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

Blog # 227 Copyright 2013 6 January 2013

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.

I.

EXQUISITE CORPSE

II.

Inquiring Minds Would Like to Know

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I.

EXQUISITE CORPSE

Recently, while researching party games, bar tricks, brain teasers, and other amusements, I came across a poetry game titled ‘Exquisite Corpse’, intended for three or more players.

It goes like this: ‘Each player writes an article and an adjective on a sheet of paper, then folds the paper in half, to cover the two words. Players exchange folded papers, unfolding the one received, and adding a noun to the paper before refolding it. Players repeat the procedure (exchanging folded papers), adding a verb; then again, with yet another article and adjective. And the next exchange involves adding yet another noun. Players exchange papers one last time; with each one reading aloud, to the general bafflement of everyone: the ‘article, adjective, noun, verb, article, adjective & noun’ written on the paper just received!’ From The Dictionary of Wordplay, by Dave Morice, Teachers & Writers Collaborative , NY, 2001, page # 68.

What got my attention about this game, besides it being a creative writing exercise, was the unintended, but near unmistakable, not so funny parody (usually a ‘humorous imitation’) of the manufactured housing industry, late in the 20th Century, and now, early in the 21st Century.

It goes like this: ‘Three or more HUD – Code home manufacturers independently design, build and ship lines of new homes, with little to no market research input from prospective homebuyers in local housing markets where the homes are to be sold. (This is, by the way, how the industry ‘keeps score’, by counting the number of new homes ‘shipped’ rather than ‘sold’ beforehand). They then maybe make adjustments to these home designs, and how/where they’re marketed, based on perceptions that may or may not have basis in reality and or practicality, e.g. the land – and – home package (i.e. ‘big boxes = big bucks’) debacle of the late 1990s; followed by a supposed ‘return to the roots of affordable housing’ (i.e. ‘smaller boxes = smaller bucks’); even the Community Series Homes or CSH Models wavelet of the past five years, to whet and feed the appetite of land lease lifestyle community portfolio owners/operators for new homes, to fill their share of an estimated 250,000 vacant rental homesites nationwide. The ‘exquisite corpse’? A mishmash of home designs and local marketing ploys, based on the creativity and perceptions of said home manufacturers, more so than the ‘needs& wants’ of the customers they seek to sell and serve!

Proof? When was the last time you saw a 30 second ad on any major TV network during prime time, advertising any manufactured housing brand of home construction? It simply doesn’t happen in our line of work, sad to say.

Of course, the often debated role – or absence of, chattel (personal property) finance, since the turn of the Century, also plays a critical role in the word picture painted in the previous paragraph. And, if interested, you’ll find a succinct, comprehensive commentary on that very topic, in the soon to be released (January 2013) 24th annual ALLEN REPORT.

Want to obtain a copy of the 24th annual ALLNE REPORT, a.k.a. ‘Who’s Who Among Land Lease Lifestyle Community Portfolio Owners/operators Throughout North America!’? Well, it’s FREE with your paid subscription to the Allen Letter professional journal ($134.95/year = 12 monthly issues – each containing a different but valuable Signature Series Resource Document, e.g. annual National Registry of RE & Chattel Lenders, ‘Who Ya Gonna Call? List of Freelance Consultants’, etc.); or, for $500.00 per standalone copy. To order, simply phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. By the way, this year’s 24th ALLEN REPORT also features a first time ever published list of ‘25 of the Most Influential Individuals in the Manufactured Housing Industry & Land Lease Lifestyle Community Asset Class’. All named individuals were recommended by their peers!

II.

Inquiring Minds Would Like to Know…

Questions that might not yet be keeping us awake at night, but ones that do make us routinely wonder, ‘Is anyone listening?’:

As many prepare to attend this year’s series of manufactured housing shows in Louisville, Tunica, and elsewhere, The Question that begs answering is this: ‘Given the real need (i.e. an estimated 250,000 vacant rental homesites in land lease lifestyle communities throughout the U.S.), and existence of Community Series Homes (a.k.a. CSH models, designed for in – LLLCommunity siting) from most major HUD – Code home manufacturers, WHY do the majority of new homes on display at said shows continue to be ‘big box = big bucks’ Development Series Homes that, in part, helped bring the manufactured housing industry to its’ knees, annual shipment count wise, at the turn of the 21st Century? That’s 13 years ago, and we still haven’t ‘changed our stripes’, nor have annual shipment numbers of new homes built, improved one iota. Why?

National Advocacy. ‘Are we getting our money’s worth?’ – dues and PAC Fund wise, by continuing, after 27 years, to support two somewhat overlapping national, not for profit, manufactured housing trade entities in and near our nation’s capitol? This is not, by any means, the first time this vital question has been raised from and among the businessmen and women grassroots of the HUD – Code manufactured housing industry. Or, ‘is there a better way’ on the horizon? Possibly, one overarching national body, Advocating the interests of all segments of the MHIndustry, including the land lease lifestyle community realty asset class; or two: one representing all HUD Code manufactured housing production & distribution segments of the industry; another representing all the real estate development and investment – related segments. Hmm?

Given the unique nature and circumstances of 21st Mortgage Corporation’s C.A.S.H. Program, (i.e. filling vacant rental homesites in land lease lifestyle communities with Clayton Homes purchased and mortgaged by 21st, in partnership with the property’s owner/operator) when will other independent, third party chattel finance firms (e.g. Triad, CU Factory – built Housing, & U.S. Bank – Manufactured Housing Finance) roll out similar LLLCommunity – friendly programs? Ask them!

Another question, related to the topic in the previous paragraph, has to with your firm’s chattel lending program, on – site and otherwise. Is it fully compliant with today’s plethora of onerous financial regulatory measures, e.g. relating to the S.A.F.E. Act, Dodd – Frank Legislation, AML, and more? As most already know, there’s ‘only one game in town’, at present, to teach manufactured housing – related compliance, and that’s via Rishel Consulting @ (217) 971-3968. Believe me; I wish there were additional credible resources to mention here. If there is, let me know via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or gfa7156@aol.com

Has the time arrived to seriously consider founding a national captive insurance entity for land lease lifestyle community owners/operators? If so; or even ‘if not’, let Jay Zandman know of your interest, so as to be ‘first in line’ if and when that time arrives: (800) 211-0468 X 117 or jayz@manning-nozick.com.

When will 21st Mortgage Corporation’s C.A.S.H. Program be opened to other HUD – Code home manufacturers? It’s believed this would enhance the program’s attractiveness to land lease lifestyle community owners/operators with longstanding home manufacturer relationships elsewhere; and, be an obvious nod to ‘inter – manufacturer cooperation and, by extension, Industry Unity’. By the way, if no one has contacted you regarding you participating in the C.A.S.H. Program, let Lance Hull know via (865) 523-2120 X 1218, or email him your LLLCommunity information & needs: LanceHull@21stMortgage.com

When will the HUD – Code manufactured housing industry provide its’ homebuying customers, particularly those living in homes sited within land lease lifestyle communities (i.e. as site lessees), a viable secondary market, replete with market comparable valuations of their homes, a real time means of marketing and selling these homes, escrow closings, even the presence of trained and licensed professional sales staff? This question, like a few before it (e.g. national Advocacy and captive insurance) should be routine fodder at periodic national MHInitiative® gatherings of businessmen and women, paying their own way, to have a role shaping and effecting national policy and issues such as: viable secondary market, advocacy, captive insurance, and more. Which, of course raises this question: ‘When will MHIndustry leaders finally, for the first time since National State of the Asset Class caucuses (predecessor to MHInitiative® concept) were held in Tampa, FL. on 2/27/2008, and in Elkhart, IN., on 2/27/2009? What will YOU be doing on 2/27/2013? That’s one day after MHI’s annual Legislative Conference, in Arlington, VA., ends. Hmm. Would YOU be willing to remain there an extra day to raise, parse, and address some of the questions posed here, and others as well? I sure would! If you agree, phone our salaried national leaders at MHI: (703) 558-0678 or 0666; and, MHARR @ (202) 783-4087. Leave a message if necessary….

Why aren’t more owners/operators of small to mid – sized land lease lifestyle communities buying and seller – financing new HUD – Code homes on – site? Possible reasons: new homes priced too high for the local housing market (This is where home manufacturers need to learn, using Annual Gross Income & Annual Median Income figures, to calculate ‘affordable’, even ‘risky’ Price Points, on homes going into specific – defined by postal zip code – local housing markets!*1); real concerns about being compliant with the S.A.F.E. Act and other related finance regulatory measures; too much trouble ‘being all things to all people’, e.g. wholesale home buyer, marketer, seller, and seller – finance source; unfamiliarity with other options (e.g. lease – option, even leasing of homes as apartment units); and that rare, good working relationship with a local independent ‘street’ MHRetailer willing to sell new homes into LLLCommunities.

How can we, as an industry and realty asset class, effectively attract more private investors, interested in safe investments with yields attractive to them, as well as to land lease lifestyle community owners/operators, and our actual homebuyers?’ Perhaps this pithy question has a two-step answer. First; as a realty asset class, we must provide access to well – constructed Community Series Homes affordably priced, properly installed on fully serviced rental homesites in LLLCommunities owned and managed by individuals and firms committed to providing an ‘attractive value proposition to homebuyer/site lessees via rent rates in line with what the local housing market indicates’. AND secondly, perhaps the time has arrived (for us?) to create a new, national fund, to finance the purchase of new CSH model homes by reputable, qualified LLLCommunity owners/operators (i.e. Similar to existing P2P & P2B internet lending platforms). If you’re reading this, and are excited about the prospect of creating such a fund, contact Spencer Roane, MHM® via spencer@roane.com or via (678) 428-0212.

And the final questions of the hour are these: Are you, or your firm, direct, dues – paying members of the Manufactured Housing Institute (‘MHI’) and or its’ National Communities Council (‘NCC’) division, both Advocating in behalf our MHIndustry and the land lease lifestyle community realty asset class? If the answer is NO, then phone (703) 558-0666 in the first instance; and (703) 558-0678 in the latter instance, to converse with Dick Jennison and Jenny Hodge respectively. Tell ‘em ‘George sent me!’ And, if you’re reading this, and are a LLLCommunity owner/operator, and interested in the rare opportunity to be a Charter Member of the Manufactured Home Communities Association of North America, or MHCA in short, simply phone the aforementioned MHIndustry HOTLINE, and provide your contact information. Remember, the new, not for profit MHCA is being launched to continue the ‘statistical Research & comprehensive Resource servicing’ of land lease community owners/operators nationwide, and maybe Canada; services heretofore provided by GFA Management, Inc., dba PMN Publishing. NOTEs. It’s hoped and planned the MHCA will effectively complement national Advocacy efforts of and by MHI, as long as one group of NCC members (e.g. largest property portfolio ‘players’) don’t preempt legislative and regulatory concerns of small to mid – sized owners/operators of land lease lifestyle communities. And, if you’re wondering ‘Why didn’t MHI absorb aforementioned ‘statistical Research & comprehensive Resource servicing’ of LLLCommunities when given the opportunity, on two separate occasions? Ask them, when you phone to join as a direct, dues – paying member.

End Notes:

1. Easiest & best way to calculate ‘affordable’ & ‘risky’ Price Points for new & resale homes, of any type, to be sited within or outside LLLCommunities, is to use the ‘Ah Ha! & Uh Oh! Worksheet’, available FREE upon request, by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

***

George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset class &
Affordable Housing Purists & Enthusiasts Nationwide
Box # 47024, Indpls, IN. 46247
(317 346-7156

Blog # 226 Copyright 2012 30 December 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.

I.

Don’t Take Good Leadership for Granted!

II.

Kudos Continue to Arrive in Support of Forming MHCA

III.

There’re Some Pretty Bright Thinkers & Doers Out There..

***

I.

Don’t Take Good Leadership for Granted!

‘Yes, I’m as guilty as the next guy or gal, taking good leadership for granted, at all levels and among a wide variety of firms that comprise various segments of the HUD – Code manufactured housing industry.’ It only occurred to me recently, how far astray some self – proclaimed, a few elected, even salaried leaders, routinely drift from core values and performance measures generally associated with good leadership practice.

How do I know? We see and read sorry examples all the time; in our trade press, during business meetings at state and national levels, and elsewhere.

But first, as a matter of credentialing; I’ve enjoyed two simultaneous leadership rich and demanding roles, of 28 years and 33 years duration respectively; as an officer of U.S. Marines, experiencing combat tours of duty in the Republic of Vietnam and during Desert Storm; and am now winding down more than three decades of responsibility as a senior salaried executive, entrepreneur businessman, real estate investor and manager, book author and newsletter publisher. There’s no way I’d have achieved significant successes throughout two parallel careers, without having early learned, and long applied, honorable core values and performance measures generally associated with good leadership.

Now, back to the self – proclaimed, a few elected, even salaried leaders who, in this industry reporter’s opinion, ‘based on firsthand observation & reading what they’ve penned’, are at times, selling would be clients, serious readers, and others, a ‘bill of bogus goods’ based on whimsy, ‘less than as successful as claimed past results’, even seat – of – the pants rhetoric. The sad thing is, some manufactured housing industry aficionados and land lease lifestyle community owners/operators, have bought into these bogus goods, for a time; some out of naiveté’; some out of supposed peer pressure; and still others, unaware of likely consequences of bad leadership.

