, reference was made to Gary W. Pomeroy’s 1970s classic text, How to Successfully Sell New and Resale Manufactured Homes. In that book, the author wrote about Grayson Schwepfinger’s ‘use of a rather unique system of qualifying the customer’ by ‘locking all the homes on a sales center…forcing prospects to come to the office’, where they are pre – qualified by Urgency, Income & Need before seeing any homes.’ (p.26). Well, how’d you like to read more of Schwep’s wisdom on the subject? He sent me the following lengthy email message on 1 December; so, here’re some rare gems (lightly edited) right from that ol (manufactured housing sales) warhorse’s pen…

‘First off, you mentioned very few salespeople really look at whether the customer can truly afford the home they are being sold. Well, one of our clients, New Jersey – domiciled REIT, UMH Properties, pulls a credit report on every prospective homebuyer, and not only confirms their ability to buy, but also does a character check to ensure they are indeed the quality potential resident they’re looking for. If the prospect doesn’t pass both tests, they instruct the salesperson to refuse the offer to purchase the home.’

‘You described one way (Use of the new ‘Ah Ha! & Uh Oh!’ worksheet) to calculate ‘affordable’ and ‘risky’ price points for new and resale homes. Well, 40 years ago, I went to the chattel lenders and asked how they computed whether or not a customer can afford to purchase a home. They showed me a form they used – and continue to use to this day. First, they take all the monthly income the prospect is making. This includes any standard job income, plus any other additional income that is long – lasting and received on a monthly basis, such as child support. In most areas, they figure the total commitment to monthly payments should not exceed 40% of this monthly total, then subtract all the current monthly debts (e.g. furniture, credit card, car payments, and homesite rental fee) from that amount. The amount left is what lenders will allow the homebuyer to spend (invest) in monthly housing payments. For example: $3,000.00 income/month X 40% = $1,200.00 (-) $633+/- (for car, credit card, rent, etc. payments) = $567.00/month available for P&I (principal & interest) payments on home mortgage.’

GFA Note. But ‘here’s a potential rub’. The above calculation, if still the manner in which some, if not all, third party lenders estimate how much monthly P&I payment a new homebuyer can afford, they may be unintentionally setting borrowers up for unexpected and undue economic pressure, if not ultimate failure. How so? Nowhere in this methodology, that I’ve seen, are escrowed T&I (taxes & insurance) and monthly household utility expenses, not including telephone expenses, included in the overall housing expense proposition! Frankly, ‘if included’, the $567.00/month P&I mortgage payment estimate would necessarily be reduced to something in the neighborhood of $342.00., in order for the PITI mortgage payment and household expenses, to be indeed be ‘affordable’, rather than inherently ‘risky’! This is the same dynamic, oft ignored, difference between ‘affordable’ & ‘risky’ monthly housing payments, the new ‘Ah Ha! & Uh Oh! worksheet clearly demonstrates. *2

Grayson continues. Once home buying prospect is qualified, ‘what I do is show them what the lender will allow them to spend on a new home, e.g. $567.00. Then I ask how much of that amount they would be willing to invest each month. So, I now have identified not only what they are able to pay, but also what they are willing to pay. By doing it this way, I don’t get their ego in the way. What I mean is, suppose I early on, ask how much they want to pay by the month, and they tell me they would go as high as $600.00/month. If I now sell them a home for $600.00/month, then turn the agreement in to the lender for approval, it’s going to be turned down, since it’s over the calculated limit. I now have two problems. First, the deal has been turned down. Second, is having to go back to the prospect, and tell them they are not approved for anything over maybe $500.00. At this point, I stand a good chance of their ego getting in the way, and they tell me the lender doesn’t know what they’re talking about. So, they leave my sales center or LLCommunity in a huff, go to another sales outlet, and begin by telling them not to show them anything that costs more than $500.00/month.’

Schwep NOTEs. If you’d like FREE copies (one blank & one filled – in sample) of the form Grayson developed, over the years, to apply the above – described income qualification methodology, simply email your request to And, given the present day finance regulatory climate, ensure your on – site staff is appropriately trained and licensed. For information on this subject, phone Schwep @ (610) 533-4969.


And here’re guidelines a CPA LLCommunity portfolio owner/operator uses to qualify would be homebuyers, at one or another of his/her properties:
30% of gross pay must cover all housing costs (e.g. site rent, house payment, taxes, insurance, finance fee); and, or max of 60% of net pay must cover housing costs just listed. JD
Yet another blog flogger (‘promote & publicize’ what’s right about manufactured housing and landlease communities!) weighs in on this timely subject with this insightful commentary. “On the surface, the key determinant, as to whether or not the home seller really cares about the prospective homebuyer’s ability to make ongoing house payments, is whether, or not, the seller indeed has ‘skin in the game’. Since home finance is a long term endeavor, that ‘skin’ must be based on a 10 – 15 year planning horizon. When people, who run businesses, allow others (e.g. employees) to disregard that important fact, by allowing short term gains at the expense of long term security, they set in motion a sure – fire formula for failure!” Spencer Roane. (Lightly edited. GFA)


