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

Best Salmagundi* of MHIndustry ‘Insider Information’ You’ll Ever Read!

• Salmagundi is ‘a little of this, a little of that; a mixture of something, information’

S.A.F.E. Act ‘fear factor’; portfolio ‘player’ vs. small owner/operator; one liner responses – and more, to last week’s blog about MHAssociations; ‘Where’re Greg O’Berry, Bob Blatz & Greg Harmon? And, where will YOU be March 14 & 15, 22nd, 29 & 30, 2011?

I.

“Many (landlease, nee manufactured home, community) owners are misusing a limited amount of uncertainty in the S.A.F.E. Act final rules, as an excuse to ‘do nothing’ (to ensure their self – financed home loans are in compliance). Their ‘fear factor’ is high, and the tragedy is, there’s no reason for it, except among the smallest of operators.”

“The problem is, they (LLCommunity owners) ‘don’t know enough about what they don’t know’, and hence are so paralyzed, they don’t reach out to get the knowledge they need to make the ‘fear factor’ go away! There’s also fear, among some large portfolio folk, their corporate structure needs changing, meaning someone with the knowledge and experience to set up and run a successful finance arm, would become as important and valuable to the organization, as the traditional CEO and COO ‘golden boy’ positions. And the pay for these financial execs could also be a problem. In an organization doing 40 loans a month, the top finance job is going to be a six figure position.”

“All his doesn’t change the fact that every LLCommunity, capable of filling even a dozen rental homesites a year with self – finance homes, cannot afford not to be doing it the right way! This widespread ‘wait & see’ attitude is a spurious one indeed, simply masking a lack of will and foresight. There’ll always be changes in lending law, and it’s shortsighted not to expect change, and to plan accordingly.” Kenneth Rishel, writing in an email response to an earlier blog posting, by the author, relative to the S.A.F.E. Act. (Lightly edited. GFA)

II.

The following story was prompted by an earlier blog posting, cautioning LLCommunity owners/operators not to be too aggressive with rental homesite rent increases, as more and more properties have been going back to lenders, following large rent increases that have resulted in severely declining physical and economic occupancy.

“I can say first hand, a (LLCommunity) REIT is out of control on their rent increases and fees. I bought a home in a ________- owned property and left it there vs. moving it to my park, since it seemed like a good investment. WRONG. Not only did the market drop shortly after my purchase, but my lot rent shot up from $387 to $427 in three years!”

“What bothered me more, is the fact they charged a flat fee for (natural) gas and water, even when my home sat empty month after month. Their rules and regs state they ‘only charge for consumption’, yet they continued to charge these fees (approximately $37/month), which I continued to ignore. Eventually they evicted me for back lot rent. Frankly, the lot rent was current, but I was behind with the flat fees. Rather than lose the home, I chose to donate it to the St. Vincent de Paul Society. Even that was a struggle to get them to approve, even after I paid all their fees, just to keep the home there.”

Question to this writer: Did they know you were a fellow LLCommunity owner?

Answer: “Absolutely. They knew I was a LLCommunity owner, which was why they were anxious to get me to leave once I started asking too many questions.”

III

One liners, a.k.a. ‘zingers’, have long been the staple of stand up comedians. And the following one liners, emailed in response to last week’s posting title: ‘Why I Belong!, but am frustrated with most MHAssociations’, would be humorous if they weren’t so darn serious!

“You hit the nail very squarely, sir, on the associations.” N

“This won’t make you many friends in MHAssociation (mis) management circles. LOL.” H

“Concerning MHAssociations in your latest blog – it’s time someone threw the skunk out on the table and talked about this.” R

“George, all it takes is the whisper of RENT CONTROL in the (state) legislature, to activate interest in industry political action, which is the ground roots of association membership.” P

There was but one lengthy, thoughtful reply, penned by James Ayotte, a veteran association exec in OH, New England, with MHI/NCC for awhile, and now exec with the Florida Manufactured Housing Association.

“You raise several relevant points. It has become much more difficult to do the work of the association in face of falling revenues. We’ve all been forced to reduce expenses, eliminate non – core services, and focus our limited resources on what’s important – protecting and promoting the MHIndustry’s interests. These decisions have required leadership from staff and volunteer leaders.

“…our mission is clear – to increase the sales of manufactured housing and residency in landlease communities. This mission is evident in everything we do, from ongoing meetings with our customers (e.g. Federation of Manufactured Home Owners of Florida), to our government affairs and legal agenda to our consume education and marketing activities. FMHA’s job is to educate the public about the value and potential of manufactured housing and LLCommunity living, to ensure communities remain open and profitable, and consumers have the ability to buy a manufactured home and (buy/rent) homesites like any other type of single – family housing.

“We don’t lack vision (‘forward focus’) or leadership here in Florida, we lack the resources necessary to accomplish everything we want to do as quickly as we want to do them. These past few years have been sometimes difficult, sometimes gut – wrenching, but we have never lost sight of our mission!

“I am excited about the future of the manufactured housing industry in Florida, and the role we play to position the industry for growth. According to the AARP, 8,000 people a day are turning age 65, and there is a growing wave of first – time homebuyers. These population trends support expansion of the industry. How well we capitalize on these opportunities will depend on the effectiveness of FMHA and industry members marketing efforts and education.

Jim continues his reply for another three paragraphs, and ends thusly: “These are issues I think about everyday, and I’m sure my colleagues do the same. Together, we can meet the industry’s challenges head – on and prevail! Separately, we will languish and waste our time talking about what the industry could have been.” Previous paragraphs lightly edited. GFA

Know what? That was the sole response received from MHAssociation execs nationwide, even after making a special effort to send this blog posting their way! Know what I think? Board chairmen should consider placing last week and this week’s blog in front of their salaried association executive, and ask them to pen a response based on their state’s present day experience, as Jim has done here. Then, distribute copies to all the association’s board members, to stimulate discussion, and maybe stimulate some ‘forward focus’, as well as renewed member recruiting. It’s worth thinking about…

By the way, several blog ‘floggers’ (faithful readers) reminded me of other irksome practices and trends characteristic of some MHAssociations, over time:

• Faux takeover of a state association by one or another membership segment. On one hand, this is easy to observe in states where landlord tenant legislation is a near perennial bugaboo. Count the number of attorneys who pen articles in the MHAssociation’s newsletter; more tellingly, what percentage of articles are penned by legal counsel? 100% in some cases! And rent control doesn’t have to be present; as some attorneys wind up specializing in LLCommunity law and are better able to write than most. And of course, there’s the historic leaning of an association, towards manufacturing & retailing (of homes) vs. the real estate investment side of the house – resulting in ‘two associations’ in some states, e.g. WA, OR, CA, AZ, and others.

• Want to be a ‘player’ on the national scene, but maybe avoid paying dues to become a direct member of the national advocacy body? Position yourself to become a state MHAssociation’s Certified Representative to that national group. Frankly, it a responsible job when ‘done right’; meaning attending as many committee meetings as possible, then reporting proceedings back to one’s state association board. Too many times however, assignment as a Certified Representative is sought and treated as a ‘perc’ by past board chairmen, who may or may not fulfill either responsibility. What’s wrong with sending a young, aggressive, even new association member, to learn what’s going on at the national scene, perhaps developing a passion for our industry and or asset class? As is oft said, and this certainly needs to be heeded by the MHIndustry, ‘Our future is our youth!’

To end this review of association peccadilloes on a positive note, join me in welcoming Lisa Brechtel as the new MHI executive hired to lead the National Communities Council division of the institute!

IV.

OK, where’s Greg O’Berry (former president and COO of Hometown America); Bob Blatz (‘Mr. American Land Lease’); and, Greg Harmon, formerly a regional property manager with Green Courte Partners?

Well, Greg O’Berry resurfaced recently, at Onyx Real Estate, LLC., in Chicago, having just taken on an apartment consultancy project for the firm.

And Bob Blatz recently relocated, and went to work as an executive, with a self – storage firm headquartered in Valley Forge, PA.

Greg Harmon, MHM & BDM? He’s discovered, and now enjoys the ‘challenge and rewards’ of the entrepreneur life, as head of GHP, LLC, working throughout the Pacific Northwest.

Are there other former high profile execs you’ve lost track of but would like to know there whereabouts these days? Like Scott Jackson, Stephen Wheeler, Craig White, Nancy Huppert, Kathleen Lyden, Chrissy Jackson, and Gail Cardwell. Just let me know…

V.

Where will you be during the MHIndustry & LLCommunity asset class ‘triple play’ during March 2011?