Where to find examples of marginal and poor leadership? Easiest, is probably within one or another of the print and online trade publications making their way to our mailboxes and computers every month. Next time you pick up one of these media, and read the columns therein, study what the writer has to say; then ask yourself: ‘OK, I read what you write, but just how has this advice played out ‘successfully’ in your own experience, over the years, as a businessman or woman?’ Or, if unsuccessful, ‘Have you learned from your mistakes?’ Furthermore; ‘If you’re a leader, even a ‘thought leader’, I should be following, ‘What is your regional or national platform’, where I can find you, to listen and observe firsthand, business and leadership principles you espouse and (hopefully) practice?’ In my experience, more often than not, some of the self – proclaimed leaders aspire more to the misleading ‘Do as I say, not as I do!’ mantra, rather than simply setting a good, solid, verifiable example for us to emulate and follow. So, Be Careful Out There; what you read, might be leading you down the wrong leadership path.

Then there’s the body politic, within and throughout our industry and realty asset class. Here we find elected and salaried leaders who (at least should) aspire to espouse good core values and performance measures (results). And know what? For the most part, we do generally see more positive leadership than negative; and that’s a good thing. But leadership position voids (over time); round pegs hired to fill square holes; and worst of all, junior execs wearing their superior’s (boss’s) ‘rank’ in arrogance, are examples of marginal to faux leadership, on the association level. And then there’s that rare occasion, when elected officer(s) take it on themselves to publicly attack or chastise other association members, without notice or documentation, and without providing opportunity for their victims to rebut. That’s among the grossest examples of poor leadership – compounded in the eyes of other members, when the host body does nothing to rectify the sorry matter occurring on their time and in their locale, but simply passes the buck.

And did you know, there’s an unproven, but hard to miss, tip – off to identifying marginal or soft leaders? Here goes. It involves the trend, among frequent emailers, to end messages with a favorite or apt quotation, usually from some famous – or at times infamous, personage. And as far as it goes, it’s not a bad idea, and the practice can even convey meaning, if not overused. For example; if I were inclined to do so – which I’m not – my choice would be a tossup between this line from an old hymn, stenciled on my helmet in 1968: ‘Where Duty Calls or Danger, Be Never (found to be) Wanting There.’ Or that ol ‘6-P Rule: ‘Proper Prior Planning Prevents Poor Performance!’

But know what? The wanna be leader, one who has yet to find his or her path to good leadership, via core values and performance measures, often appends several, sometimes related, but often disjointed quotations, from a variety of individuals, to his/her correspondence or writings. My guess is they hope the reader will equate them with the substance of their selected quotations. Not. In a recent extreme example, I counted no fewer than a dozen mishmash of quotations accompanying a single piece of written communication.

This commentary regarding leadership brings to mind a short poem, author unknown, shared ‘years ago’, by Craig Fulmer, chairman of the board, of Heritage Financial (LLLCommunity portfolio owner/operator), and featured on page # 27 of the Chapbook of Business & Management Wisdom, PMN Publishing, Indianapolis, IN., 2008 (3rd ed.) An appropriate way to end this challenge to not take Good Leadership for granted.

‘I’d rather see a sermon, than hear one any day;
I’d rather one would walk with me, than merely show the way.
The eye’s a better pupil, and more willing than the ear;
Fine counsel is confusing, but examples’ always clear.’

Just how important is good individual leadership? Here’s an insightful passage from Robert Rosen & Paul Brown’s book, Leading People: “With a net worth estimated at $250 million, Malcolm Forbes was frequently asked how he decided where to invest his own fortune. His answer never varied. ‘I bet on the jockey, never the horse…I don’t need to know what industry the company is in, or what its’ financials are. All I need to know is what kind of person the CEO is.” (p.283). This quoted from the Handbook to Leadership, by Kenneth Boa, Sid Buzzell, & Bill Perkins (2007); a 52 week collection of readings on various aspects of leadership. Available via kenboa.org

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II.

Kudos Continue to Arrive in Support of Forming MHCA

“I truly appreciate your commitment to our (MH) industry, and will be supportive of your efforts going forward. It’s unfortunate the national association doesn’t see the merits of your work. Perhaps this ‘not for profit spin-off’ is the best way to take this issue (of ‘statistical Research & comprehensive Resource Servicing’) on. I have no loyalty to the national circus, so will back you to the furtherance of this agenda.” MC

“As long as you find it rewarding and enjoyable, you will be able to do it forever, with glee, and die in your boots, like a real man, to whom we are all humbled; and I am not being facetious or sarcastic. There is no doubt you have set the stage for the future, and have made historical contributions to the industry. Hard to walk away from that and quite possibly, counter productive. It would be terrible (for you) to retire too early and watch the diminishing of your efforts because idiots took over the cause.” KH

“One thing we shouldn’t forget, is a code of ethics, and procedures which all MHCA members agree to operate under. For example, 1) not directly soliciting the residents of another land lease lifestyle community owner/operator, 2) and treating lenders like we would like to be treated ourselves.” PC

“Honestly – I think you’re right launching this new organization, George. We have waited and asked and shouted for strength and unity among the independent ‘street’ MHRetailers, manufacturers, suppliers, financiers, and LLLCommunity segments of our industry without result. Time to move on and win!” NB

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III.

There’re Some Pretty Bright Thinkers & Doers Out There…

The following three short, lightly edited paragraphs, came to me in the form of an email message from a successful manufactured housing entrepreneur businessman, with more than 30 years owning and operating his own ‘for profit’ entities. Pay close attention; there’s some pretty pithy thinking here…

“I think our (HUD – Code) industry continues to struggle with a market identity problem. While tempting, even glamorous, to suggest our ‘big box = big bucks’ housing product (a.k.a. Developer Series Homes) continue to compete with site – built housing, despite zoning restrictions, modular homes, low – end site built models, foreclosed on homes, lending regulations, and tightening lender credit, make that a really rough row to hoe. The less glamorous, more competitive, affordable, manufactured housing alternative (e.g. inexpensive multisection, & 16X80 singlesection models) sited in land lease (lifestyle) communities (with site rent in sync with the local housing market), has a far better chance of success, than continuing to fight battles we’ve been losing for years!”

“I don’t agree with a lending executive’s recent warning to be wary of ‘the same customers who led us into this $ mess’. What got us into this $ mess was: mortgage fraud, fabricated income, false credit claims, fictitious down payments, lenders more focused on selling to the CMBS market than making sound loans, and long – range planning that was anything but. Like site – built housing today, we’ll continue to struggle until we convince investors they can, and will, make money by trusting us to treat them like we’d like to be treated. On that account, I’m afraid we still have a long way to go.”

“I continue to think 21ST Mortgage Capital’s CASH program is a definite step in the right direction, being a symbiotic relationship between LLLCommunity owners and chattel lenders, and certainly a no – brainer from the home buyer’s point of view. But seeing how much of the marketing and processing burden is on the owner/operators, specifically the difficulty communicating benefits of the program to would be home buyers, this continues to hold the program back from achieving its’ full potential.” SR

See what I mean? Sage observations and reasonable suggestions like these, should be receiving max attention on the national scene of our ‘double dual industry’ (i.e. ‘home manufacturing/distribution & realty development/investment’). Other than what you read here, or in Ken Rishel’s fine online finance newsletters, and in the Allen Letter professional journal, or the Allen CONFIDENTIAL! business newsletter, where else do you find heady topics presented, parsed, and planned into the future of HUD – Code manufactured housing and land lease lifestyle communities? It simply does not happen; despite the fact we have two national trade bodies claiming to Advocate in our behalf.

Proof? Ask yourself; When was the last time either Advocacy body called for a national MHInitiative® type strategic planning meeting, where businessmen and women from across the U.S., would participate at their own expense, to seek new and pragmatic solutions to the inherent barriers to increased housing market share – demonstrated by five years of HUD – Code housing shipments at a 60 year nadir? Why hasn’t this Survival effort happened? Ask them, next time you send in your annual membership dues check!

***

George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset Class &
Affordable Housing Purists & Enthusiasts Nationwide
Box # 47024, Indpls, IN. 46247 (317) 346-7156

Blog # 225 Copyright 2012 23 December 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

Is History About to Repeat Itself During Year 2013?

II.

Manufactured Home Communities Association of North America

III.

REMINDER!

IV.

Duke University Discovers MHIndustry & LLLCommunities….

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Pay careful attention to what you read here today. No one else in the manufactured housing industry, nor any other land lease lifestyle community owner or operator, will be as candid and forthcoming with you, as that which you are about to learn and ponder…

***

I.

Is History About to Repeat Itself During Year 2013?

In matters politic, business, social and otherwise, power is the operative word. And power is measured in many ways; as in votes, dollars, influence and otherwise. Power can be well applied to achieve a greater good, but it can just as easily be subverted to wreak harm, even dissipated to the point of marginalizing one or something into powerlessness.

The HUD – Code manufactured housing industry has been down this power to powerlessness path before. In 1985, I’m told, smaller, regional home manufacturers split from the Manufactured Housing Institute, or MHI, at least in part, because they felt the direction and future of the industry, particularly where HUD – Code related regulatory matters were concerned, was being powered by a few, much larger home manufacturers. Result? Formation of the Manufactured Housing Association for Regulatory Reform or MHARR. To this day, both entities continue to Advocate in behalf of HUD – Code manufactured housing; the former, from offices in Arlington, VA.; the latter, in downtown Washington, DC.

Have these two HUD – Code manufactured housing Advocacy bodies worked well together during the past 17 years? Generally no; though at times, they’ve sought and found common ground, when it came to supporting or opposing specific legislative initiatives and troublesome regulatory issues. One of the clearest and enduring examples of their cooperation, even with its’ downside, was the joint effort to effect passage of the Manufactured Housing Improvement Act of 2000. Its/ downside? The act is still far from being fully implemented; in part – per this industry observer’s opinion – because the two national Advocacy bodies have been unable to ‘power’ effectively together, to get the job done, even after 12 years!

Is MHIndustry unity (Think enhanced power!) on the horizon for year 2013? The chairmen of both national Advocacy bodies seem to think so; but given numerous past false hopes and failed efforts, only the passage of time and tangible results will tell us for sure.

In the meantime, MHARR continues, unofficially, to press for reorganization of various segments of this ‘double dual industry’ (i.e.‘home manufacturing/distribution’ & ‘realty development/investment’) whereby all HUD – Code home manufacturers, large and small (And possibly their OEM suppliers, and maybe ‘company stores’; which begs this question: Who’d Advocate for independent ‘street’ MHRetailers?) would be represented by one national Advocacy entity; and the remaining segments, by another national Advocacy entity (Thinking finance, and maybe land lease lifestyle community owners/operators here; but – again wondering, ‘Who’d Advocate along with, and in behalf of, state manufactured housing associations?’). But wait! Given the recent past, present and continuing depressed state of the industry (e.g. annual home shipments at a 50,000+/- 60 year nadir for the past four or more years!), with no sub prime chattel finance capital relief in sight, some have likened this bold reorganization idea, to ‘rearranging deck chairs on the Titanic after it hitting the iceberg and starting to sink’.

So much for the manufacturing side of the house. How ‘bout expectations, during year 2013, where land lease lifestyle communities’ present and future are concerned?

Their back story is fairly well known. A group of 19 (then) manufactured home community portfolio owners/operators gathered on 31 August 1993, in Indianapolis, IN., to eventually form an ad hoc Industry Steering Committee or ISC. Following a series of meetings and dues collection, by year 1996 (January), MHI formed the National Communities Council or NCC – since granted full division status by the institute. Like MHI, the NCC division has been, and continues to be ‘the national Advocate’ for land lease lifestyle communities, and their owners/operators nationwide.

But wait – again. Here too, there’s at least one elephant – the first one by historic comparison – ‘in this room’ (i.e. Segment of the MHIndustry). Remember how the big versus small HUD – Code home manufacturer matter played out, as just described, in 1985? Well, some fear a similar scenario might be in the offing, where ‘big & small’ land lease lifestyle community owners/operators are concerned. How so? While there’s an acceptable ‘size mix’, among present day, direct, dues – paying members of the NCC division, all elected and ‘appointed’ members of its’ executive committee hail only from among the Top Ten largest LLLCommunity portfolio owners/operators listed in the last several ALLEN Reports! And the second elephant? There seems to be a communications shortfall to boot. Only once since the NCC council’s last meeting, 8 October 2012, – and then, in the form of a newsletter, has communication gone out to all members, relative to what and how, as LLLCommunity owners/operators, we should be planning for the upcoming year 2013. And in one instance, a direct, dues – paying member submitted a list of recommended agenda items for the council’s next meeting, in late February; but to date, has not received even an acknowledgement of receipt of said correspondence, let alone the agenda suggestions. Any elephant hunters reading this?

During all this time, since 1980 when it was founded, GFA Management, Inc., dba PMN Publishing, a ‘for profit’ firm domiciled in Indianapolis, IN., has handled the statistical Research & ‘comprehensive Resource servicing’ of land lease lifestyle communities and their owners/operators nationwide. Today, faced with the probable closing down of the firm by year end 2013, an alternative vehicle, to perpetuate print and online communication media, professional property management education and certification, national and regional interpersonal networking, and deal – making opportunities, is sorely needed.