It turns out, many of you feel my pain, over the uncertainty about not knowing how year 2011 is going to begin, progress, and end, relative to the many asset class – specific products and services created and supplied to LLCommunity owners/operators, by GFA Management, Inc., dba PMN Publishing, during the past several decades. Thank You for writing, phoning, and emailing. Here’re a couple typical email responses…

“George, I have found solice in your blogs! And, on a different subject, I must admit the Solstice Communities angle is refreshingly imaginative.” NB By the way, did YOU visit after reading last week’s blog posting? If not, strongly recommend you do so now…

“I’d hate to think you’d be one more casualty of this industry’s new reality. You’re the glue that we need to continue as one voice. Seems, with your experience and willingness to help all of us who need a voice on the national front, the home manufacturers might consider you as a liaison to the rest of us who need to keep in touch with the most up to date training and products they offer. Community owners need a figurehead t turn to, as I have turned to you in the past for advice. Our strength to survive this downturn is as a group, and your leadership for those of us in the community business, is needed more than ever. I would also nominate you for our voice in Washington, to those who do not have the firsthand knowledge you do. My hope is you and your leadership will stay with us long after we all come out of this day to day struggle. What a loss your silence would be to us all.” DR (Lightly edited. GFA)


Four Good Reasons to be in Louisville, KY., 11 – 14 January 2011. Have you ever been to the Louisville MHShow (nee Midwest Manufactured Housing Show)? If so, you know there was no such venue earlier this year (January 2010). Well, there’s certainly going to be a MHShow this time around! And here’re four good reasons for you to consider attending:

11 January 2011. The day long Manufactured Housing Manager (‘MHM’) professional property management training and certification program will take place in a hotel meeting room near the entrance to the Kentucky State Fairgrounds, where the Louisville MHShow begins the next day. Today, nearly 1,000 MHMs own and or manage landlease communities throughout the U.S. and Canada! Take this opportunity, for only $250.00/MHM candidate, to participate and earn your MHM certification. You’ll receive a copy of the text Landlease Community Management, monograph of contemporary LLCommunity ‘How To’ writings, formal MHM certificate, and gold MHM lapel pin. Class is taught by a CPM® member of the Institute of Real Estate Management®, and 30 year owner/operator of Midwest LLCommunities. For information, and or register for this program, limited to 20 participants, phone (317) 346-7156.

12 January 2011. The first day of the Louisville MHShow, at the Kentucky State Fair Grounds in Louisville, KY. If you’re ‘in the MHBusiness in the Midwest’ YOU owe it to yourself to be present for at least two of the three days – to tour and buy new homes from the dozens on display, especially Community Series Homes, and participate in the LLCommunity – focused seminars the next day…

13 January 2011. While the Louisville MHShow continues in the Exhibit Hall, no fewer than four LLCommunity – focused FREE seminars will occur in an adjacent meeting room. Don Westphal will hold forth on the design and features of Community Series Homes (‘CSH’) – providing a list of such homes on display in the Exhibit Hall. Then Ken Rishel will answer questions relative to the variety of self – finance programs popular with LLCommunity owners/operators selling and ‘carrying the paper’ on new and resale home transactions in their properties. George Allen will describe How To Calculate ‘affordable’ & ‘risky’, new & resale price points for homes within one’s LLCommunity or sited on scattered building sites; and, how to know – ahead of time – what priced homes will sell best, in any local housing market in the U.S.! The four sessions will end with Tony Kovachs describing the best ways to use social media and online marketing, to sell homes within and outside LLCommunities! Ed Hicks will also be present, describing an upcoming seminar he’s hosting relative to the FHA 207(m) Program. To register for the Louisville MHShow, phone (707) 587-3350. When you phone, tell’em ‘George sent me!’ Seriously.

14 January 2011. Last day of the Louisville MHShow.

Another GFA NOTE. Also be aware, there’s the possibility of a special FOCUS Group meeting, probably 12 January, that’ll be ‘by invitation only’, for LLCommunity owners/operators seriously interested in perpetuating LLCommunity products and services, e.g. newsletters, annual directories, statistical reports, property management training & certification, networking/deal-making opportunities, etc.. This meeting, if it occurs, will be held during the Louisville MHShow, but at a nearby hotel meeting room, has been requested by LLCommunity owners responding, to what’s covered in Part II of this blog posting. To ensure you’re on the LLCommunityowner/operator invitation list, phone (317) 346-7156.

End Notes.

1. Sample issue and subscription via (317) 346-7156 or see *2 following.

2. ‘Ah Ha! & Uh Oh!’ price point calculation worksheet is available FREE by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024
Indianapolis, IN. 46247
(317) 346-7156

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment

Powered by WordPress