14 & 15 March. Manufactured Housing Institute’s Spring (Winter?) meeting in Washington, DC. If you own/operate LLCommunities, you owe it to yourself to be present for the National Communities Council (‘NCC’) meeting on 14 March, from 2:30 – 4PM. For information, phone Thayer Long @ (703) 558-0678. I’ll be there for sure, after traveling via Cape May, New Jersey & the Lewes Ferry over to Delaware. Gotta have some of that fresh seafood cooked up by my brother!

22 March. The ‘Manufactured Housing Industry Innovation Summit’ in Portland, ME. Boy, this is one event I don’t want to miss, but probably will. Can’t be everywhere. But, if you live and work anywhere in New England, then you should phone Karen Brown – Mohr @ (207) 761-4221 for program details. Tell her ‘George sent me!’

29 & 30 March. Told you about this gem of a seminar program in last week’s blog posting. Nancy Geer has put together a ‘show stopper of an agenda’ for LLCommunity owners/operators! Call her @ (518) 867-3242 for details. Registrants are already signing – up from throughout the U.S. You don’t want to miss this unique opportunity to learn more about on – site, self – financing of new and resale homes, how to calculate ‘affordable’ & ‘risky’ price points on new and resale homes, within and outside LLCommunities, and much much more!

VI.

Are you a subscriber to the Allen Letter professional journal? If not, and you own one or more LLCommunities, you should be! It’s the ONLY trade publication in the U.S. & Canada that is focused on the information and networking needs of LLCommunity owner/operators. And, for a limited time, PMN Publishing is making the following ‘deal’ available to readers of this weekly blog:

For $250.00, subscribe to the Allen Letter professional journal, and, receive a copy of the recently released 50+ page, 22nd annual ALLEN REPORT. That’s right, a $334.95 savings! How so? The newsletter subscription is $134.95, and ALLEN REPORT retails for $450.00. YOU get both, for a limited period of time for only $250.00. Go figure! Better yet, pick up the phone and order today, via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

***

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

Best Salmagundi* of MHIndustry ‘Insider Information’ You’ll Ever Read!

• Salmagundi is ‘a little of this, a little of that; a mixture of something, information’

S.A.F.E. Act ‘fear factor’; portfolio ‘player’ vs. small owner/operator; one liner responses – and more, to last week’s blog about MHAssociations; ‘Where’re Greg O’Berry, Bob Blatz & Greg Harmon? And, where will YOU be March 14 & 15, 22nd, 29 & 30, 2011?

I.

“Many (landlease, nee manufactured home, community) owners are misusing a limited amount of uncertainty in the S.A.F.E. Act final rules, as an excuse to ‘do nothing’ (to ensure their self – financed home loans are in compliance). Their ‘fear factor’ is high, and the tragedy is, there’s no reason for it, except among the smallest of operators.”

“The problem is, they (LLCommunity owners) ‘don’t know enough about what they don’t know’, and hence are so paralyzed, they don’t reach out to get the knowledge they need to make the ‘fear factor’ go away! There’s also fear, among some large portfolio folk, their corporate structure needs changing, meaning someone with the knowledge and experience to set up and run a successful finance arm, would become as important and valuable to the organization, as the traditional CEO and COO ‘golden boy’ positions. And the pay for these financial execs could also be a problem. In an organization doing 40 loans a month, the top finance job is going to be a six figure position.”

“All his doesn’t change the fact that every LLCommunity, capable of filling even a dozen rental homesites a year with self – finance homes, cannot afford not to be doing it the right way! This widespread ‘wait & see’ attitude is a spurious one indeed, simply masking a lack of will and foresight. There’ll always be changes in lending law, and it’s shortsighted not to expect change, and to plan accordingly.” Kenneth Rishel, writing in an email response to an earlier blog posting, by the author, relative to the S.A.F.E. Act. (Lightly edited. GFA)

II.

The following story was prompted by an earlier blog posting, cautioning LLCommunity owners/operators not to be too aggressive with rental homesite rent increases, as more and more properties have been going back to lenders, following large rent increases that have resulted in severely declining physical and economic occupancy.

“I can say first hand, a (LLCommunity) REIT is out of control on their rent increases and fees. I bought a home in a ________- owned property and left it there vs. moving it to my park, since it seemed like a good investment. WRONG. Not only did the market drop shortly after my purchase, but my lot rent shot up from $387 to $427 in three years!”

“What bothered me more, is the fact they charged a flat fee for (natural) gas and water, even when my home sat empty month after month. Their rules and regs state they ‘only charge for consumption’, yet they continued to charge these fees (approximately $37/month), which I continued to ignore. Eventually they evicted me for back lot rent. Frankly, the lot rent was current, but I was behind with the flat fees. Rather than lose the home, I chose to donate it to the St. Vincent de Paul Society. Even that was a struggle to get them to approve, even after I paid all their fees, just to keep the home there.”

Question to this writer: Did they know you were a fellow LLCommunity owner?

Answer: “Absolutely. They knew I was a LLCommunity owner, which was why they were anxious to get me to leave once I started asking too many questions.”

III

One liners, a.k.a. ‘zingers’, have long been the staple of stand up comedians. And the following one liners, emailed in response to last week’s posting title: ‘Why I Belong!, but am frustrated with most MHAssociations’, would be humorous if they weren’t so darn serious!

“You hit the nail very squarely, sir, on the associations.” N

“This won’t make you many friends in MHAssociation (mis) management circles. LOL.” H

“Concerning MHAssociations in your latest blog – it’s time someone threw the skunk out on the table and talked about this.” R

“George, all it takes is the whisper of RENT CONTROL in the (state) legislature, to activate interest in industry political action, which is the ground roots of association membership.” P

There was but one lengthy, thoughtful reply, penned by James Ayotte, a veteran association exec in OH, New England, with MHI/NCC for awhile, and now exec with the Florida Manufactured Housing Association.

“You raise several relevant points. It has become much more difficult to do the work of the association in face of falling revenues. We’ve all been forced to reduce expenses, eliminate non – core services, and focus our limited resources on what’s important – protecting and promoting the MHIndustry’s interests. These decisions have required leadership from staff and volunteer leaders.

“…our mission is clear – to increase the sales of manufactured housing and residency in landlease communities. This mission is evident in everything we do, from ongoing meetings with our customers (e.g. Federation of Manufactured Home Owners of Florida), to our government affairs and legal agenda to our consume education and marketing activities. FMHA’s job is to educate the public about the value and potential of manufactured housing and LLCommunity living, to ensure communities remain open and profitable, and consumers have the ability to buy a manufactured home and (buy/rent) homesites like any other type of single – family housing.

“We don’t lack vision (‘forward focus’) or leadership here in Florida, we lack the resources necessary to accomplish everything we want to do as quickly as we want to do them. These past few years have been sometimes difficult, sometimes gut – wrenching, but we have never lost sight of our mission!

“I am excited about the future of the manufactured housing industry in Florida, and the role we play to position the industry for growth. According to the AARP, 8,000 people a day are turning age 65, and there is a growing wave of first – time homebuyers. These population trends support expansion of the industry. How well we capitalize on these opportunities will depend on the effectiveness of FMHA and industry members marketing efforts and education.

Jim continues his reply for another three paragraphs, and ends thusly: “These are issues I think about everyday, and I’m sure my colleagues do the same. Together, we can meet the industry’s challenges head – on and prevail! Separately, we will languish and waste our time talking about what the industry could have been.” Previous paragraphs lightly edited. GFA

Know what? That was the sole response received from MHAssociation execs nationwide, even after making a special effort to send this blog posting their way! Know what I think? Board chairmen should consider placing last week and this week’s blog in front of their salaried association executive, and ask them to pen a response based on their state’s present day experience, as Jim has done here. Then, distribute copies to all the association’s board members, to stimulate discussion, and maybe stimulate some ‘forward focus’, as well as renewed member recruiting. It’s worth thinking about…

By the way, several blog ‘floggers’ (faithful readers) reminded me of other irksome practices and trends characteristic of some MHAssociations, over time:

• Faux takeover of a state association by one or another membership segment. On one hand, this is easy to observe in states where landlord tenant legislation is a near perennial bugaboo. Count the number of attorneys who pen articles in the MHAssociation’s newsletter; more tellingly, what percentage of articles are penned by legal counsel? 100% in some cases! And rent control doesn’t have to be present; as some attorneys wind up specializing in LLCommunity law and are better able to write than most. And of course, there’s the historic leaning of an association, towards manufacturing & retailing (of homes) vs. the real estate investment side of the house – resulting in ‘two associations’ in some states, e.g. WA, OR, CA, AZ, and others.