The plan is for a Manufactured Home Communities Association of North America, or MHCA in short, to take on those responsibilities and tasks, as a new, not for profit, national entity. Furthermore, it is hoped the work of MHI’s NCC division, with its’ sole Advocacy focus, will be complemented by MHCA’s emphasis on statistical Research & ‘comprehensive Resource servicing’. And at some point in the future, when the Center for Manufactured Housing Studies, or CMHS – formed during 2012, is ready, ‘academic research’ in manufactured housing, land lease lifestyle communities, and affordable housing, will become their standard fare, allowing MHCA to focus on Resources needed and desired by LLLCommunities nationwide, and maybe in Canada.

Back to the power and powerlessness theme voiced in the opening paragraph of this essay. In light of the content of the preceding paragraphs, three similar – but in the end, very different pivotal questions beg answering, and the sooner the better:

Will the HUD – Code manufactured housing industry and land lease lifestyle community asset class be best served, by further dissipating national lobbying presence and ‘power’ among four, eventually five, national, not for profit entities: MHARR, MHCA, MHI, & MHI’s NCC division (Right there we see three Advocacy bodies and one Research/Resources entity, but not in that order). And in time, there’ll be a fifth, the CMHS – not really an Advocate, but still to be, a national presence and ‘power’ – by dint of its’ dividing LLLCommunity Research & Resources responsibilities. The answer???

OR

Will the HUD – Code manufactured housing industry and land lease lifestyle community asset class be best served by consolidating presently disparate lobbying ‘power’ into one overarching, all – inclusive national, not for profit Advocacy body yet to be formed or identified??? And if this mega – merger comes about, in the name and interest of enhanced national Advocacy, what becomes of ongoing statistical Research & ‘comprehensive Resource servicing’ enjoyed by land lease lifestyle community owners/operators for the past 33 years? Does the new entity do what present ones have been unwilling to do; assume responsibility for ongoing statistical Research & ‘comprehensive Resource servicing’ for LLLCommunity owners/operators nationwide?

OR

Will the HUD – Code manufactured housing industry and land lease lifestyle community asset class be best served by reorganizing as many as four or five disparate national lobbying ‘powers’ into ‘only two’ new, national, not for profit entities; one being a solely ‘housing – focused’ Advocate; the other, a ‘realty – focused’ national Advocate, statistical Researcher, and ‘comprehensive Resource purveyor’???

A helpful hint! This quote from Woodrow Wilson describes our industry; and by default, its’ realty asset segment, in terms of past, present, and future power perspectives: “As a matter of fact and experience, the more ‘power’ is divided, the more irresponsible it becomes.” Substituting the words ‘ineffective’, ‘counterproductive’, even ‘divisive’, in lieu of ‘irresponsible’, aptly describes ‘what we’ve done to ourselves’ during the past 27 years of national Advocacy presence and powerlessness in our nation’s capitol. So, will year 2013 hold, for us, ‘more of the same’; or a reorganization that restores and enhances, rather than saps our collective power?

***

II.

Manufactured Home Communities Association of North America

Steps are being taken to legally form the new, national, not for profit entity, to be known as the Manufactured Home Communities Association of North America, or MHCA, for short. There are a few legal hurdles to be cleared during the next 30 days. It’s hoped a meeting of some, if not majority, of the Pioneers of 2012, will occur during the Louisville MHShow in Kentucky, on 24 January 2013.

Who’re the Pioneers of 2012? They’re an ad hoc group of land lease lifestyle community owners who volunteered, during early 2012, to help market the products and services of GFA Management, Inc., dba PMN Publishing. We met once at Chuck Fanaro’s beautiful SaddleBrook Farms, in Grayslake, IL., and continue to stay in touch regularly, via various forms of correspondence. When it was finally (recently) realized there wasn’t going to be a ‘buyer’ of aforementioned products and services – all related to the statistical Research & ‘comprehensive Resource servicing’ of LLLCommunity owners/operators nationwide, attention refocused on launching the MHCA.

Watch here (weekly blog posting), as well as in the Allen Letter professional journal, for announcements relative to ‘How to Become a Charter Member of MHCA’, and what the array of membership benefits will include, e.g. newsletter subscription, FREE copy of 24th ALLEN REPORT (vs. $500/copy retail price), and much much more. If you’d like us to add your name to the list of individuals to be notified ‘first’ of this Charter Member opportunity, simply phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, and ask for be so listed.

***

III.

REMINDER!

Reserved your copy of ‘Past as Predictor of the Future – or just another Crapshoot?’ yet? All you have to do is reach out to Sue Brenton, executive director of MHC of Arizona. Phone (480) 345-4202. Trust me. You don’t want to miss this expose’ of the MHIndustry and LLLCommunity asset class’ past, present, and future. It’s being published, during January 2013, in that state’s MHAssociation newsletter.

IV.

Duke University Discovers MHIndustry & LLLCommunities….

A Duke University professor, as I understand it, has been retained by a mainline publisher to research and produce a book describing the manufactured housing industry and land lease lifestyle communities. Deadline is sometime during the Summer of 2013.

In the meantime, the author’s research staff member, Ms. Reed Few, has been in touch with this industry observer, and others, and is now absorbing all she can learn about our unique ‘double dual industry’ (Described in part I of this blog posting). In fact, she participated in the recent symposium hosted by the Virginia Manufactured and Modular Housing Association, in Richmond, VA. There she met with 25 land lease lifestyle community owners/operators and several HUD – Code home manufacturer representatives, to learn more about the basics and nuances of our ‘most affordable of all factory – built housing alternatives’ as well as the unique, income – producing property type that caters to manufactured homebuyers/site lessees.

If you’re an Allen Letter professional journal subscriber, expect to receive an owner/investor questionnaire, enclosed as a lagniappe, from Ms. Few, in behalf of the book’s author. Please complete and return it promptly. To subscribe to the monthly newsletter, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

By the way, this book is not the same one we told you about last month in this blog series. That one is being researched and authored by a MHIndustry veteran; this one by an academic.

Speaking of books. How many of you remember Ted Boers, founder of DATACOMP? If you do, you know he dropped out of sight a decade or so ago, to concentrate on helping Haitians as a Christian businessman missionary. Well, it’s been quite an adventure for Ted, with some pretty high spiritual peaks, as well as more than his share of deep valleys. He tells this story in the newly released Demons of Poverty, ‘One Entrepreneur’s Experience with Addressing Poverty in Haiti’. I just finished reading it, and will tell you this much here (a longer review will be published in an upcoming issue of the Allen Letter professional journal): It is one of the most unusual non – fiction books I’ve read to date! It has everything: facts, characters, story line, etc. But what I didn’t expect, was the near abject depression Ted had to overcome at one point in his work. And his list of Practical Lessons Learned, for those planning or attempting to ‘do business’ in an undeveloped country, is worth the $14.95 price of the case bound book! Order via Datacomp: (800) 365-1415 or, at only for $9.95, electronically, from amazon.com, barnesandnoble.com, or appleibooks.

*****
George Allen, CPM®Emeritus, MHM®Master Box # 47024
Consultant to the Factory – built Housing Industry, Indpls, IN. 46247
The Land Lease Lifestyle Community Asset Class, & (317) 346-7156
Affordable Housing Purists & Enthusiasts Nationwide

Blog # 224 Copyright 2012 16 December 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

January 2013 = Dawning of a New Era for Land Lease Lifestyle
Communities Nationwide, maybe including Canada!

II.

Schwep, Schrader, & Smith Rules of Thumb;
and, How to ‘Sell More Homes & Lease More Sites’

***

I.

January 2013 = Dawning of a New Era for Land Lease Lifestyle
Communities Nationwide, maybe including Canada!

“Go MHCA!” was the typical response to last week’s blog posting, in which emergence of the Manufactured Home Communities of North America®, or MHCA®, was announced. Given the heavy volume and supportive nature of telephone and email responses, one has good reason to believe this new, national, not for profit body (Actually a conversion of ‘for profit’ GFA Management, Inc., dba PMN Publishing into a ‘not for profit’ entity) has tapped strong pent up demand for ongoing statistical Research & ‘comprehensive Resource servicing’, like that of other realty – based national trade bodies, like the National Apartment Association and Communities Association Institute.

Fourfold significance of January 2013. In brief; publication of the 24th annual ALLEN REPORT, as a lagniappe in the January issue of the Allen Letter professional journal; a ‘by invitation only’ POWER Luncheon for LLLCommunity owners/operators, during the Louisville MHShow on 23 January; first formal meeting of MHCA organizers; and, laying of preliminary plans for a MHInitiative® (formerly, National State of the Asset Class caucus or NSAC) event, likely to be held in early or mid – February 2013.

Here’s more information about each of these exciting Dawning of a New Era events:

• 24th annual ALLEN REPORT. All previous ALLEN REPORTs will pale in comparison with this one, relative to meaty content and cultivating new territory! For starters; the number of listed property portfolio owners/operators is down from 127 to 110. Why? In addition to losing a few non – reporting firms, we’ve removed ‘deadwood’ responders this year, yet added several new ‘players’ – one in particular: ‘Inspire Communities’. Furthermore; weekly blog floggers (readers) already know this year’s ALLEN REPORT features, for the first time ever, ‘25 of the Most Influential People in the Manufactured Housing Industry’ – all recommended by their peers! And there’s much more… If you’re an Allen Letter professional journal subscriber (only $134.95/year…for the time being), you’ll receive the ALLEN REPORT for Free; otherwise, it’s available at $500.00/copy. FYI. In months to come, this newsletter and report will become key MHCA member benefits!

• POWER Luncheon at 11:30AM, on 23 January, at the Crowne Plaza Hotel ‘across the street’ from the Kentucky State Fairgrounds. While invitations haven’t been mailed to Midwest LLLCommunity owners/operators yet, ‘reservations’ already approach our initial capacity of 50+/-; likely to be increased now, to 75. What’s to happen? Likely a brief ‘after luncheon’ presentation, followed by three simultaneous Discussion Groups dealing with Regulatory Compliance Issues; the Lease Option alternative; & ‘How to Collect 100% of Your Site Rent!’ And maybe: ‘Calculating New & Resale Home ‘affordable’ & ‘risky’ Price Points, using Annual Gross Income & Area Median Income…’ This event will conclude around 2:30PM.

• Meeting of MHCA organizers. There’s been an ad hoc working group, of a couple dozen LLLCommunity owners/operators, in place during 2012 – helping GFA Management, Inc., dba PMN Publishing find a buyer or successor. Results? No buyer, but a successor, the MHCA! Volunteers from this group are becoming leaders of the MHCA, giving the new, national, not for profit trade entity direction. As you’ll recall from previous blog postings and elsewhere, the MHCA was formed to Complement the National Advocacy focus of an existing not for profit body. Again, the dual foci of MHCA, for the time being, is ongoing statistical Research & ‘comprehensive Resource servicing’ in behalf of LLLCommunity owners/operators nationwide, likely including Canada. For the time being? That’s acknowledgement of the Center for Manufactured Housing Studies or CMHS, formed during 2012, which will likely assume the ‘statistical Research’ focus of MHCA, plus manufactured housing and affordable housing Research, at some point in the near or distant future.

• MHInitiative®. It’s this industry observer’s long held opinion cum conviction, the HUD – Code manufactured housing is long overdue – when it comes to engaging in open and strategic parsing, free – ranging discussion, and resolution of self – defeating business practices, inherent but unresolved intra and inter segment differences, and ongoing peccadilloes affecting homebuying and site leasing customers! Such a major, national effort takes time to plan and effect. So, in the near term, a call will go out to businessmen and women in all segments of the manufactured housing industry, to gauge their interest, and solicit their support, to meet during the Summer of 2013 to ‘do just that’: identify and address errant, self defeating business practices; ascertain how to better serve MH-related businesses at the ends of the size spectrum; and most important, rediscover our core customer base; and take steps, once again, to design, build, deliver, install, service, and warranty quality housing product! Frankly, such a national, mega – effort should originate with an existing Advocacy body – or two, already part and parcel to the business model! But will one or the other, or both, respond to an MHInitiative® opportunity to collectively regroup, refocus, and recover? Continue to read this weekly blog posting to see what, if anything, transpires to that end – in the way of response. At the very least, learn when and where the mid – February MHInitiative® planning session will occur – with or without the support of aforementioned national Advocacy entities.

OK. If you’d like to respond to the announcements and commentary contained in the previous four bulleted paragraphs; subscribe to the Allen Letter professional journal; order a copy of the 24th annual ALLEN REPORT (Appears in a couple weeks); participate in the 1/23/2013 POWER Luncheon in KY; become a charter member of the Manufactured Home Communities Association of North America (‘MHCA’); and or volunteer to participate, at your own expense, in the forthcoming MHInitiative® planning session, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, or email: gfa7156@aol.com and make your wishes known!

***

II.