• Want to be a ‘player’ on the national scene, but maybe avoid paying dues to become a direct member of the national advocacy body? Position yourself to become a state MHAssociation’s Certified Representative to that national group. Frankly, it a responsible job when ‘done right’; meaning attending as many committee meetings as possible, then reporting proceedings back to one’s state association board. Too many times however, assignment as a Certified Representative is sought and treated as a ‘perc’ by past board chairmen, who may or may not fulfill either responsibility. What’s wrong with sending a young, aggressive, even new association member, to learn what’s going on at the national scene, perhaps developing a passion for our industry and or asset class? As is oft said, and this certainly needs to be heeded by the MHIndustry, ‘Our future is our youth!’

To end this review of association peccadilloes on a positive note, join me in welcoming Lisa Brechtel as the new MHI executive hired to lead the National Communities Council division of the institute!

IV.

OK, where’s Greg O’Berry (former president and COO of Hometown America); Bob Blatz (‘Mr. American Land Lease’); and, Greg Harmon, formerly a regional property manager with Green Courte Partners?

Well, Greg O’Berry resurfaced recently, at Onyx Real Estate, LLC., in Chicago, having just taken on an apartment consultancy project for the firm.

And Bob Blatz recently relocated, and went to work as an executive, with a self – storage firm headquartered in Valley Forge, PA.

Greg Harmon, MHM & BDM? He’s discovered, and now enjoys the ‘challenge and rewards’ of the entrepreneur life, as head of GHP, LLC, working throughout the Pacific Northwest.

Are there other former high profile execs you’ve lost track of but would like to know there whereabouts these days? Like Scott Jackson, Stephen Wheeler, Craig White, Nancy Huppert, Kathleen Lyden, Chrissy Jackson, and Gail Cardwell. Just let me know…

V.

Where will you be during the MHIndustry & LLCommunity asset class ‘triple play’ during March 2011?

14 & 15 March. Manufactured Housing Institute’s Spring (Winter?) meeting in Washington, DC. If you own/operate LLCommunities, you owe it to yourself to be present for the National Communities Council (‘NCC’) meeting on 14 March, from 2:30 – 4PM. For information, phone Thayer Long @ (703) 558-0678. I’ll be there for sure, after traveling via Cape May, New Jersey & the Lewes Ferry over to Delaware. Gotta have some of that fresh seafood cooked up by my brother!

22 March. The ‘Manufactured Housing Industry Innovation Summit’ in Portland, ME. Boy, this is one event I don’t want to miss, but probably will. Can’t be everywhere. But, if you live and work anywhere in New England, then you should phone Karen Brown – Mohr @ (207) 761-4221 for program details. Tell her ‘George sent me!’

29 & 30 March. Told you about this gem of a seminar program in last week’s blog posting. Nancy Geer has put together a ‘show stopper of an agenda’ for LLCommunity owners/operators! Call her @ (518) 867-3242 for details. Registrants are already signing – up from throughout the U.S. You don’t want to miss this unique opportunity to learn more about on – site, self – financing of new and resale homes, how to calculate ‘affordable’ & ‘risky’ price points on new and resale homes, within and outside LLCommunities, and much much more!

VI.

Are you a subscriber to the Allen Letter professional journal? If not, and you own one or more LLCommunities, you should be! It’s the ONLY trade publication in the U.S. & Canada that is focused on the information and networking needs of LLCommunity owner/operators. And, for a limited time, PMN Publishing is making the following ‘deal’ available to readers of this weekly blog:

For $250.00, subscribe to the Allen Letter professional journal, and, receive a copy of the recently released 50+ page, 22nd annual ALLEN REPORT. That’s right, a $334.95 savings! How so? The newsletter subscription is $134.95, and ALLEN REPORT retails for $450.00. YOU get both, for a limited period of time for only $250.00. Go figure! Better yet, pick up the phone and order today, via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

***

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

‘Why I Belong’, but am frustrated with most MHAssociations!

&

Own/operate LLCommunities? Time to Decide What You Need!

2011 promises to be a year of survival for some & end of the road for others.
Know this; your fate is in, good but not complete measure, your hands – so make the very most of every opportunity and challenge that comes you way!

I.

A Decade ago I penned an article titled ‘Why I belong!’, for a now defunct MHIndustry print trade publication. It was reprinted many times over, and frequently distributed by state manufactured housing trade associations (‘MHAssociations) as an aid to help recruit new dues – paying members! It’s still inventoried at PMN Publishing, but is rarely requested these days, underscoring the tripartite theme of the following paragraphs.

Our firm is a 20+ year member of two Midwest MHAssociations, and a direct, dues – paying charter member of the Manufactured Housing Institute’s (‘MHI’) National Communities Council (‘NCC’) division. Until recently, we were a full (charter) member of the Urban Land Institute’s (‘ULI’) Manufactured Housing Communities Council (‘MHCC’) – but that’s another story for another time. The Point? As a former elected board member of those Midwest MHAssociations, and present board member of the NCC, I’ve observed ‘the workings’ of these bodies, up close and repeatedly over the years, and believe They Are All Lacking At This Time!

Yes, ‘lacking dues revenue’ for sure, but also ‘lacking forward focus’ and ‘lacking leadership’. Let’s take these three shortfalls, in need of obviation, one at a time.

Lack of forward focus. I’ll be the first to admit, ‘Generalizations are as generally wrong as they are generally right’. But with that said, ask yourself: ‘How many of the state or provincial MHAssociations, or even just the one association – you or your firm belong to, is/are indeed focused – let’s say, on planning and effecting aggressive, positive measures ensuring ongoing survival as a viable trade association and advocacy body? Are you satisfied with the answer? If not, maybe YOU need to get involved and become part of a focused solution, rather than continue as part of the ongoing problem(s). With that said,

Lack of dues revenue. Admittedly, there’re far fewer HUD Code home manufacturers and MHRetailers to solicit as dues – paying members of state and provincial MHAssociations. But guess what? There’re just as many, if not a few more, landlease (nee manufactured home) communities TODAY than there were a DECADE AGO! And yes, consolidation of this type income – producing property type, into one or another of 500+/- LLCommunity portfolios (averaging 22 properties apiece, per the 22nd annual ALLEN REPORT) existent across the U.S. and Canada, has cannibalized this membership category in almost every state and province. BUT, what has your MHAssociation done to 1) aggressively recruit these portfolio owners/operators as dues – paying members, and 2) go ‘on the road’ to visit and recruit heretofore ignored sole proprietor (i.e. Mom & Pop) owners/operators? My guess is, little to no effort whatsoever. How do I know? A year ago, I volunteered to 1) ID all portfolio owners/operators active in a particular state, 2) form a small team of LLCommunity owner/operator members of said association, to 3) visit each of the portfolio ‘player’ headquarters, to recruit (‘pressure’) them, one – on – one to ‘join’! My offer was ignored, and the association continues to lose members and dues in this minimally tapped category. To this end, it’s my contention, every association executive, in the company of at least one board member, should spend one day each week ‘on the road’ aggressively recruiting the small – to – midsized LLCommunity owners/operators, as well as suppliers, service firms, lenders, and the like.

Lest you think our national trade and advocacy bodies are immune from constructive criticism in this ‘lack of dues revenue’ effort, you’re wrong. Similar trends and circumstances apply on the national level as on the state level. But when a suggestion was made recently, that the new NCC executive, as part of their compensation package, be formally challenged to match their salary with ‘new dues revenue’ within 12 months after being hired, the incentivization idea was dismissed as being inappropriate for association executives. Really? Why? Furthermore; I don’t know ‘bout you, but I tire of hearing one national advocacy body constantly cry ‘poor boy’, as they continue to restrict membership to just HUD Code manufacturers.

Lack of leadership. This category riles me above the other two. Perhaps there’re a few MHAssociations, somewhere in the U.S. and Canada, with strict and enforced term limits for elected board members. If so, they’re few and far between. Sure, respond to this blog and let me know! No response? Then I’ll assume, sad to say, I’ve got it right.

For the moment however, assume most elected boards have done a credible job recruiting, hiring and compensating their present MHAssociation exec, the preceding lack of focus and lack of dues revenue comments notwithstanding – since both are functions of board member ‘direction’, and dare I say it, ‘leadership’. Moving right along; few things are more frustrating to business stakeholder members, than to see MHAssociation board seats perennially occupied by protective ‘friends’ of the association exec (Beware the Golden Parachute when an exec leaves, for cause or otherwise…We’ve seen that travesty firsthand.); individuals (usually salaried employees) who consider board meetings personal ‘percs’ away from their day job; and, some old ‘warhorses’ who’ve convinced everyone the association will wither and die without their hallowed presence, year after year after year. And I simply don’t buy the excuse, ‘No one else will step forward and serve.’ That’s just an excuse for not really trying to recruit, and symptomatic of the very environment just described.