Schwep, Schrader, & Smith Rules of Thumb;
And, How to ‘Sell More Homes & Lease More Sites’

Earlier this year, the Book of Formulae, Rules of Thumb, & Helpful Measures ‘Mostly for Land Lease Lifestyle Communities & HUD – Code Manufactured Housing, as well as Commercial Real Estate Investment, Affordable Housing, and Realty – Secured Mortgage Originations’ debuted at the 21st annual International Networking Roundtable in San Diego, CA. Did you get your copy there or afterwards? It’s still available!

Since then, a fair number of readers of the Allen Letter professional journal, and this weekly blog posting, have requested more information about the content of the book, and ‘how to order it’. Well, the answer to the second question is this: Phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 and order the Book of Formulae…for $19.95 postpaid. Credit card orders are welcome.

Content? Thought we’d share some of it here, and possibly in future blog postings. This time around, we’ll quote three separate (edited) Rules of Thumb, from pages # 11 & 12 of the subject book.

• Schwep Rule of Thumb. To sell successfully, a manufactured home’s loan PITI (principal, interest, taxes & insurance premium) payment, and site rent total together, must be 15- 20 percent less than monthly rental amount for a conventional apartment in the same local housing market. Percentage may vary per specific market. This rule of thumb first articulated by veteran freelance manufactured housing consultant, and RV/MH Hall of Fame inductee, Grayson Schwepfinger. For example. If conventional 3BR2B apartment rent, in a given local housing market is $900.00/month, maximum PITI and site rent combined payment has to be between $720 & $765/month. How so? Multiply $900, first by .85, then by .80 (i.e. 15% & 20% target margins cited earlier), to arrive at those two amounts. Then subtract site rent (e.g. $300/month from the $720 figure to leave $520/month remaining for new home mortgage PITI. Same thing with the $765 amount, (-) $300 = $465 for mortgage PITI. Be careful to ensure any household utility payments, e.g. water/sewer charges, are handled similarly in the apartment and home/rental site environments. *1

• Schrader/Smith Rule of Thumb. To sell successfully, a manufactured home’s loan PITI (principal, interest, taxes & insurance premium) payment, and site rent total together, must be at least $50.00 less, per month, than conventional apartment unit rent in the same local housing market. Dollar amount may vary per specific market. This rule of thumb first articulated, similarly but at different times and places (i.e. KY & MN) by land lease lifestyle community portfolio owners/operators Al Schrader and Nathan Smith, PHC®. For example: If conventional 3BR2B apartment rent, in a local housing market, is $900/month, maximum PITI and site rent combined payment must be at least $50.00 less, per month, than aforesaid apartment rental rate. How so? Subtracting $50.00 from $900.00 leaves $850.00. In turn, subtract #$300/month site rent from the $850.00, to arrive at $550/month for new home mortgage PITI. Be careful to ensure any household utility payments, e.g. water/sewer charges, are handled similarly in the apartment and home/rental site environments. *1

• ‘Sell More Homes & Lease More Sites’ Rule of Thumb. To sell successfully, a manufacture home’s loan PITI (principal, interest, taxes & insurance premium) and site rent total together, must be at least $25.00 per month less (some say 25%) than a real estate – secured home mortgage’s PITI – assuming household utility expenses are treated in similar fashion in both instances. Several reasons: First and foremost, site – built home PITI includes underlying realty, while a manufactured home in a land lease lifestyle community doesn’t. Furthermore, said discount plays to the affordable nature of manufactured housing and the land lease community lifestyle. *1

End Note.
1. The third Rule of Thumb makes passing mention of ‘household utility expenses (being) treated in similar fashion in both instances’, i.e. per conventional apartment & or LLLCommunity. The first two Rules of Thumb make no mention whatsoever of this important consideration. How so? When estimated annual household utility expenses (e.g. water, sewer, electricity, heating fuel @ gas or oil) are included in the 30% Household Expense Factor or HEF, along with PITI & site rent – or even apartment rent, homebuyers/apartment renters are positioned to be in ‘affordable’ living situations, i.e. ‘Not buying more house, or renting more apartment, than they can truly afford!’ On the other hand, when said household utility expenses (not including telecom services) are NOT included within the aforesaid 30% HEF, homebuyers and apartment renters are saddled with ‘risky’, at best, home and apartment ‘deals’. Consequences? Instead of paying 30% of their annual gross income (AGI) towards household mortgage and or rent expense, they in truth wind up paying in the neighborhood of 40 – 50% HEF; hence a precursor to financial woe, of one manifestation or another.

***

George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset Class &
Affordable Housing Purists & Enthusiasts Nationwide
Box # 47024, Indpls, IN. 46247 (317) 346-7156

Blog # 223 Copyright 2012 9 December 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

I’m Happily Moving On with My Business Life!

II.

Symptoms of Troubled Land Lease Lifestyle Communities!

III.

Own LLLCommunities & Want to be Charter Member of MHCA?

********

I.

I’m Happily Moving On with My Business Life!

It’s been two months and a day, since 8 October 2012, when I and another dues – paying member of a national manufactured housing advocacy body, were verbally assaulted without warning or cause, before 70 or so of our peers – including but a dozen bona fide owners of land lease lifestyle communities – at a national gathering of fellow manufactured housing industry businessmen and women.

Since then, the elected officers of the parent body hosting said meeting, have dodged responsibility for their colleague’s attack. They confirmed their position in a letter from their attorney, that arrived 30 November, the date I’d set as a personal deadline to get this sorry matter resolved, hopefully with an apology and copy of the script read to castigate the other dues – paying member and myself. Neither happened.

So, why am I not particularly upset, and happily moving on with my business life? As you likely know, I have opportunities and the wherewithal, as an author, to write and publish contemporary histories of the manufactured housing industry, and it’s sister segment, the land lease lifestyle community real estate asset class! *1 My day will surely come….

II.

Symptoms of Troubled Land Lease Lifestyle Communities!

Following data based on 200 rental homesites @ $200/month rent.*2

Yes, some of you reading this posting have seen these ten symptoms before. But since they continue to be one of the most frequently requested training aids, right there along side the…

• ‘Ah Ha! & Uh Oh! Worksheet’ calculates ‘affordable’ & ‘risky’ Price Points, using Area Median Income (‘AMI’) &/or Annual Gross Income (‘AGI’), for new & resale homes sited in LLLCommunities & on realty conveyed fee simple

• Official Industry Standard Chart of (operating) Accounts & the industry averages of Operating Expense Ratios (‘OER’s) for land lease lifestyle communities nationwide.

• Industry Briefing Sheet, contains core benchmark statistics for HUD – Code manufactured housing (e.g. shipment #s, $/sq.ft. costs), and land lease lifestyle community data from the current ALLEN REPORT, a.k.a. ‘Who’s Who Among LLLCommunity Portfolio Owners/operators Throughout North America!’

• Annual ALLEN REPORT, & 11 Signature Series Resource Documents (e.g. National Registry of Realty & Chattel Lenders; List of Freelance Consultants; and nine more…) available nowhere else in the MHIndustry or LLLCommunity asset class than from GFA Management, Inc., dba PMN Publishing.

All the above resources, but one, are available FREE for the asking, by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. The annual ALLEN REPORT is available ‘free’ to paid subscribers to the Allen Letter professional journal; or for $500.00 per copy; again, by phoning the above listed MHIndustry HOTLINE.

Back to the ‘Symptoms of Troubled Land Lease Lifestyle Communities’ It’s OK to ‘set your own standards’, or use ones provided in mathematical examples below. In each instance, however, think or say to oneself; This symptom, ____________, if ‘less or more’ than stated standard, indicates the subject property is ‘troubled’ in this particular area:

1. Physical Occupancy less than 93%, e.g. 186 occupied sites divided by 200 total rental homesites = 93% physical occupancy!

2. Economic Occupancy less than 85%, e.g. 170 ‘occupied & paid’ sites divided by 200 total rental homesites = 85% economic occupancy!

3. Bad debt more than 1% of adjusted gross rent! ‘Adjusted gross rent’ is total (monthly) rental income from a property, based on real or estimated physical occupancy percentage. So, if ‘adjusted gross rent’ is 200 sites X $200 X 95% (.95) occupancy = $38,000. X 1% (or .01) = $380.00. ‘maximum bad debt allowed’ benchmark.

4. Aged rent delinquencies more than 30 days! Some say 60+ days, however, when comparing ‘collection performance’ to conventional apartments, as it oft takes monthly rent from three homesites to equal rent volume from one apartment unit.

5. Aged accounts payable more than 30 days! Often beyond the control of on – site management, but a symptom, nonetheless, of a troubled property operation.

6. Operating cash flow goes negative in consecutive monthly periods! Similar to previous symptom, characterized by ‘holding checks’ till next month rent arrives.

7. Debt service coverage drops below 1.05x in consecutive months! This is margin by which a property’s ‘net operating income’ or NOI, exceeds or covers ‘debt service’ or mortgage payment, usually a10 – 20% margin, expressed as 1.1 – 1.2x

8. Moves by vendors & or suppliers to close property accounts, inhibiting work from being completed or needed supplies from being ordered and inventoried.

9. Poor curb appeal. Symptomatic of lax routine maintenance, deferred maintenance, lax rules enforcement, and marginal on – site property management.

10. Little to no qualified leasing or sales traffic, along with below average ‘conversion percentages’. Symptomatic of no marketing plan (Consider implementing the ‘5-Ps of Marketing’*3); ineffective advertising; lack of home sales & site leasing training; lax performance supervision (e.g. # of calls converted to visits, & # of visits converted to approved applications, & reporting of same); and, worsening reputation in the local housing market.

III.

Own LLLCommunities & Want to be Charter Member of MHCA?

The following two paragraphs are quoted from a letter I recently mailed to businessmen, still active in the manufactured housing industry and land lease lifestyle community asset class, who attended the historic, strategic planning meeting on 31 August 1993. This was precursor to formation of an Industry Steering Committee (‘ISC’), which in turn was predecessor to the Manufactured Housing Institute’s National Communities Council division – that debuted 1 January 1996.

“Since I’ve been unable to successfully market the ‘products & services’ created and nurtured, during the past 33 years, by the ‘for profit’ GFA Management, Inc., dba PMN Publishing firm, the matter comes down to two courses of action:

• I pull the plug on the ‘for profit’ firm, and walk away from the Research & Resource needs of hundreds of my fellow owners/operators of LLLCommunities nationwide and in Canada, and likely retire. Walking away is the least desirable alternative, but I would like to slow down and spend more time with Carolyn. What’s this mean (to you)? No more weekly blog postings and monthly newsletters, no more annual ALLEN REPORTs, no more annual Networking Roundtables or periodic FOCUS Groups, and no more monthly updates as to identities of real estate and chattel loan originators, freelance consultants, and much more. (Forgot to include: ‘no more exclusive data base, listing 500+/- LLLCommunity portfolio owners/operators in North America!’ & no more Manufactured Housing Manager® or MHM® professional property management training and certification program!’)

-OR-

• We take the above reference ‘for profit’ products and services, and roll them into a new, not for profit (501c3), national trade entity, to be the statistical Research & ‘comprehensive Resource servicing’ arm of the LLLCommunity property type, nationwide and in Canada. All the while, leaving Advocacy work for MHI’s NCC division. In effect, creating a second national MHIndustry (or third, considering MHARR) trade body, (something) we talked about avoiding, even at the 31 August 1993 meeting’ 19 ½ years ago!

So, where are we today? By years end, a call will likely go out to land lease lifestyle community owners/operators, who’ve already expressed their desire to have a direct roll in perpetuating the statistical Research & ‘comprehensive Resource servicing’ they’ve enjoyed these past three decades! Specifically, they’ll be given the opportunity to join and actively support the new, national, not for profit Manufactured Home Communities Association of North America®, or MHCA®, as a dues – paying charter member. Then participation will be opened up to all LLLCommunity owners/operators nationwide.

Know what? You don’t have to wait to get involved! Let me know NOW of your interest, via letter (GFA c/o Box # 47024, Indpls, IN. 46247), the above MHIndustry HOTLINE, or email: gfa7156@aol.com

Again, the new MHCA is envisioned as being the statistical Research (Until the Center for Manufactured Housing Studies, or CMHS, is fully operational) and ‘comprehensive Research servicing’ entity, going forward, to serve land lease lifestyle community owners/operators throughout North America; leaving the Advocacy interests, of the realty asset class, the sole focus of MHI’s National Communities Council division.

***
End Notes.

1. Read Development, Marketing & Operation of Manufactured Home Communities, Allen, Alley & Hicks, J. Wiley & Sons, NY, NY, 1994. See appendices B, C, and especially G.. Also, chapter # 2 in, Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing, George Allen, CPM® & MHM®, PMN Publishing, Indianapolis, IN., 2011.

2. Adapted from 6/2007 issue of Affordable Housing Finance magazine

3. 5 – Ps of Marketing: Product (or Service), Price structure, Place (or location), Promotion, & People! Source. Landlease Community Management, George Allen, CPM® & MHM®, PMN Publishing, Indianapolis, IN. 2008; 6th edition, pp. 66 & 67. Also text for Manufactured Housing Manager® or MHM® professional property management training and certification program, via PMN Publishing.

George Allen, CPM®Emeritus, MHM®Master
Box # 47024, Indpls, IN. 46247
(317) 346-7156

Blog # 222 Copyright 2012 2 December 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

WOW! Did YOU Respond? YES!

There will be a ‘by invitation only’ POWER Luncheon in KY on 1/23/2013

&

While the MHCA of North America is not a ‘done deal’ yet, may be soon…

II.

‘Past as Predictor of the Future – or just Another Crapshoot?

Have YOU Contacted ‘MHC of Arizona’ for a Copy of this MHExpose’?

III.

Key # Indicators of Land Lease Lifestyle Community Performance

IV.

Will I See YOU in Richmond, VA. this Coming Week?

***

I.

WOW! Did YOU Respond? YES!

There will be a ‘by invitation only’ POWER Luncheon in KY on 1/23/2013

&

While the MHCA of North America is not a ‘done deal’ yet, may be soon

More often than not, business writers wonder if what they pen is getting through to their intended audience? And assuming so, what’s their response to said message?

Well, last week’s blog produced many welcome and happy YES responses to the first question, as well as ‘replies of substance’ to the latter one! Within hours of posting the blog a day early (Saturday) on community-investor.com, I had six commitments – from land lease lifestyle community owners, to participate in the POWER Networking Luncheon on 23 January, the first day of the annual Louisville MHShow – along with an unsolicited offer to sponsor this first major networking and educational event of the year! And five days later, that ‘interested party’ number swelled to 20, not including the three discussion leaders I’ve asked to assist me facilitating this special event. Have YOU expressed your interest yet? Get your name on the ‘invite list’ ASAP, as seating is limited to 50 LLLCommunity owners and operators.

A sampling of the first dozen responses:

• “I’m interested in the luncheon. Count me in!” MM

• “Count me in for Louisville. I sincerely appreciate you taking the initiative (as expected and appreciated). We want to sponsor the event. This is NOT a request. What time and where?” RO

• “I would be interested in attending the meeting you mentioned, to be held in conjunction with the upcoming Louisville Show.” RN

• “I’ll be there for the Louisville networking lunch. Great idea!” CN

• “Would love to have lunch with you in Louisville.” DL

• “Haven’t been to Louisville in years, but sure plan to go now, for lunch and the show. Ha! Sounds a little like going to the big city for ‘dinner and a show’. DG

And that wasn’t all! Requests continue to arrive for a reprint of the ‘Best of Times, Worst of Times’, Briefing Summary I frequently share with inquirers, mostly from outside the MHIndustry & LLLCommunity asset class. Here’s what one of our blog ‘floggers’ (readers) had to say about the briefing summary:

“I read your piece on the current state of the industry and thought it was one of the most concise, accurate and realistic analysis I have read in awhile. With new MH production down, over the last decade, there are few used homes available for purchase as rentals. Your thoughts on this matter, particularly the economics of renting homes on – site?” JD

Haven’t decided for sure yet, but am considering editing this blog feature into a lead story for an upcoming issue of the Allen Letter professional journal, maybe the February 2013 issue. Speaking of the business newsletter, are YOU a paid subscriber? If so, look to receive the stunning 24th annual ALLEN REPORT (a.k.a. ‘Who’s Who Among Land Lease Lifestyle Community Portfolio Owners/operators Throughout North America!’) as a lagniappe (‘i.e. ‘freebie’) in the January 2013 issue. Otherwise the report alone, is retail priced at $500.00. per copy. So, if not yet a paid subscriber, and really want a copy of this new 24th edition of the ALLEN REPORT, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 ASAP. Price? Only #134.95 for a one year (12 monthly issues) subscription.

Why stunning? Because we’ve built a couple ‘extras’ into this year’s 24th edition. Not the least of which will be the List of the 25 Most Influential Persons in the MHIndustry & LLLCommunity Asset Class! Remember; many of you reading this blog are the ones who, during the past six months, identified the individuals YOU consider to be the Most Influential. You don’t want to miss this edition of the ALLEN REPORT.

And finally; regarding another topic imbedded in last week’s blog posting. MANY have phoned and written, asking for more information about the casually mentioned Manufactured Home Communities Association of North America, or MHCA for short. Here’s all I can tell you at this time:

If and when MHCA officially debuts, you’ll be among the first to know! And if indeed, maneuvered to materialize, MHCA will ‘hit the ground running, as a new, national, not for profit ‘comprehensive Resource servicing’ entity for all land lease lifestyle community owners/operators in the U.S. and Canada! As such, it’ll complement the Advocacy role of MHI’s National Communities Council (‘NCC’) division, and the eventual Research focus of the Center for Manufactured Housing Studies or CMHS.

While I said nothing last week about MHCA membership solicitation, more than a dozen of you, all LLLCommunity owners, inquired as to When, Where, How, & How Much it’ll cost to sign – on as Charter Members. While that’s getting out a little ahead of ourselves, it’s encouraging to know my land lease lifestyle community owner peers, as well as others, recognize the ongoing and intrinsic value of the print and online communication (e.g. books, monthly newsletters, weekly blog & standard PM forms), interpersonal networking events (e.g. annual Roundtable & periodic FOCUS Groups), professional property management education (e.g. nearly 1,000 Manufactured Housing Managers® or MHMs® to date), and realty deal – making opportunities, as well as other unique products and services. All this has been welcome confirmation of the past 33 years of effort, via GFA Management, Inc., dba PMN Publishing, in behalf of LLLCommunity owners and operators nationwide and in Canada. So, for the time being, a sincere ‘Thank You for that Vote of Confidence & Expectation of What’s Ahead!’ GFA

II.

‘Past as Predictor of the Future – or just Another Crapshoot?’

Have YOU Contacted ‘MHC of Arizona’ for a Copy of this MHExpose’?

As long time readers of the Allen Letter professional journal know; at least once each year, I update and share the most comprehensive ‘State of the MHIndustry & LLLCommunity Asset Class’ document available anywhere, from anyone, in the industry and throughout the property type. Sure, there are other versions of ‘State of the Manufactured Housing Industry’, but that’s generally all they’re about; that singular business type and model only. Few, if any, include key stats, trends, and more, that describe the land lease lifestyle community , a.k.a. manufactured home community.

With that said, you’ll surely want to read ‘Past as Predictor of the Future – or just Another Crapshoot?’ Why? Because I’ve taken material from the last dozen years of ‘State of the MHIndustry & LLLCommunity Asset Class’ presentations, and ‘predicted them forward’ to what we might expect, in both business milieus, a decade from now, during year 2022! Wouldn’t you like to know?

To order your copy of the MHC of Arizona newsletter containing this forward – looking document, contact Susan Brenton via (480) 345-4202 or sbrenton@azmhca.com The feature is tentatively scheduled to be published in the association’s January 2013 newsletter. It will not be reproduced in this weekly blog.

Here’re a few tidbits from this ‘futuristic start to year 2012 cum 2022:

• “One can almost (hope) to see an industry promo as straightforward as this: ‘One House, Your Home; Anywhere, Anytime! (Manufactured) Housing!’ Now all we’ve gotta do is figure out what word to use instead of ‘manufactured’….

• “This major segment of the manufactured housing industry is on the cusp of significant consolidation nationwide.” Which segment one do you think it is?

• “…how many more property portfolios are going to shrink in size, or disappear altogether, as foreclosure casualties?” That is indeed happening, you know.

• “Again, Randy Rowe, says it best: ‘Community owners (now) horizontally integrate, to include….” This part alone is a real education in LLLCommunity operations.

• “Household expenses must be paid by the homeowner/site lessee. If paid as part of the 30% HEF, a housing transaction is ‘affordable’; however, if paid in addition to the 30% HEF (PITI only), the housing deal is ‘risky’ at best!”

• “Today, more than ever before, (state) MHAssociations cannot afford expensive deadwood staffing. And…everyone must become active membership recruiters!”

• “But there’s a rub or two. The National Communities Council division of MHI has been effective since 1 January 1996, or 17 years. Two significant concerns spark controversy today and going forward.” Some ‘must read’ material for all..

OK, if you haven’t already contacted Susan Brenton, in AZ, to pre – order a copy of her association’s January 2013 newsletter, featuring this ‘look into our collective future’, phone her at (480) 345-4202 or email: sbrenton@azmhca

III.

Key # Indicators of Land Lease Lifestyle Community Performance

Just decided this particular blog posting is long enough as it stands, so will push this ‘really interesting & instructive material’ over into next week’s offering.

IV.

Will I See YOU in Richmond, VA., this Coming Week?

Sure hope so! If you’re a land lease lifestyle community owner/operator in any of the Mid Atlantic states, this’ll be the best $35.00 you’ll spend during 2012! Phone Tyler Craddock @ (804) 750-2500 or email him at tcraddock@vammha.org to register for this one day, 6 December, education and networking event. Learn all about 21st Mortgage’s cutting edge C.A.S.H. lending program for LLLCommunities; how to calculate ‘affordable’ & ‘risky’ Price Points for new and resale homes going into LLLCommunities or onto scattered building sites conveyed fee simple; my ‘trade secret’ property turnaround procedures, and much much more.

*****

George Allen, CPM®Emeritus, & MHM®Master
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset Class &
Affordable Housing Purists & Enthusiasts Nationwide
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

Blog # 221 Copyright 2012 25 November 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

Lunch Anyone?

1/23 in Louisville, KY: Dine & Network with Movers & Shakers!

II.

Fallout Continues!

Amazing! Little Official Action, but Lots of Support from You!

III.

Best of Times, Worst of Times…

What I Tell Prospective LLCommunity Investors When They Call

***

I.

Lunch Anyone?

1/23 in Louisville, KY: Dine & Network with Movers & Shakers!

Who’s up for starting a new tradition at the Louisville MHShow?

‘More than a few of you are’, since several manufactured housing and land lease lifestyle community businessmen and women have asked me – since the ‘free lunch is long gone at the Louisville MHShow’, Why don’t I host an annual ‘by invitation only’ luncheon and networking event, at a nearby hotel, for those who want to get off the showroom floor for awhile, to dine & socially mingle with ‘friends in the MHBusiness’?!

Well, I’m game, if You’re really interested! Tell you what we’ll do…

I’ll soon drive down to Louisville and reserve a venue. In the meantime, you indicate interest in being invited to the networking luncheon, by responding via phone (e.g. MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764) or email: gfa7156@aol.com
Simply state your desire to participate, leaving me your preferred contact information.
I’ll send you an invitation, & read future blog postings here for details, $ amount, etc..

So, what do we have in mind? An appropriately sized hotel meeting room, probably a buffet luncheon, with seating conducive to interpersonal networking; then a special speaker (not me), followed by opportunities for open discussion – or maybe three ‘directed discussions’ on such topics as lease option, financial regulatory compliance, and how to collect 100% of your site rent. And there’ll be no pressure to conclude the event. I suspect we’ll convene between 11 & 11:30AM, break bread together from11:30AM to 12:15PM, titillate you with the surprise presenter from 12:15 – 1PM (I do have someone in mind.) And you’ll be free to return to the MHShow anytime you wish: before or after 1PM, or later – if you participate in one or more of the three directed discussions described above. In any event, I plan to keep the meeting room available for networking, discussion, and more, until at least 3PM. Cost? Too early to say, but as reasonable a fee as I can negotiate with the host facility.

Wanna participate? You’ll need an ‘invite’; and the first step to receiving that, is to phone the above – listed MHIndustry HOTLINE or email me via gfa7156@aol.com

***

A Postscript of Virginia Sorts…

Speaking of networking, as well as education and industry/asset class matters! Don’t forget. If you own and or fee manage one or more land lease lifestyle communities in VA, MD, NC, WV, and surrounding areas, plan to be in Richmond, VA., on 6 December 2012! Why? The Virginia Manufactured & Modular Housing Association is hosting a day long opportunity for Education (‘How to Set Affordable & Risky Price Points on New & Resale Homes’ & ‘How to Turnaround Troubled & or Abused Properties!’), Information (‘State of the MHIndustry & LLLCommunity Asset Class!’ & 21st Mortgage’s cutting edge C.A.S.H. Program, funding on – site home loans in partnership with LLLCommunity owners!), and superb interpersonal networking (luncheon) among land lease lifestyle community owners/operators. Tyler Craddock, VAMMHA’s exec, is your point of contact for more information and to register (only $35.00/person!): (804) 750-2500. Hope to see you there!

***

II.

Fallout Continues!

Amazing! Little Official Action, but Lots of Support from You!

Haven’t said much yet, about what happened at the NCC meeting on 8 October 2012, during MHI’s annual meeting in San Antonio, TX. Suffice it to say however, an unexpected, unfortunate public incident occurred that begs redress for the injured parties.

As of 21 November, MHI’s Executive Committee attempted, by email, to dodge responsibility for said incident, even though it occurred at their annual meeting venue; suggesting offended MHI members take the matter up with the NCC division officer effecting the highly embarrassing incident.

With that said, know nary a week goes by – and there’s been seven of them so far, when we haven’t heard from one or another land lease lifestyle community ‘owner’, assuring us of their ongoing support. Here’s the most recent email commentary and challenge to come our way:

“A long time ago, I got sick of the ‘do nothing clique’, who are ONLY in the mix for their own selfish reasons. Why invest personal money, and more importantly TIME (to this end). Keep up your tenacious fight, and continue to be our voice! Help to crystallize the issues, and support people who can really help make a difference.” JR (Emphasis added. GFA)

Where does this sorry matter stand today? Correspondence continues to pass back and forth among the elected and salaried leaders of our industry’s primary national Advocacy body, and the injured parties. I’m hoping there’ll be resolution by the end of November, certainly by 8 December, which will mark two full months of waiting for this situation to be made right. Beyond that? Well, guess you’ll need to read this blog posting, from week to week; as well as upcoming issues of the Allen Letter professional journal; and, certainly plan to be at the next NCC meeting in Arlington, VA., on 26 February 2013.