The remedy? A healthy mix of ‘fresh blood’ coming onto MHAssociation boards every year, along side capable, experienced, motivated board members who, hopefully, are businessmen and women with bona fide ‘skin in the game’ of manufactured housing and LLCommunity ownership/operations. And be careful about how many years an exec is permitted to stay in place. Is their present salary now double what it’d cost the association to hire a new and anxious – to – please and learn executive? I know one New England association that was on its’ deathbed a couple years ago, but is now growing by leaps and bounds, thanks to a new, ‘willing to travel and recruit new members’ executive. When was the last time your state’s exec was out ‘on the road’ doing likewise? Ask.

Think I exaggerate? Not at all. Ending this first blog segment with two recent accounts; the first a response to an earlier post on this blog site; the second, published last month in the Chattel Finance Newsletter:

“I find is exacerbating the very organizations (i.e. ‘trade associations’) we tout as our representatives – state or national – do NOTHING to change our desperate straights. They are like five fingers moving without concert, to try and make a fist. We have no chance of surviving as an industry, without us getting together!” N

“I don’t belong and likely never will. From what I have seen, over the years, most seem to be a big ego trip for the board members and a big paycheck for the guys who run them. Once in a while, they get worried about some new law somebody wants, because of what one of the members did to somebody else; but other than that, they mostly meet and talk. In my state, there has only been one guy running the association that didn’t think he was smarter and better than all the park owners. I don’t know much about the national association, but all they seem to do is to meet in expensive places, to have a party, and pretend they are actually doing something worth doing.” Anonymous

II.

The time has come for YOU to Decide What You Need. Talking mostly to landlease (nee manufactured home) community owners/operators here, portfolio folk and otherwise. No big introduction, since most reading this weekly blog, are aware of the Request for Proposals we published in the November 2010 issue of the Allen Letter professional journal, to acquire work products long associated with GFA Management, Inc., dba PMN Publishing. To date, there’s one formal Offer to Purchase in place; and, face – to – face negotiations with one party begin this week; and with another, the following week. All that’s being asked here, is for YOU to read down through the list of 28 work products; then ask yourself – ‘Which items – if any, are helpful, even critical, resources relative to my ownership and operation of one or more LLCommunities?’ At the end of this blog segment, I’ll suggest what you can do to (maybe) ensure continuation of the resources you need…

Annual ALLEN REPORT or ‘AR’, a.k.a. ‘Who’s Who Among Portfolio Owners/operators of Landlease Communities Throughout North America!’ The 50+ page, 22nd annual AR released in early January 2011. Asset class’ statistical compendium

Exclusive & CONFIDENTIAL, 25 year computerized data base, comprised of names & addresses of 500+/- LLCommunity portfolio owners/operators in U.S. & Canada. Regular direct mail access by those acquiring/marketing such properties; new products/services

The Allen Letter professional journal; a 21 year, monthly print, subscriber – supported periodical penned for the LLCommunity owner/operator audience! Vehicle for a dozen Signature Series Resource Documents (‘SSRD’), identified later in this work product list.

International Networking Roundtable or ‘INR’. The 20th INR is scheduled for 14 – 16 September 2011. It’s the LLCommunity asset class’ premier educational, interpersonal networking, and deal – making event. Platform for most initiatives during past 20 years!

the Allen CONFIDENTIAL! business newsletter. Subscriber – supported, monthly print publication communicating sensitive, strategic, advance information to MHIndustry & LLCommunity executives alike, 30 – 60 days before be published elsewhere, if then!

Manufactured Housing Manager or ‘MHM’ professional property management training and certification program for on – site, regional & executive property managers, and owners of LLCommunities. Nearly 1,000 MHMs to date! Classroom or correspondence.

community-investor.com website…’How you got here today!’ Superb online resource for books, reprints, PM forms, educational programs, newsletters & more (e.g. Mystery Shopping & MAP planning/execution). Also site of industry& asset class’ weekly blog

Weekly blog posting! The primary B2B (business – to – business) MHIndustry & LLCommunity online news and op/ed source for hundreds of corporate executives and LLCommunity owners/operators, responsible for profitability of business enterprises.

FOCUS Group meetings of LLCommunity owners/operators are convened as interest and needs require. Confidential small group interaction opportunities oft hosted on – site in LLCommunities. GFA/PMN compensated as meeting planner, facilitator and reporter.

National State of the Asset Class (‘NSAC’) caucuses for MHIndustry executives and LLCommunity owners/operators. Two to date: 2/27/08 identified Five Action Areas of LLCommunity concern; 2/27/09, dialogue per new home design for on – site marketing

Periodic ALLEN SURVEYS (VI to date); prepared with assistance from Laurence Allen, MAI. Researched & published results regarding LLCommunity Operating Expense Ratios (‘OER’s), & income capitalization rates (‘cap rates’) per ABClassification System

Stock Inventory of at least 26 copyrighted standard forms tailored to the LLCommunity asset class, e.g. Market Survey, Standard Shopping Report, Income & Expense Cash Flow Analysis Worksheet, ‘Ah Ha! & Uh Oh!’ housing price point worksheet, and more!

MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Primary point of initial inquiry for matters pertaining to LLCommunity operations nationwide, including Canada! E.g. access to HUD Code Business Development Managers & Community Series Homes…

Stock inventory of books includes: Development, Marketing & Operation of Manufactured Home Communities; How to Find, Buy, Manage & Sell a Manufactured Home Community; Landlease Community Management, Manufactured Housing $ Primer

Stock inventory of reprints, both hard copy and PDFs, via community-investor.com. Dozens of copyrighted articles cover virtually every aspect of manufactured housing, and LLCommunity ownership and property management. More than 50 titles.

Chronological History of the LLCommunity Real Estate Asset Class, dating back to the 1980s. Includes accounts of many of the resources on this list. ‘History’ is updated upon revision and publication of each edition of Landlease Community Management.

Library of manufactured housing and LLCommunity asset class related texts, notebooks, binders, etc. Acquisition interest expressed by RV/MH Heritage Foundation’s library, and U.S. Library of Congress. The ‘best location’ for this body of knowledge & history?

SSRD: annual ‘Official State of the MHIndustry & LLCommunity Asset Class’, published in February, includes a comprehensive list of owners/operators’ issues identified during ALLEN REPORT research previous Fall. Only ‘combined’ summary!

SSRD: annual ;National Registry of Real Estate Lenders & Brokers’ specializing in LLCommunity acquisition and refinance real estate – secured mortgages. Narrative identifies prevailing trends, plus list of at least a dozen lenders/brokers with contacts.

SSRD: annual ‘Who Ya Gonna Call in 2011?’ comprehensive list of MHIndustry & LLCommunity freelance consultants. 12th edition to be published in April 2011. Only such ‘specialty skill’ list available anywhere throughout the MHIndustry.

SSRD: annual ‘Directory of MHIndustry & LLCommunity Print & Online Trade Media Resources’. Given the greatly reduced number of print and online trade publications serving the MHIndustry, this is a key working resource facilitating press releases, etc..

SSRD: annual ‘Official Lexicon or Glossary of MHIndustry & LLCommunity Terminology’. Years in the making, this landmark research and resource first published in the Manufactured Housing $ Primer and the 22nd annual ALLEN REPORT.

SSRD: annual ‘Professional Property Management Training & Certification Program Survey’ describes and codifies professional property management in the LLCommunity real estate asset class by dint of the CPM®, ACM® & MHM certification programs.

SSRD: annual, repeatedly updated, ‘Industry Briefing Sheet’. This four page document summarizes HUD Code MHIndustry & LLCommunity benchmark statistics, lists key advocacy and media contacts, including Canadian CSA Z240 & CSA A277-90 info.

SSRD: annual ‘Trade Body Advocacy Directory’ features background and contact information re: MHI/NCC, ULI/MHCC, MHARR, IREM, FBOA, NSAC caucuses, etc..

SSRD: annual ‘Summary of International Networking Roundtable’ proceedings serves as an historical record of this annual event, featuring contact information on all presenters!

SSRD: annual updates to the ‘MHIndustry Paradigm Shifts Timeline’, preserves the essence of HUD Code manufactured housing history & the LLCommunity asset class!