***

Best of Times, Worst of Times…

What I Tell Prospective LLCommunity Investors When They Call

By now, most of you reading this 221st consecutive weekly blog posting, know I make my living as an independent, freelance consultant to the factory – built housing industry, land lease lifestyle community owners/operators, and affordable housing purists and enthusiasts nationwide. As such, we field a wide variety of task inquiries every week, including: deposition and jury trial testimony in expert witness cases; telephonic & on – site inspection Mystery Shopping assignments throughout the U.S.; covert property management criminal investigations; property takeover & turnaround planning services; public, private & corporate speaking engagements; as well as, professional property management (Manufactured Housing Manager® or MHM®) training & certification class scheduling – and more.

The one near routine inquiry these days, for ‘private industry & realty asset class briefings’, comes from financiers, equity funds, Wall Street analysts, hedge fund directors, lending institutions, academics, and now, realty – secured mortgage servicing firms, all asking the same or similar questions:

Is now the right time to invest in manufactured housing & or land lease lifestyle communities? If so, why? And if not, why not?

To begin with, those are not generally the two ‘trade terms’ inquiring clients use in their question or questions. But their choice of lingo is usually a clear indication as to how little or much they already know about our interrelated business types and models. What’s contained in the following paragraphs, albeit in abbreviated fashion, is what I shared with a paying client this past week; and frankly, the ‘drill’ doesn’t change much from client to client, or month to month, unless new information or helpful statistics become available for my use. Ready?

I won’t tell you ‘up front’, whether this is the Best of Times, or the Worst of Times, to invest in manufactured housing and its’ real estate component, the land lease lifestyle community (a.k.a manufactured home community). But you’ll be able to make up your own mind, by the time we’ve worked through the following paragraphs, and you’ve studied the 23rd annual ALLEN REPORT, as well as other contemporary trade articles. The 24th annual ALLEN REPORT will be published 1 January 2013 as a lagniappe to the Allen Letter professional journal.

To begin with, ‘manufactured housing’ and ‘land lease lifestyle communities’ (a.k.a. LLLCommunities) are two different, but closely related business types and models. HUD – Code manufactured housing, on the one hand, has to do with the design, fabrication, shipment, and installation of factory – built housing constructed in accords with a federal preemptive performance – based building code. Manufactured housing production, marketing health, and industry performance are measured by ‘annual shipment volume’ of new HUD – Code homes. At present, and for the past several years, annual shipments have been at an historic and dismal nadir of only 50,000+/- new homes per year, down from a renascence high of 372,843 new HUD – Code new homes shipped during 1998. No significant change, or improvement, is seen on the horizon – unless there’s an increase in crew housing demand from natural oil – fracking regions of the U.S.; or FEMA needs thousands of specially – designed homes, following natural and weather disasters. Of course, a wholesale return of the now decade – long – gone accessible chattel (personal property) financing of HUD – Code homes would also be a major game changer!

LLLCommunities are neither growing or declining in number. It’s estimated there are 50,000+/- of them nationwide, with 85 percent of that number characterized by properties containing 100 or fewer rental homesites apiece. Because of their scarcity (i.e. 50,000+/-), stable occupancy (homes too large & expensive to relocate), stable & competitive site rent (compared to conventional apartments in the same local housing market), affordable home ownership & equity opportunity, being ‘recession proof’, and unique opportunities to ‘add value’ in difficult economic times, these income – producing properties enjoy the near perennial reputation of being a Sellers’ Market. It’s, in large part, why the majority of the 15 percent of LLLCommunities, larger than 100 rental homesites apiece, are today in 500+/- known property portfolios domiciled throughout North America only. For more details read the 23rd & 24th annual ALLEN REPORTs.

With all that said, what are the unique, encouraging, even troubling trends characteristic of many, if not most or all LLLCommunities across the U.S. today?

Traditionally, when one acquired a LLLCommunity, it was commonplace to rely on local independent ‘street’ MHRetailers (formerly referred to as ‘street dealers’) to sell new and resale manufactured homes, then encourage buyers to site their new home in (then) mobile home parks cum manufactured home communities. Well, due to a plethora of undisciplined lending practices, throughout all segments of the manufactured housing industry before, during, and after the ‘turn of the century’ (i.e. 1996 – 2005), most independent sources of chattel (personal property) finance have disappeared from our industry and are remain gone. Same with the MHRetailers; their number is estimated to have plummeted from 11,500, at the turn of the century, to but 4,000 independent ‘street’ MHRetailers & ‘company stores’ today. And no near term relief or change is foreseen there as well.

At that point in time – when independent, third party – originated chattel mortgage financing disappeared from the manufactured housing business scene, owners/operators of LLLCommunities, from coast – to – coast, exercised one of the aforementioned unique characteristics of this property type, i.e. ‘ability to create additional streams of income’ by selling and self – financing new and resale home transactions on – site! This worked fine for awhile – until getting (some say, unintentionally) swept up in financial reforms, following our nation’s recent economic hiatus, specifically, the S.A.F.E. Act (Safe And Fair Enforcement of Mortgage Licensing), provisions of Dodd – Frank legislation, Red Flag, American Patriot Act, AML, and more. Now $$$ matters have become much more complicated; enough so, many LLLCommunity owners, like me, when needing to fill vacant rental homesites, opt to buy resale homes (Some buy new homes), then lease them as ‘rental units’ on – site, rather than ago through the complicated and inherently dangerous hoops of becoming and remaining compliant with onerous state and federal $$$ regulations. Speaking of ‘new homes’, know that one area where HUD – Code home manufacturers work closely with LLLCommunity owners/operators, is in the area of designing, building and shipping Community Series Homes, a.k.a. CSH Models. These are generally modest size singlesection homes or smaller multisection homes, often featuring front porches, but almost always characterized by durability – enhancing features, to prolong the home’s utility and life as it passes among multiple homeowners/site lessees and unit renters.

Another dynamic that’s been playing out, during the past decade, is the shake out of properties, sometimes even entire LLLCommunity portfolios, where owner/operators, in an attempt – I suppose – to emulate the real estate investment trusts (‘REIT’s) in this asset class, ‘raised site rents too much too fast’, to maximize profitability during the Go Go economic times, roughly between 1998 and 2008. The inevitable consequence was, as ‘rents went up’ (in effect stealing value from homes sited in affected properties), we turned our customers ‘upside down’ in their transactions. They then, ‘voted en masse, with their feet’, becoming ‘no money down’ buyers of new, cheaply constructed tract homes (which included underlying realty in the transaction) financed via undisciplined lending practices akin to what cost the manufactured housing industry their sources of capital just a few years earlier! Then that site – built home finance bubble burst.

Now today, many of these LLLCommunities, large and small, whose rental homesite rents rose to ‘double or more’ what local housing markets indicated, or could bear, have become tied up in forbearance agreements, and most recently – back on the market, as foreclosure deals. So properties are indeed available for purchase; it’s just that, in many cases, one must craft a viable turnaround Management Action Plan or MAP, that effectively deals with curb appeal issues, deferred maintenance, filling vacant rental homesites (marketing), collecting delinquent site rent, and adjusting rental rates – all at the same time, or in tight sequence. And there’s this strategic question; ‘Where will the funds come from, to purchase new and resale homes to then be either resold and self – financed (e.g. via lease option or one or another type of ‘captive finance’*1), or leased as on – site apartment units?’

The intent here, has not been to ‘scare you off’ the asset class as an investment vehicle, but to deliver a healthy dose of contemporary reality, before you begin a serious search for the ‘right property’ in the ‘right location’, at the ‘right time’, and for the ‘right price’, that meets your investment needs and goals. *2 There are additional resources to access, as you continue your research and decision – making. They include:

• Manufactured Housing Institute’s (‘MHI’) National Communities Council (‘NCC’) division; the national Advocate for land lease lifestyle communities nationwide: (703) 558-0678

• Center for Manufactured Housing Studies or CMHS, the new, academic Research arm, for manufactured housing, land lease lifestyle communities, and affordable housing nationwide. Calls temporarily being taken and forwarded, via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

• Manufactured Housing Communities Association of North America or MHCA, maybe the new ‘comprehensive Resource servicing’ arm for land lease lifestyle communities throughout North America. Phone the MHIndustry HOTLINE: (988) MFD-HSNG or 633-4764.

End Notes.

1. For lease option information, contact Spencer Roane, MHM® via spencer@roane.com And for ‘captive finance’ alternatives information, and training relative to being compliant with finance regulations, contact Ken Rishel via (217) 971-3968.

2. For further information on the land lease lifestyle community, as investment vehicle, read: How to Find, Buy, Manage & Sell a Manufactured Home Community ($75.00) & Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing ($19.95). Both books available from PMN Publishing. Order via MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or visit community-investor.com

***

George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset Class &
Affordable Housing Purists & Enthusiasts Nationwide
Box # 47024, Indianapolis, IN. 46247 (317) 336-7156

Blog # 220 Copyright 2012 18 November 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities,
& earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

Getting Ready for the 24th annual ALLEN REPORT, a.k.a.
‘Who’s Who Among LLLCommunity Portfolios in North America

II.

Trade Secrets to be Revealed During Virginia’s First Symposium;
A special day for land lease lifestyle community owners/operators

III.

The Future (out to year 2022) of the Manufactured Housing Industry & the Land Lease Lifestyle Community Asset Class!

***

I.

Getting Ready for the 24th annual ALLEN REPORT, a.k.a.
‘Who’s Who Among LLLCommunity Portfolios in North America

If you are reading this blog posting and own, fee manage, or otherwise operate one or more land lease lifestyle communities, the annual ALLEN REPORT is likely required reading for one of two reasons: you own such properties and use the helpful information contained therein, to position your LLLCommunities to achieve greater profitability and value; or, you’re a salaried professional property manager, or freelance management consultant, and know this is the only published document containing the names of 20 percent of the known 500+/- portfolio owners/operators in business today throughout North America.

For the past 23 years, the ALLEN REPORT has been the sole researcher and purveyor of benchmark statistical data and trade knowledge pertaining to this unique, income – producing property type, in the U.S. and Canada! Not only is it a veritable ‘Who’s Who’ of investors and professional property management firms active in this realty asset class, but every year includes special features available nowhere else:

• List and comparison of 13 unique LLLCommunity characteristics in years 2000, 2010, & 2020! A list first compiled by the ULI’s Manufactured Housing Communities Council in 2009, and featured in the 23rd annual ALLEN REPORT.

• ‘Seven reasons’ LLLCommunities enjoy a near perennial ‘sellers market’ as a commercial real estate investment. This list is now codified in Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing, PMN Publishing, IN. 2011.

• Setting ‘affordable’ & ‘risky’ Price Points on new and resale manufactured homes to be sited in LLLCommunities, or on private sites conveyed fee simple, using Area Median Income (‘AMI’) &/or Annual Gross Income (‘AGI’) and the ‘Ah Ha! & Uh Oh! Worksheet’. Now available in the Book of Formulae, Rules of Thumb & Helpful Measures for manufactured housing, LLLCommunities, real estate investors, affordable housing aficionados, & realty mortgage originators. PMN Publishing, via MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764.

• ‘Rental Homesite Counts Among All Land Lease Lifestyle Community Real Estate Investment Trusts (‘REIT’s) from 1994 through 2012’. Question: How many LLLCommunity REITs have there been since 1994? Hint. More than three and less than 10. Read the 24th annual ALLEN REPORT for this & much more!

It’s almost ‘too late’ for owners/operators of LLLCommunity property portfolios to submit rental homesite count data for inclusion in this year’s report, but it’s worth a try. Phone the above referenced MHIndustry HOTLINE and tell me, or leave a message.

And while you’re at it, tell me who YOU think is the single most influential person in the MHIndustry and or LLLCommunity asset class! As we announced a few months ago, a ‘List of the Top 25 Most Influential Individuals in the MHIndustry & LLLCommunity Asset Class’ debuts in this year’s 24th annual ALLEN REPORT. Use MHIndustry HOTLINE to make your recommendation. We have more than 20 on hand and nominees don’t have to be members of national MHTrade or Advocacy bodies!

OK, so how does one obtain a copy of the 24th annual ALLEN REPORT? The retail price for the report, when requested by Wall Street analysts, hedge fund managers, university and business libraries, and would be real estate investors, is $500.00 per copy – along with one or another of the dozen Signature Series Resource Documents (e.g. 14th annual Registry of Real Estate & Chattel Finance Lenders in the MHIndustry & LLLCommunity Asset Class’) we research, update and publish every month of the year.