SSRD: annual ‘National State of the Asset Class caucus progress report’ preserves accomplishments of the first two NSAC caucuses, and measures progress relative to the Five Action Areas, Business Development Managers, & Community Series Homes.

So, there you have it, 28 proprietary resources presently in place, and in service to the MHIndustry and LLCommunity asset class! How many, if any, of these specialized resources are important to YOU, and the success with which you manage your business interests? If you’re a direct, dues paying member of any of the national trade and advocacy bodies, you already know ‘who to contact’ relative to your desire to see some or all these work products continue intact – or not. If not presently within that Inner Circle, but wish to make your views and needs better known, contact me via the aforementioned MHIndustry HOTLINE or (317) 346-7156 or email: gfa7156@aol.com

Bottom line? Ideally, ‘all the above’ will wind up being administered and continued by one, two, maybe three, national not for profit trade and or academic bodies, maybe even a ‘for profit’ entity, all committed to HUD Code manufactured housing and the landlease community real estate asst class. Or maybe not. Frankly, much of the future of our unique, income – producing property type and asset class, more so than ever before, is in your hands. If these 28 resources continue, it’ll be in large part, due to your support; if not, well, it’s been an interesting, challenging, rewarding, thirty years of service….

***

George Allen, Realtor®, CPM®Emeritus, MHM Box # 47024
Consultant to the Factory – built Housing Industry & Indpls, IN. 46247

This Weekly Blog Draws Much Traffic; YOUR RESPONSES to…

High Site Rent, an Intellectually Honest Debate, the S.A.F.E. Act & My Sayonara!

(Note. Don’t miss reading the final paragraph of this blog; it contains a Special Deal for purchase of the 50+ page, 22nd annual ALLEN REPORT! Maybe only time offered..)

If anyone told me two years ago, when I started blogging, electronic media would become a rich and ready forum for discourse among friends and associates throughout the MHIndustry and landlease community asset class, I wouldn’t have believed them. But that’s what has occurred. I pen this 125th consecutive weekly blog, knowing we’ll receive a dozen or so thoughtful and oft provocative responses by this time next week. And that number doesn’t include plenteous email messages that arrive daily, addressing a wide variety of industry/asset class matters. Yes, the community-investor.com website has become the intellectual and communication oasis for manufactured housing executives and landlease community owners/operators nationwide. Here’s a sampling of typical daily and weekly commentary…

I.

The ‘No NSAC – III caucus in February’ announcement attracted a flood of response – but of a totally unexpected nature! I’d been hearing, for some time, peer angst regarding ‘too high homesite rents’, at some or many properties owned/operated by mega – sized LLCommunity portfolio owners/operators. Here’s a sampling of those blog responses:

• “As far as the secondary focus on high rent (at postponed NSAC – III caucus) is concerned, it may just end up (being) a bitch session. However, I would like to hear from the offenders: ______________, ______________, and ___________, as to what their strategy is? Specifically, in the _________________market, their LLCommunities are emptying – out, yet they’ve just raised the rent another $25 per month! They don’t take care of them (the properties) anymore; (homeowner) residents have no equity; they (the owners/operators) pay extravagant incentives to move people in; and then, residents can’t afford to keep up their homes and pay the high rent. I simply don’t see the strategy, if there is one.” D (edited. GFA)

• Responding to the two reasons I gave for not having NSAC – III (i.e. “…largest portfolio ‘players’ have programs in place and eschew distraction” & “Thanks to the federal S.A.F.E. Act and variegated state implementation thereof, most everyone else favors a ‘Wait & See’ attitude, before doing anything.”), one blog flogger (reader) opined: “Don’t believe the reasons you’ve been given! The MHIndustry is paralyzed by fear of anyone learning what steps have been contemplated and taken, to keep their present jobs – at the expense of the balance sheet; and, contrary to any reasonable understanding of the true cost of ‘buying occupancy’ in marketplaces where new homes cannot be sold, except at great loss…” P (edited. GFA) Whew! Do ya think maybe ‘site rent is too high in those marketplaces’?

Keep the dialogue going! Anyone care to ‘splain’ the strategy of having market – leading rental homesite rent when a LLCommunity’s physical occupancy is 80% and dropping?

II.

‘Encouragement for a national, Intellectually Honest Debate about what’s brought the noble HUD Code MHIndustry to its’ knees, then brainstormning what it might take to get it back on its’ feet again’, continues to show up on our PC, laptop and netbook screens. For example:

“The need for an industry wide national forum for discussion, and (formulation of) action plans is as obvious as the 12 year slide from nearly four hundred thousand new HUD Code homes shipped annually, to the 49,000 level we’ve been stuck at for the past two years! This would be an appropriate and timely meeting theme and focus for small, mid and large – sized businesses alike.” K Are our elected and salaried leaders at MHI, the NCC, MHARR, and ULI’s MHCC listening? If you’re a member, tell ‘em!

III.

S.A.F.E. Act related commentary seems to be on everyone’s mind these days. Here’s one LLCommunity owner/operator who plans to ‘carry his coals to Newcastle’ next time MHI’s National Communities Council (‘NCC’) meets. After talking about the various home finance alternatives relative to the S.A.F.E. Act, and state implementation thereof, he/she goes on to observe: “One of the problems with the NCC, is the age – old difference in priorities, operation, etc., between large and small (LLCommunity) operators. Everyone is inclined to think the big guys know it all. When in fact, most execs have never been in the trenches, and there are 25 – 50 ‘little guys’ in our asset class for every one of them! Too bad the NCC continues to be dominated by a few big guys….” R`

IV.

“I’m still having a hard time with thinking about you not being involved in this business. I know you need a life, and I do too, but it’s hard to ‘cut bait’, as the saying goes. I too am assessing my options, as a LLCommunity owner, which is hard to do when I’m so busy with day – to – day business demands. So I understand what you mean.” N

Let me say, it’s still early in the process of finding new home(s) for the work products and services we’ve created and grown ‘together’ during the past three decades. I’m cautiously optimistic all will work out in the end, hopefully before December 2011. My ‘ideal’ outcome is pretty well known, if you’ve been reading recent blog postings here, and articles in the Allen Letter professional journal. My worst case scenario however, is not to have found a capable, industry experienced, motivated national successor(s); then having to decide whether to continue in trace another year or two or three; or, as the writer quoted in the previous paragraph puts it, simply ‘cut bait’. Hopefully neither of the last two options will come to pass. In the meantime, know there’s been lively interest to date, in the assets of GFA Management, Inc., dba PMN Publishing; with two ‘intents’ expressed, one firm written offer received to date, and face – to – face meetings scheduled and effected. You seriously interested? Contact Susan McCarty, during working hours, using a not – blocked phone @ (317) 889-6465 & request a Confidentiality Agreement to sign, the first step in participating in the process.

V.

The 50+ page, 22nd annual ALLEN REPORT has been flying out our door! Initial print run of 300 is more than half gone one month after the report’s initial release1 There is no plan for a second printing. So, if YOU want a copy of what could well be the last ALLEN REPORT researched and published for the LLCommunity asset class, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156 right away. While the cover price is $450.00/copy (postpaid), there’s a Special Deal available for the 137 LLCommunity portfolio owners/operators listed in this year’s edition; as well as for those who donated funds in 2010, to partially cover the cost of researching and preparing this year’s report! The Special Deal? Only $250.00/copy, and if you’re not already a paid subscriber to the popular Allen Letter professional journal, a new ‘free’ one year subscription, to the newsletter, will be included in that amount as well! GFA

VI.

Speaking of the Allen Letter professional journal. In light of the seriously faux ‘Top 100 List’ published this month, in the only other print trade publication serving the MHIndustry, and as businessmen or women requiring accurate (Not firms long gone!) and timely (Not portfolio stats five years old!) information, begin your paid subscription ($134.95/year for 12 monthly issues) to the Allen Letter professional journal TODAY! Use contact information in the previous (‘V’) paragraph. Credit Card Orders Welcome.

***

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

You Won’t Read Any of What Follows, Anywhere Else in the MHIndustry!

I.

No NSAC – III next month in Florida! Despite an announcement in the 22nd annual ALLEN REPORT – first distributed at the rejuvenated Louisville MHShow in Kentucky last week, the ‘National State of the Asset Class caucus III, (will not meet) to refine the 2nd of Randy Rowe’s Five Points’: Need for more chattel financing sources!

Why not? Sent a ‘test the waters’ mailing to 50 landlease community owners/operators actively engaged in seller – financing of new and resale home transactions on – site, who also happen to be on the asset class’ Exclusive 200 name ‘Insiders List’ – and received but five responses, or 10%. When I phone – polled them, and others, identified two reasons for NOT convening YET: First, the largest portfolio ‘players’ have programs in place and eschew distraction, for the time being. Second, Thanks to the federal S.A.F.E. Act and variegated state implementation thereof, ‘most everyone else’ favor Wait & See attitudes, before doing anything. So, we’ll wait awhile.

Interestingly however, every sole proprietor and small portfolio owner/operator I polled, made it a point to say they support a separate NSAC caucus, that’d elevate the earlier stated secondary focus of ‘too high homesite rent rates’- on the part of some mega portfolio firms, to primary focus! Now, that was a surprise – or was it?

In the meantime, if you can’t or don’t want to wait for the ‘chattel finance regulatory debris to settle’, before moving ahead with a self – finance program of your own, here’re the only five MHIndustry resources available to you today:

• Buy a copy of Manufactured Housing $$$ Primer for $25.00, via (317) 346-7156

• Attend Ken Rishel’s Chattel Finance Workshop (217) 971-3968 & read newsletter

• Ask Dick Ernst about CU Factory – Built Housing’s new program (972) 503-3201

• See Matt Kerlin (800) 955-0021 for info on 21st Mortgage Corporation’s program

• Use ‘Ah Ha! & Uh Oh! worksheet to calculate ‘affordable’ & ‘risky’ housing ‘price points’ in any local U.S. housing market. (317) 346-7156.

Furthermore, plan to attend the Manufactured Housing Institute’s (‘MHI’) National Communities Council FORUM, the day before this year’s MHCongress, in Las Vegas. Why? Entire program focus, this time around – in April 2011, is on property owner self – finance of new and resale home sales transactions within LLCommunities! For information, contact Thayer Long @ (703) 558-0678.

II.

An Intellectually Honest Debate, within and throughout the manufactured housing industry. There’s no way this is going to play out in the online communication blogosphere. Oh, it’s tempting to try, for sure….just read the quoted blog responses following. No, intellectually honest debate occurs best, when and where primary parties are face – to – face, then properly schooled and guided throughout the debate process. Such a timely and much needed forum could occur at a future meeting of the industry’s de facto Think Tank (i.e. Urban Land Institute’s MHCC) – if that wasn’t such a ‘closed society’ forum. Another possibility would be a One Hour Open Discussion, during a future Manufactured Housing Institute meeting – if internal and industry segment power politics could be kept at bay. The MHCongress is ‘out of the question’, as it’s more a trade show than ‘guiding light’; and, the International Networking Roundtable plays only to the landlease (nee manufactured home) community asset class needs. Would YOU patronize a national intellectually honest debate if one was planned this Summer? To express your opinion(s), respond directly to this blog posting or via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

Here’re recent responses to previous blog postings on this and related topics:

“Too bad, too sad for (home) manufacturers. So many are already gone, and those left need to awaken their imaginations and intelligence. Yes, I know, that assumes (the survivors) have the intelligence and willingness to identify and get out into the (local housing) markets.” N
versus

“…I think it’s unfair to say ‘We (HUD Code home manufacturers) Don’t Get It!’, because not all the houses at the (Louisville) show were low end models built for communities. That is clearly an important market we are working to better serve, with low price points. But it isn’t only about communities.” K (lightly edited for length)

See what I mean? This is an honest intellectual debate waiting to happen! And most likely, it will not occur! For example; here’re just a couple debate parameters:

• All housing is local housing market specific, per climate, demographics, zoning, & LLCommunity occupancy. What will sell in one locale, won’t sell elsewhere!

• Which point(s) of view to embrace? Be an affordable housing purveyor advocate or ‘Bigger Box = Bigger Bucks!’? Housing contractor or street MHRetailer only?

What can YOU DO, if YOU AGREE the manufactured housing industry, and it’s elected leaders, should be engaging in honest intellectual debate regarding our collective future as this nation’s premier source of affordable, non – subsidized, quality, energy efficient, transportable, attractive, quality housing? Whether you’re an active dues – paying member of one or both national advocacy bodies, and or one or more state associations, let them know how YOU FEEL about this timely, increasingly strategic (Because the future of our industry and asset class may indeed be ‘on the line here!’) matter. Will YOU PARTICIPATE if a national honest intellectual debate occurs? Thought so….

III.

Affordable housing & housing affordability still a bugaboo almost everywhere one looks and reads these days. What follows is quoted from the January/February issue of the Institute of Real Estate Management’s prestigious Journal of Property Management, page # 8:

“Affordable housing in Florida is going green…and gold. The $33 million townhouse development called East Village will target very low and low – income families earning between $15,000 and $49,500 annually in Davie, Florida. Monthly rents at the 155 unit complex will start at $416. Average unit size will be more than 1,000 square feet. Amenities will include a community lake surrounded by walking paths, a swimming pool, children’s splash fountain, exercise facility, playground/tot lot, library and computer lab.” Whew! Who wouldn’t want to live there?

OK, here’s ‘the rub #1’. While there are several formulae and measures of housing affordability*1, the most commonly recognized ones include:

• 30% Housing Expense Factor or HEF
• Housing Opportunity Index or HOI
• Housing Wage or HW

In the HEF instance, this means folk who’re earning $15,000/year annual gross income or AGI, will be expected to pay no more than $375.00/month rent – for their rental housing to be considered ‘affordable’. Well, that’s $41.00/month less than the ‘starting rent’ of $416.00, or a net difference (shortfall – unless subsidized) of $492.00/year. Who’s making up that difference? And while it’s unlikely all 155 units will be rented by $15,000/year AGI folk; if that was the case, it’d be a $56,580 annual shortfall in overall rental income. However, mix in some – or many, $49,500/year AGI folk, paying 30% HEF @ $1,238.00/month, as the appropriately compensating balancing factor. Wonder what happens if and when these ‘opposite ends of the affordability extreme’ get to talking to one another about their respective ‘affordable’ monthly rent rates or $375.00 and $1,238.00, for the same sized apartment unit? And then there’s the question as to who’s really footing the bill to make all this happen.

Hence, in this tight raw land development finance market, here’s ‘the rub # 2’. This 155 unit, $33,000,000.00 townhouse development, pencils out to $212,903.00 per ‘affordable’ unit! Wanna know where all this ‘affordable housing’ money comes from? “Funding for the project stems from federal stimulus funds, Low Income Housing Tax Credit (LIHTC) equity, a Town of Davie SHIP Loan, a Broward County HOME Loan and conventional financing from Citi Community Capital.”

Bottom line? Affordable housing and or housing affordability can, and oft does, mean whatever one wants it to mean! ‘Affordable’ has become the hackneyed catchall term of choice throughout the housing industry; brashly preempted on one hand, by the low income housing folk; and, irretrievably fuzzied by land and housing developers looking to curry favor with political shelterforce activists, on their way to securing quasi – public funding their next project.

***

End Note.

1. HOUSING AFFORDOGRAPHY, ‘Study of Affordable Housing Formulae & Measures of Housing Affordability’, George Allen, Realtor®, CPM®Emeritus, MHM., PMN Publishing, Franklin, IN., June 2008.

George Allen, Box # 47024, Indianapolis, IN. 46247 (317) 346-7156

What YOU Missed at the Louisville Manufactured Housing Show

&

HUD Code Home Manufacturers Still ‘Don’t Get It!’

I.

1,000+/- attendees visited more than two dozen new homes (Mostly indoors, but with three FEMA units outdoors) & 82 supplier exhibits, during the 2 ½ day rejuvenated Louisville Manufactured Housing Show! KUDOS to Show Ways’ Dennis Hill for planning and facilitating the improbable: A New Manufactured Housing Show with a Landlease Community ‘Spin’ to the Program, if not the homes themselves – but more on this point in part II of this blog posting.

More proof of the emerging ‘popularity and profitability of landlease (nee manufactured home) communities’ lies in the asset class’ increased level of participation in this traditional mid – January manufactured housing show, up from 10% in years past, to more than 20% this year! And this, sans participation by most large Midwest property portfolio owners/operators, identified in the just released 22nd annual ALLEN REPORT! Why absent? Probably because they’re routinely buying new manufactured homes in bulk – in one case via a bidding process, built to their specifications; so, probably feel they don’t need to see what’s on display in ‘Luavul’. This time around, who could blame them? – again, more on this point in part II of this blog posting.