However, for ‘insiders’, specifically MHIndustry businessmen and women, along with LLLCommunity owners/operators, the annual ALLEN REPORT is FREE to subscribers to the Allen Letter professional journal! For $134.95/year, you receive an Allen Letter each month of the year, usually chock full of lagniappes (Free enclosures, e.g. recent summary of the ‘biggest & best networking roundtable ever’, and much more!), and ALLEN REPORT, specifically, with the January issue. SO, if not already a newsletter subscriber, simply phone the MHIndustry HOTLINE and sign – up today.

II.

Trade Secrets to be Revealed During Virginia’s First Symposium; A special day for land lease lifestyle community owners/operators

If you’re reading this blog posting, and own/operate one or more land lease lifestyle communities in Virginia, Maryland, West Virginia, or North Carolina – and elsewhere, you should consider spending the day in Richmond, VA., on Thursday, 6 December, a scant two weeks away. I’ll certainly be there for the day, and hope to see you there as well!

Why attend? Because Virginia Manufactured & Modular Housing Association (‘VAMMHA’) executive director Tyler Craddock, has cobbled together one terrific day of education, information sharing, interpersonal networking, and chattel finance sourcing for land lease lifestyle community owners and operators.

• Education? Two of the hottest topics, nationwide in this realty asset class today, are ‘How to Set Affordable & Risky Price Points on New & Resale Homes Today – particularly for those in LLLCommunities; and, How to Turnaround Troubled and or Abused Properties! (Latter topic is where ‘trade secrets’ come into play!)

• Information Sharing? Two things you’ve gotta experience! In the first instance, the State of the MHIndustry & LLLCommunity Asset Class presentation you’ll hear, is unparalleled at any other venue in the U.S. these days. Why? Because no one else covers what’s happening throughout the LLLCommunity asset class! And Tyler will brief participants about what’s happening legislatively in Virginia.

• Interpersonal Networking? When was the last time LLLCommunity owners/operators from the above – listed states have gotten together for a joint symposium like this? Maybe NEVER? Don’t miss this historic opportunity to attend a SECO – like event (Recalling the very successful 140 LLLCommunity participant symposium in Atlanta, GA. earlier this year) right in your own back yard! Seating is limited, so don’t risk not being able to attend.

• Personal property (chattel) financing? If you’re marketing homes For Sale and engaging in self – financing on – site (e.g. ‘captive finance’, lease option, etc.) and haven’t learned firsthand of 21st Mortgage Company’s cutting edge C.A.S.H. Program, this reason alone is worth participating in this one day event in Richmond on 6 December 2012.

For more information, and to register @ $35.00/person, contact Tyler Craddock via (804) 750-2500 or tcraddock@vammha.org for meeting location address (Home Building Association of Virginia’s facility) and host hotel (Hampton Inn) information. Remember; seating is limited, so don’t risk missing this near – historic event for VA, WV, NC, & MD owners/operators of land lease lifestyle communities. Should be a Good Day for All!

***

III.

The Future (out to year 2022) of the Manufactured Housing Industry & the Land Lease Lifestyle Community Asset Class!

Do you like being among the first businessmen and women to learn of inside ‘goings on’, relative to the manufactured housing industry and land lease lifestyle community asset class? Well, so do dozens of other MHExecutives around the U.S. and Canada. And they satisfy that need by reading an exclusive monthly newsletter known as the Allen CONFIDENTIAL! This savvy communiqué has been around for a dozen years, but is rarely shared in public. And it’s not inexpensive. An annual subscription is $950.00/year for 12 monthly issues; but only $750.00/year for subscribers to the Allen Letter professional journal. To subscribe, use the aforementioned MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

Now here’s an interesting ‘bottom line’ figure for you. All three items mentioned in this blog posting, two newsletters and the annual ALLEN REPORT, ordered and paid for separately cost $1,584.95; but, bundled together, only $884.95; a savings of $700.00! So, are you missing out? Take that first step to being fully informed TODAY!

Back to that titillating title of Part III of this week’s blog posting at community-investor.com.

Awhile back I was asked by Susan Brenton, executive director of the Manufactured Home Communities of Arizona association, to research and pen a forward – looking feature article for her group’s monthly publication. Well, I’m still putting the final factual details and prognostications together, fleshing out what I’ve tentatively titled:

‘Past as Predictor of the Future – or Just Another Crapshoot?

Here are a couple interesting questions answered in the first part (i.e. past and present time frames) of the feature: What were two cynical and foretelling industry – wide slogans commonly used and heard during years 2002 & 2003? And the well known MHIndustry businessman, who accurately foretold the near total financial collapse of site – built housing a half dozen years before it happened? Too bad the right people didn’t listen to him!

Now, switching to the future. What changes in the manufacturing segment of the MHIndustry will likely be necessary (In addition to the return of chattel financing) for it to return to the Glory Days of new home shipment volume (There’s a hint, right there!)? And how ‘bout the independent ‘street’ MHRetailers, and their ‘company store’ counterparts? What’s the future maybe hold for them? And let’s not forget the land lease lifestyle community segment. Sure is a mixed – bag of successes and failures today, but what’s it going to take to see increased physical and economic occupancy during the years ahead, where national Advocacy, performance Research, and ‘comprehensive Resource servicing’ are concerned – and more!? (This might just turn out to be some of the most important business reading, for you, during all of year 2012; Oops, 2013). The two finance segments of MHIndustry & LLLCommunity asset class? Their intertwined or mutually exclusive future? Guess you’ll have to read the details in the Arizona – commissioned feature.

Unless you’re presently a dues – paying member of the MMC of A, you’ll have to get in touch with Susan Brenton, to order and or obtain a copy of the January 2013 publication that’ll feature this ‘ten year look into the future of our industry and asset class’. Contact her via (480) 345-4202 or sbrenton@azmhca.com

***

George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset Class &
Affordable Housing Purists & Enthusiasts Nationwide
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

Blog # 219 Copyright 2012 11 November 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

Talking to One Another About Ourselves & Our Business Model..

II.

‘Selling New Homes’ at 2013 MHCongress in Las Vegas in April!

III.

More on ‘that book’ I’ve Been Telling You About for Weeks….

***

I.

Talking to One Another About Ourselves & Our Business Model..

“Bottom line. You can’t sell (manufactured) housing for half price without a fair bit of compromise. Increase your (home sale) price ten percent and you’re toast. It’s competition that brings prices down, and it’s price that moves the goods. The magic of manufactured housing has long been, and apparently still is, the ability to build decent housing at costs nobody else can touch, and make good profits along the way. Invest every nickel of profit in upgrading the product, and you gain a five percent advantage. But of course, you go out of business. It’s a brutal world out there George. We have to find a way to improve the quality of our golden eggs without killing the goose!” RV (Lightly edited. GFA)

There’s a significant measure of truth in the previous paragraph. To this day, it boggles my mind, when walking into an attractive, brand new HUD – Code manufactured home, to experience the eclectic right mix of ‘bells & whistles’, e.g. laminated flooring instead of carpeting in some rooms; heavy gauge recessed flap hinges on all doors, instead of thin gauge surface hinges; and more. But then, to observe dozens of cheap white plastic switch and outlet covers at every light switch and electric outlet in the house; and doors hung ‘inches off the floor’ to facilitate return air flow to the heater/air conditioner, rather than enhancing privacy via installation of air vents near the bottom of passage doors hung nearly flush with the floor; and more.

Is there an answer to this perennial quality – price conundrum? I think so, and not; the answer being in the form of this question: ‘When was the last time you heard or saw HUD – Code home manufacturers caucus and cooperate with one another to this end?’ Answer: Almost never. Why? Competition. Oh, innovative ideas have been tried ‘over the years’ (Think back to aluminum wiring, culturally sensitive exterior designs for urban infill, etc.), but we still lack the will to meet and work together towards a common solution – with one notable exception, the National State of the Asset Class (‘NSAC’) caucus, 27 February 2009 in Elkhart, IN. That was when 100 reps from the manufacturing and land lease lifestyle community segments of the manufactured housing industry caucused to figure out ‘How to Sell More New Manufactured Homes into Land Lease Lifestyle Communities?!’ Results? The Community Series Homes, or CSH Models, relatively common today, with many featuring front end loaded porches, and durability – enhancing features needed to ensure habitability over an extended period of time. Perhaps now it’s time, once again, for HUD – Code home businessmen and women to look past their competitive nature, to solve the quality – price golden egg conundrum, without killing the goose that manufacturers them!

So, here’re two Questions of the Hour, Day, Month and for the Year 2013: If YOU agree there should be a soon national caucus, call it a MHInitiative® *1, to address this perennial, and as yet unsolved, manufactured housing industry conundrum, WHO should and will step forward to lead, plan, organize, and facilitate this timely, strategic effort in behalf of HUD – Code home manufacturers nationwide? I’ll be pleased to help if asked; but rather than being the catalyst and meeting planner this time around, the organizing and executing of such a MHInitiative® should rightly come from the manufacturing segment of the manufactured housing industry! And know what? There isn’t a more appropriate time and opportunity for elected and salaried leaders of MHI and MHARR to come together, for the good of the entire industry, than auspicious occasion!

Now, let’s wait to hear and see what happens, or doesn’t happen regarding this challenge, between now – mid November, and the end of year 2012. This could be the HUD – Code manufactured housing industry’s 60 year bellwhether event! *2

End Notes:

1. MHInitiative® is the term that’s replaced National State of the Asset Class (‘NSAC’) caucus, used to effectively in Tampa, FL., @ 2/27/2008, and a year later in Elkhart, IN., @ 2/27/2009. A hint, for anyone who’s read this challenge thus far; 2/27/2013 might be a possibility, as MHI’s annual Legislative Conference, in Arlington, VA., ends, and just before the Great Southwestern Manufactured Housing Show begins in Tulsa, OK. Or, the MHInitiative® might be an appropriate sidebar event to the 2013 Manufactured Housing Congress in Las Vegas, 16 – 18 April.
2. Bellwhether ‘a person or thing that assumes leadership., a person or thing that indicates a trend.’ And does the manufactured housing industry need a unifying bellwhether leader and bellwhether trend at this point in its’ history!

II.

‘Selling More Homes’ at 2013 MHCongress in Las Vegas, NV.

Switching our focus to market research. Here’s what another industry observer has to say about that subject and manufactured housing. “The vehicle industry, from which our industry evolved, spends multiple millions (of dollars) researching who their potential customers are, and what it will take to make them customers, while manufactured housing spends almost nothing; relying instead on borrowed site – built housing research and gut instinct. What is wrong with our industry, that this basic (research) function goes unmet? George Allen is the closest we have to a research arm, with his community – oriented publications, and ongoing efforts to get an Ivy League university actively and permanently involved in (‘teaching us how to effect and share’) manufactured housing and land lease lifestyle community market research.” KR (Again, lightly edited. GFA)

As mentioned in the last paragraph of Part I of this blog posting, ‘How to Sell More New Manufactured Homes into Land Lease Lifestyle Communities?!’ will be a primary focus during year 2013. Yes, it’s early in the (business) game – like five months early, to be writing and talking about one of the key topics to be covered at the Manufactured Housing Institute’s annual Manufactured Housing Congress in Las Vegas, 16 – 18 April. But guess what; it’s going to take those five months to get this alert out, and the training material prepared, for HUD Code home manufacturers and land lease lifestyle community owners/operators wanting to cultivate this emerging market. It’s simply a shame though, that MH – focused ‘market research’ is not an integral part of our industry’s package – yet.

So, here’s where the matter stands today, and what’s expected to materialize during the next five months, as the MHCongress approaches. During August, a blog posting, at this web site, introduced a Ten Point Plan to help HUD – Code home manufacturers ‘Sell More New Manufactured Homes into Land Lease Lifestyle Communities!’ Since then, copies of the Ten Point Plan have been mailed to every HUD Code home manufacturer in the U.S., and it was published in the September issue of the Allen Letter professional journal. This same Ten Point Plan will serve as the core of the program being prepared for public presentation at MHI’s annual MHCongress in Las Vegas.

In the meantime, it’s hoped at least one HUD – Code home manufacturer takes ‘point number ten’ seriously, to wit: #10. ‘Want to corner the on – site new home sales in land lease lifestyle community market? Research, write, publish and distribute, for a price or for free, the MHIndustry’s first HOW TO guidebook on this subject! Seriously. No one has done so to date. Be the first to do so, and watch LLLCommunity folk beat a path to your plant door, when you teach them how to properly select, fairly price, skillfully market, and effectively sell ‘your homes’ on – site at their properties!’ I’ve personally challenged Business Development Managers, or BDMs, at each of the Big Three ‘C’ manufactured housing firms (Clatyon, Cavco, & Champion) TO DO SO, but still await a manuscript! Even volunteered to provide all the self – publishing services (e.g. editing, printing, binding, distribution) needed, to pull this project off successfully. Anyone listening out there?

Proof of the validity of this #10 point? 25 years ago, I authored and self – published Mobile Home Park Management. Today, with tens of thousands of copies sold, it’s been retitled twice, and now is Land Lease Lifestyle Community Management. In its’ eighth edition, this is the core textbook for the Manufactured Housing Manager® or MHM® professional property management certification program.*3 And know what? The same could well be the case now – and 25 years from now, for whoever pens and publishes the first and best ‘How to Sell More New Manufactured Homes into Land Lease Lifestyle Communities!’ guide or text. I’m not qualified to author it or I would….