Veteran Midwest Manufactured Housing Show attendees remember it was anathema, in years past, to schedule any activity that’d take attendees ‘off the display floor’ during the day. After all, folk (i.e. MHRetailers) were there to buy homes, not necessarily to ‘learn how to do so better’. Well, this year was 180 degrees different. Four pithy, one hour programs, were planned to attract LLCommunity aficionados, and attract them they did – Thanks to online efforts of MHMSM.com (ezine), Ken Rishel’s Chattel Finance Newsletter, this blog, and the Allen Letter professional journal, which comprise the, new in 2010, Print & Online Publishers’ CONSORTIUM. Result? An average of 40+ LLCommunity owners/operators attended each of the following sessions:

• Don Westphal prepared a Power Point Presentation describing the genesis, and present day manifestation, of Community Series Homes or ‘CSH’. These are new lines of HUD Code manufactured, and modular, homes that’re Affordable, Adaptable, and Attractive! They’re often singlesection in configuration, with 3BR2B and an open floor plan featuring some sort of ‘WOW’ factor. Most have shutters on windows, vaulted ceilings, asphalt shingled roofs, and linoleum in kitchens, utility area and at the front door. They also have 40 gallon hotwater heaters, 200 amp service, wood cabinetry, and non – plastic sinks and tubs. And best of all, CSH homes are competitively priced! If you’d like a list of the CSH specialist Business Development Managers (‘BDM’), assigned to ‘talk the talk & walk the walk’ of LLCommunity infill, using manufactured homes, see End Note # 1. To reach Don Westphal, phone (248) 651-5518.

• Ken Rishel of Ken Rishel Consulting delivered a comprehensive overview of ‘captive finance’, a.k.a. or (property owner) self – financing of new and resale transactions effected on – site in LLCommunities. Far too many details and timely advice to describe here, so sign up for his FREE, aforementioned online newsletter by phoning (217) 971-3968. While you’re at it, ask for the firm’s CD on how to prepare for and comply with the new Red Flag program! Plus, if you don’t have a copy of the 100 page Manufactured Housing $$$ Primer, for helpful information on chattel financing, see End Note # 1. Cost? Only $25.00 postpaid.

• ‘Setting Affordable & Risky Price Points for New & Resale Manufactured Homes, Sited Within & Outside Landlease Communities, in any Local Housing Market in the U.S., using AGI & AMI, & HEF guidelines’ was the first LLCommunity – focused seminar in the afternoon. If you’d like free copies of the seminar outline and ‘Ah Ha! & Uh Oh!’ worksheet, see End Note # 1.

• Tony Kovach and his team of marketing specialists, introduced the day’s largest audience, of more than 60 LLCommunity owners/operators, to the exciting new world of online marketing, of new and resale homes, via web site design, blogging, social networks, and much much more. For a copy of that Power Point Presentation, phone the firm at (847) 730-3692.

Heavy snow throughout most of the nation (At one point, 49 states had ‘snow on the ground’) surely affected Louisville MHShow attendance. But now is the time to purpose to attend the January 2012 event! And if you want to input the program composition, talk to Dennis Hill at Show Ways.

II.

So, just how many Community Series Homes were on display at this year’s rejuvenated Louisville MHShow? Oh, two, maybe five, possibly seven, depending on how one ‘counts’. Apparently, only one HUD Code manufacturer, of the six exhibiting at this year’s event, ‘gets it’. Get’s what? That LLCommunities have been, for the past several years – and continue to be, major purchasers of new HUD Code manufactured homes, for on – site infill, ‘marketing, selling & self – financing, when necessary, to get the ground rent meter running!’ But you wouldn’t know that, when viewing the behemoth, tricked – out, multisection homes on display at this year’s Louisville MHShow. Oh, they were certainly ‘pretty enough’, even impressive, but totally out of sync with what most of the couple hundred LLCommunity folk were looking to buy at the beginning of year 2011! Close to a dozen LLCommunity owners, ‘would be homebuyers’, came by the GFA Management, Inc., booth to complain, ‘There’s nothing here at the show for me to purchase for our property!’

Performed an informal survey on Thursday at the Louisville MHShow. Wanted to identify how many of the 29 known BDMs were present to ‘sell product’ to LLCommunity owners/operators; how many CSHs were indeed on display; and, inquire how manufacturers taught wholesale home purchasers (i.e. MHRetailers & LLCommunity owners) to calculate selling price points, for their homes, when marketed in various local housing markets, where Area Median Incomes (‘AMI’) vary widely.

BDM presence. There were three: Walt Comer & Chris Miller from Adventure Homes of Garrett, Indiana; and, Brian Cira of Harmony Homes in Nappanee, IN. But, by the time I was done with the survey, several more were formally added to the BDM roll: Joe Kimmel of Champion (Northeast), Wade Lyall of Champion (South), Jim Justice of Champion (West), and Nathan Kimpel with Manufactured Housing Enterprises, Inc., out of Bryan, OH. These four new BDMs will be added to the next update of that widely referenced resource. Again, see End Note # 1.

CSH presence. Adventure Homes had two Community Series Homes on display. One was 28X44, the other a 14X72 model home. Harmony Homes had larger homes on display, 28X64 & 16X80, both a tad bit large for many, if not most, LLCommunities. And it’s questionable whether the three FEMA homes exhibited outdoors in front of the convention center, should be labeled as CSH models. Size wise they certainly are, but interior features are not akin to specifications listed earlier in this blog posting. Bottom line? Two for sure, maybe four, perhaps seven CSH models among the 25 HUD Code and modular homes on display at this year’s Louisville MHShow.

Price Points. Let’s not even ‘go there’, this time around. It’s clear to this industry observer, present day home manufacturers have little sensitivity to what square footage and features will sell, based on AMI and Annual Gross Income (‘AGI’) in different housing markets throughout their targeted geographic regions.

Bottom line? This year’s Louisville MHShow demonstrated how HUD Code home manufacturers continue to design and fabricate homes to interest land developers focused on scattered (owned fee simple) site and subdivision placement, i.e. The Big 4 B Formula, where ‘Bigger Box = Bigger Bucks’, rather than return to their historic roots and creatively address the affordable housing needs of the greater part of this nation’s citizenry, especially during these times when both conventional real estate and chattel (personal property) financing is so difficult to obtain. Hence the headline: ‘HUD Code Home Manufacturers Still ‘Don’t Get It!’’

III.

22nd annual ALLEN REPORT debuts! Allen Letter professional journal subscribers, for the last time, received a FREE copy of the annual ALLEN REPORT. The now 50+ page compendium of landlease community information, statistics, trends, listing of major portfolio players, and much much more, retails for $450.00/copy. Copies, at the Louisville MHShow, however, sold at a Special Price of only $250.00. And given this was a very limited print run, the remaining 100 copies will likely not last long. So, if YOU want a copy of this seminal document, maybe the last edition that’ll be published, ORDER your copy today! Blog readers can purchase the 22nd annual ALLEN REPORT, this week only (January 17 thru 21, 2011) for the above referenced show price of only $250.00. See end note # 1 to order.

IV.

Ouch! Some blog ‘floggers’ (readers) responded strongly to last week’s title: ‘A Call for (more than one) Honest Intellectual Debate’ – within and throughout the HUD Code manufactured housing industry! Gonna let that one lie (percolate?) awhile, to see if more commentary arrives. If so, we’ll pursue the matter further. In the meantime, here’s but a taste of what’s already in hand: “In order to have ‘honest’ debate, we must start with ‘honest’ individuals.” K And this challenge: “The HUD Code problem: ‘How Can We Make Chattel Financing Survivable for Average Lenders?’ L ‘Hmm. What a choice place to start an Honest Intellectual Debate. Anyone else out there a – pondering?

***
End Notes.

1. To order offered items, phone the MHIndustry HOTLINE (877) MFD-HSNG or 633-4764 or (317) 346-7156.

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

A Call for (more than one) Honest Intellectual Debate,
&
‘Yes, we’ll surely rue the day we ignored The CAMPAIGN!’

I.

In the least likely of places, I found a quote that, in my mind, describes the current state of affairs at both the top level of manufactured housing advocacy, lobbying, and leadership in Washington, DC; and, among landlease (nee manufactured home) community owners nationwide. Here’re the first two paragraphs from a book review, penned by Bruce Edward Walker, describing economist Thomas Sowell’s book Intellectuals and Society…

“Arguments about ideas are the bread and butter of the academic, journalism and think tank worlds. That is as it should be. Honest intellectual debate benefits any society where its practice is allowed. The key element is honesty.”