Bottom line? See YOU in Las Vegas at the MHCongress, when we will learn together, ‘How to Sell More New Manufactured Homes into Land Lease Lifestyle Communities!’

End Note.

1. To order a copy of Land Lease Lifestyle Community Management, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. If interested, also ask for information on the Manufactured Housing Manager® or MHM® program. A one day class is scheduled in Tulsa, OK., during late August 2013.

III.

More on ‘that book’ I’ve Been Telling You About for Weeks….

As you’re reading this weekly blog posting at community-investor.com, know that author Bob Vahsholtz is diligently working, somewhere in the U.S., diligently researching, carefully compiling, and skillfully writing the first definitive book on factory – built housing in general, manufactured and modular housing in particular. When this tome is completed, hopefully during 2013, it’ll be the first such book in more than two decades!

In the meantime, if after reading the following list of chapter headings and subtopics, you’d like to provide input, in the way of ideas, suggestions, material, etc., to the author, send it to me via GFA c/o Box # 47024, Indianapolis, IN. 46247 or FAX it to (317) 346-7158. Any questions, contact me via the aforementioned MHIndustry HOTLINE.

Here’re the chapter headings and subtopics Bob V is working with at this time:

1. There’s Always a Better Way. Stick – built housing, the ailing beast? America, the nation of shortcuts to success, and more….

2. Leadership & Innovation. The risks of pioneering. Introducing Richardson’s.

3. Introduction to the Learning Curve. Theory; how it works in the real world. Classic example of the Model T Ford.

4. Niche Markets, the Way into the Battle. Using Detroit as an example; introduction to Midget Motors.

5. The Biggest Market in the World; Housing. Size of the challenge? And bureaucracy, the ultimate stranger (or maybe ‘strangler’) of progress.

6. Big Guns Step into the Fray. An introduction to Sears, Levitt, National Homes, and Lustron.

7. The Elephant in the Room. Code challenges to innovation, barrier of cultural momentum, and more….

8. Manufacturers Climb the Blind Side. Origins of the MHIndustry; the story of Schult Homes.

9. The Support System. Suppliers, dealers (Wish he’s say MHRetailers), parks (Wish he’d say communities), lots (Wish he’d say rental homesites or sites), and installation ‘foundations’, the origin of the industry’s stigma?

10. How to Cut Housing Cost in Half. Fundamentals of MH efficiency, comparison with stick – building costs, matters of quality and more….

11. Leadership & Management. Art Decio builds a learning curve; the Skyline experience.

12. Managing in Troubled Times. Think Gold Seal, ANSI, and early codes; then the HUD code, along with government ambiguity.

13. How Much Can One Leader Do? Norcom & Canada; federal industries, and more

14. Manufactured Housing Hits the Wall. Who’s in charge of MH strategy? Lack of overview. Role of government, MH & long term finance. Land Lease Lifestyle Communities, a financing niche.

15. A Way Through the Woods? The Clayton story, park models, mobes redux, sectionals, etc. The Cavco story.

16. Getting Serious about the Opportunities Ahead. Riding a focused learning curve; risks vs. gambles – and a big difference. Role of team building….

Well, there you have it. Your advance peek at a text that will describe and parse parts and much of your business livelihood. David Funk, MHM, and I are working closely with Bob V, introducing him to key personages and firms throughout the manufactured housing business. Feel free to contact either of us if you have questions and comments.

***

George Allen, CPM®Emeritus, MHM®Master
Box # 47024, Indianapolis, In. 46247
(3170 346-7156 or gfa7156@aol.com

Blog # 218 Copyright 2012 4 November 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

WARNING! Land Lease Lifestyle Community Owners/operators
Beware of Faux Management Consultants!

II.

More Differences Between Small & Large Owners/operators of
Land Lease Lifestyle Communities….

III.

Initial Blog Reader Responses to ‘A Lesson in Growing & Caring for One’s Reputation’, from Management 101, for Land Lease lifestyle Community Owners, Property Management Executives,
Regional & On – site Managers & Others!

***

I.

WARNING! Land Lease Lifestyle Community Owners/operators
Beware of Faux Management Consultants!

They’ve resurfaced again. Sometimes they’re unemployed land lease lifestyle community on – site and regional managers looking for work, other times interlopers from other segments of the manufactured housing industry, even other income – producing property types. Irregardless, they hang out their shingle as independent, freelance management consultants, oft promising to quickly fill vacant rental homesites; trim operating expenses; in effect, maybe executing the turnaround or rehabilitation of an ailing or management – abused, income – producing property. A desirable end game, for sure; just be fully aware of to whom one is entrusting this multi million dollar real estate investment! More later….

This phenomena pops up every ten or so years, as the LLLCommunity realty asset class suffers through the ‘down stage’ of an economic life cycle. For example; we saw this in the late 1970s, as the manufactured housing industry adjusted to HUD’s new performance – based national building code (Causing new ‘mobile home’ shipments to plummet from 575,940 in 1972 to 250,000+/- by the end of the decade), initially resulting in tens of thousands of newly constructed ‘mobile home parks’ going into foreclosure as the historically heavy flow of new homes dried up.

We saw a similar, though not as massive adjustment in the late 1980s, after the Federal Tax Code was changed in 1986, forcing limited partnership syndicators to market the ‘profitability’ of their deals, rather than ‘tax losses’ heretofore. That raft of freelance consultants had their work cut out for them, as they were forced to implement basic principles of professional real estate management to salvage and then rebuild profitability. That time around, compared to the decade before, it was easy to spot the charlatans, as they were forced to quickly produce positive results or quickly move on.

A decade later, at the end of the 1990s, following a second REIT wave (mid – 1990s), LLLCommunity income – producing properties as a whole, enjoyed – albeit only for a brief period of time – the statistical and historical acme (highest point) of national rental homesite physical occupancy, at 95 percent! And if we needed any independent consultancy advice at the time – which we did not get, it should have been as a loud and stern Warning, to stop going down the slippery slope of predatory (chattel) lending that had taken the manufactured housing industry by storm! And we’re still paying for that misguided era of greed, more than a decade later.

Now it’s 2012, about to morph into year 2013. This time around, thousands of LLLCommunities have slipped into foreclosure, or are approaching that unfortunate destiny, as physical and economic occupancy (Do you understand the critical difference? See *1), for the most part, continues to decline in local housing market after local housing market – but with some notable exceptions. While some of the general occupancy decline is driven by tenant relocation, and near disappearance of independent ‘street’ MHRetailers, as well as many ‘company stores’, from most markets (i.e. The manufactured housing industry’s traditional ‘fillers’ of vacant rental homesites), most of the asset class’ stress comes from a lack of ability to obtain chattel (personal property) financing for new and used homes sold on – site. And with the exception of the innovative C.A.S.H. Program available from the 21st Mortgage Company (Lance Hull @ (800) 955-0021), not much improvement to this situation is anticipated anytime in the near future.

Now here’s where the WARNING about faux management consultants becomes important. Let’s begin by describing what a LLLCommunity owner/operator should look for in a bona fide management consultant, one specializing in this unique income – producing property type, and not from outside this realty asset class. First off, what are his/her property management consultancy capabilities?

One way to measure this is to look for – and verify, nationally – recognized credentials. And there’s really only one; whether the individual is an active Certified Property Manager® member of the Institute of Real Estate Management®. Sure, IREM does not train and certify LLLCommunity managers per se, but their requisite course work and rigorous peer approval system generally ensures a CPM®s application of ‘professional property management principles’ to one’s property challenge – once they know and understand property owner’s goals for a specific location or locations. There are 147 such LLLCommunity specialty CPM®s at work throughout the U.S. today. If listed here, every one of them would be viewed as a ‘household name’ throughout the asset class; as they hail from CA, AZ, OR, IN, IL, MI, PA, FL and beyond. To identify these specialty CPM®s in your region, simply go online to IREM.org and left click on the Find a Member tab.

Another means is to identify, and then verify, a would be management consultant’s claims of work experience. If you don’t perform this critical step, you deserve whatever results you experience. Right now, there are land lease lifestyle community owners in MI and IL who sorely wish they’d made such a phone call or two, in recent months, before retaining the services of one or more freelance PM consultants.

So, are CPM®s and experience – verified independent consultants, the only credible freelance property management experts afoot these days in the LLLCommunity realty asset class? No. There are indeed some Accredited Community Managers® or ACM®s and Manufactured Housing Managers® or MHM®s out and about; but guess what? Their ‘cred’ too needs to be tested, not only in personal interviews featuring pointed questions (e.g. Do they know how to compute physical & economic occupancy and understand the difference; same with Operation Expense Ratios or OERs – and are they conversant with the LLLCommunity Standard Chart of Accounts and Model OER percentages? If not, how do you and they expect to set performance standards, then measure results against them? *2), and make phone inquiries to previous employers and consulting clients as well. A key issue, relative to an ACM®, is to contact the certifying body, in this instance, the Manufactured Housing Educational Institute, via (703) 558-0653, ensuring the individual has completed all three stages of that educational program and actually been awarded the coveted ACM® designation. Same for the MHM® designee. In this instance, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 and request verification of MHM® status.

Any other touchstones along the way to retaining the services of a freelance PM consultant? If a formal report is required, as part of the assignment, beforehand request a copy of their Mystery Shopping reports to other clients,
End Notes.

1. Physical occupancy = # rental homesites with homes on them; Economic occupancy = # rental homesites with homes on them where resident’s rent is paid current. For example: 180 occupied sites, divided by 200 rentable sites = 90% physical occupancy; while 160 occupied & paid sites, divided by 200 rentable sites = 80% economic occupancy. The latter calculation is more a performance ‘acid test’ than the former.

2. Want a resource featuring all the MHIndustry & LLLCommunity – related formulae, etc? Phone the aforementioned MHIndustry HOTLINE, and for only $19.95, order the new Book of Formulae, Rules of Thumb, & Helpful Measures for LLLCommunities, MHIndustry, commercial real estate, affordable housing, and realty – secured mortgage origination. PMN Publishing, Indpls, IN. 2012.

II.

More Differences Between Small & Large Owners/operators of
Land Lease lifestyle Communities….

OK, if you reading this line, and did not peruse last week’s blog posting at this web site (community-investor.com); you’d be better – served, right now, to scroll down thru this posting to blog # 217. There read what prompted the responses you’re about to hear in the paragraphs that follow…

Ready to go? The following commentary was penned by a several decades veteran of land lease lifestyle community on – site home sales and property management. He/she begins with a general statement, then focuses on one more key difference between, in this case, large versus small LLLCommunity owners/operators, specifically, consequences foisted on the latter by actions of the former.

“George. I’m sure I’m not the only one who recognizes the 800 pound gorillas (i.e. large property portfolio owners/operators) may be able to take advantage of their strength to float their realty assets along the meandering river of (business) life, but their lack of commitment to the long term health of their assets…and their leadership’s disdain for their customers…will eventually float them over the waterfall.”

“The…characteristic you may have overlooked (in the previous blog posting) rears its’ ugly head in certain local housing markets. When these (owners/operators) make large portfolio transactions, they essentially assign values to each asset (i.e. LLLCommunity), which are less grounded in reality, than in finance. So, trading them like baseball cards, at inflated values, winds up (providing) prima facia evidence for every county property appraiser’s inflated valuation calculations, and ultimately the amount of ad valorem taxes paid by smaller LLLCommunity owners/operators(in the same local housing market) – as well as residents, via pass – ons and pass – throughs. Witness what is happening to _______________ in ____________, after the ______________deal.” (Lightly edited.) GFA

Other blog readers weren’t as verbose; one simply wrote: “ (You) Hit the nail on the head!” – with the characteristics described in the previous blog posting.

III.

Initial Blog Reader Responses to ‘A Lesson in Growing & Caring for One’s Reputation’, from Management 101, for Land Lease Lifestyle Community Owners, Property Management Executives,
Regional & On – site Managers & Others!

Here too, if you didn’t read last week’s thoughts about earning and preserving one’s ‘rep’ in the business world, you might want to stop; scroll back to blog # 217, and read ‘A Lesson in Growing & Caring for One’s Reputation’.

Now today, recalling the totally unexpected, undocumented personal attack, followed with no opportunity to explain or defend myself, during a national business meeting in early October – and hinted at in blogs # 217, 216 & 215, the following ‘rep’ encouragement, coming from a manufactured housing industry veteran, is highly appreciated:

“I know you are too secure to worry about any of this, but I still wanted to remind you that the right people in our crazy industry love and respect you, and that’s not going to change. You are about results, not hot air, and you’ve proven you know what you are talking about, time and time again.” SF

See what I mean? Does take time, effort, and positive results, over time, to cultivate one’s good personal and business reputation. But, from time to time, there’ll be individuals who’ll make an effort to besmirch what one has done, said, penned, or otherwise. And there’ll also be other individuals with which, and to whom, one has proven themselves, repeatedly, who will come to one’s defense, one way or another – just as in the previous paragraph!

And to these latter, supportive individuals, who’ve stepped forward since this recent contretemps and voiced and written of their support, I say a sincere ‘Thank You!’ The status of this affair? Still awaiting a formal response and apologies resolving this sorry matter. GFA

*****
George Allen, CPM & MHM
Box # 47024, Indpls, IN. 46247
(317) 346-7156