“Today, someone is always looking to take out the fastest gun, and in the battles over the hearts and minds of the public, many weapons are brought to bear. Unfortunately, and too often, among the artillery deployed by both sides in an argument are rhetorical deception, misleading statistics, and an air of authority, which can immediately bury facts in the Boot Hill of honest debate.” *1

Well, there you have it; the absence of honest intellectual debate, almost anywhere – anytime, characterizes HUD Code manufactured housing as a whole. Yes, 100+/- of us convene thrice yearly, to ruminate one business perspective, relative to challenges affecting our industry; we do so almost always, without any input from ‘the opposing side’ within our HUD Code family; but often with input from federal regulators. This absence of honest intellectual debate needs to end, if we hope to break free of the severe business malaise gripping us today! And frankly, this ain’t gonna happen when a few executive committee types, oft steeped in ‘political correctness’, from both sides of the industry caucus; unless, they’re charismatic, successful (in their own right) businessmen or women leaders who can debate to amenable resolution, then rally optimism and support to move everyone up and out of today’s ‘dead’ business environment. Such honest intellectual debate hasn’t occurred to date!

This absence of honest intellectual debate ‘hit home’ again, this past week, as I unsuccessfully attempted to organize a formal press conference at the upcoming Louisville Manufactured Home Show. It occurred to me, every member of the Print & Online Trade Media CONSORTIUM, plus The Journal’s publisher, would be in town for this resuscitated event. And with leaders and spokespersons, from national and state manufactured housing associations present as well, why not arrange for press interviews with them? An ideal opportunity for advocacy and trade bodies to ‘tell their story’, then lay out their respective programs for 2011! Well, the idea, following a flurry of email messages, never got off the ground.

Why? Let’s just say; the lack of an aggressive and inquiring trade press, during the past decade or so, has ‘aided and abetted’ the aforementioned absence of honest intellectual debate, giving some spokespersons comfort, when penning newsletters and monthly columns, little concern for consequences of possible ‘rhetorical deception, misleading statistics’, even their ‘air of authority’. For example; here’s one very telling response to the press conference request: “…the time for press conferences, briefings and other forms of intra – industry political forums has long ago passed.” Really? Who sez? He sez! That speaks volumes about one spokesperson’s view of communication.

Who’s to blame? On one hand, the decimated, but now slowly reemerging national trade press, needs to do a better job at being aggressive, inquisitive, and forthcoming, this time around. Hopefully we won’t have to resort to muckraking, but we should be quick to identify rhetorical deception and misleading statistics in material we quote, or clear for publication – and just as quick to comment on same, when observed in print and online elsewhere, especially in biased blast email messages. On the other hand, what’s so difficult, about setting aside an hour or two, during future national and regional trade gatherings, to encourage honest intellectual debate about the very matters that are restraining our ability to engage in the housing trade? Think about it; and if you agree our industry could stand more honest intellectual debate, let your state and national, elected and salaried, leaders know of ideas and challenges worthy of such attention!

Speaking of future national trade gatherings, there’s still a strong possibility LLCommunity owners/operators, from throughout the U.S., will gather in Florida during February for a third National State of the Asset Class (‘NSAC’) caucus. This time the dual focus might be 1) property owner self – financing of on – site sales of new and resale homes, and ramifications of methodology and compliance issues; and, 2) landlease community homesite rental rate avarice versus protecting homeowner’s housing value on – site; two timely topics worthy of honest intellectual debate. The question is, whether these heady topics can be adequately covered during a 1 ½ day caucus. What do you think? LLCommunity owners, ensure your invitation to NSAC – III caucus, by phoning (317) 346-7156, to have your contact information put on the 200 name NSAC caucus ‘Insider List’.

II.

I love when blog floggers (readers) correspond with me, and forward material supportive of what’s been posted, as well as inspiration for new directions to research and blog. Here’re a couple recent commentaries per postings about The CAMPAIGN…

“My comment. I wonder if the political and leadership powers that be (in the MHIndustry) are sleeping or living in denial. In the MHBusiness, we are the result today of decisions made 6 – 18 months ago, depending on the (industry segment) arena in which we try to succeed. Without action NOW, we are destined to decline for many more months and years. Perhaps we should, once again, offer the belly – windows to those executives. It is time to act!” NB commenting on woeful lack of national leadership attention to The CAMPAIGN – a regional image improvement, housing product showcase opportunity, generally in partnership between Big Box Retailers across the U.S. and exemplary local landlease community owners/operators and MHRetailers. For more information email ahaven@creativehavenmedia.com or phone (856) 702-6063.

Veteran home sales personnel trainer Grayson Schwepfinger, commenting on The CAMPAIGN made this wise suggestion, to ensure only exemplary LLCommunities and MHRetailers actively participate: “…prospects would be completely turned off, after viewing a TV commercial, then visiting a retailer whose location looked like a junkyard, with homes poorly displayed, dirty, and only partially set up. In order to overcome this problem, we developed copyrighted signage to be placed in front of the home sales location, and used in their advertising. Then we ended all commercials with this line: ‘To see quality homes, visit a retailer displaying this sign!’ Accomplished two things: Since we didn’t give permission to use this signage, to a retailer unless his/her location passed our scrutiny, they cleaned up their locations! And, retailers had to pay a monthly fee to the state association while the commercials were running. We enjoyed 90% participation among retailers in the TV station market areas involved in this promotion!”*2

III.

A couple weeks ago, in an earlier blog posting, we described – but didn’t name New Lions, picking up property portfolio leadership slack, as their predecessors have “retired…expired…forced from leadership roles, and…moving on to other interests outside manufactured housing and LLCommunity milieus.” Little did we expect one of the most popular, and increasingly high profile New Lions to depart so soon and abruptly. Greg O’Berry, successor to recently retired Barry McCabe, of Hometown America, resigned on 3 January 2011. Perhaps we should name the other New Lions in an upcoming blog posting…

***

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

End Notes.

1. Action Institute’s Religion & Liberty newsletter, p.9.
2. Contact Schwep via (610) 533-4969

Affordable Housing Hell; Randy Rowe’s Five Part Plan;
& ‘ Do YOU have the 22nd annual ALLEN REPORT?

When I started blogging for the now defunct Manufactured Home Merchandiser mag,

(Like billboards picturing former President George W. Bush asking, ‘Do You Miss Me Yet?’, I wonder if you feel similarly about that magazine? I sure do.),

I doubted there’d be enough fresh, interesting and compelling information to support this blog, Allen Letter professional journal and the Allen CONFIDENTIAL! newsletter. Boy, was I naive. That’s why this weekly posting contains at least two, three, sometimes four, short stories. And this week is no different. Chalk it up to lively reader response; a Five Part Market Share Recovery Plan worthy of attention & discussion among manufactured housing peers nationwide; and well, if YOU haven’t read the 50+ page, 22nd annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Landlease Community Portfolio Owners/operators Throughout North America (in 2011)!’ you should get hold of one of the ‘only 300 copies printed’!

I.

Someone else has figured out how we, as a society, housing industry and nation, have gotten ourselves into ‘affordable housing hell’. What’s that? It’s that too common phenomenon (until recently) characterized by homebuyers, builders, and lenders encouraging would be mortgagors (i.e.‘The party who borrows the money and gives the mortgage.’) to frequently and greatly exceed the traditional 25 percent Housing Expense Factor (‘HEF’), intended to not overburden a homebuyer’s income stream. In last week’s blog posting we ‘splained’ how this 25 percent limit, when ‘fully loaded’ with principal, interest, taxes, insurance (a.k.a. ‘PITI’), and household utility expenses, but not telecommunication charges, allows for the modest, reasonable, even affordable purchase of a new or resale home. BUT, when homebuyers, builders, and lenders encourage a sale and mortgage transaction in which only P&I factors are included in the 25 percent HEF, while facilitating the ‘risky’ purchase of a much larger abode, greatly burdens the mortgagor with T&I factors, plus household utility expenses, but not telecommunication charges, above and beyond the mortgage payment. That’s ‘affordable housing hell’ – when and where we find 40 and 50 percent HEFs now decried by all sorts of ‘affordable housing’ folk, who not long ago, loudly extolled the virtue of ‘Everyone a homeowner!’

Here’s what one blog flogger (reader) – that ‘someone’ alluded to at the beginning of the previous paragraph, penned in response to last week’s blog on this timely and troubling topic.

“I wonder if this ‘duality of affordability’ (Reread previous paragraph) has been precipitated by the propensity of Generation Y to, ‘Have what my parents have NOW!’? *1 We raised our kids on the 25% factor (inclusive of PITI & utilities). Our daughter and her husband both work, yet struggle to fit their family of five into a home being paid for in accords with that 25% factor. Same with our son and his wife of two years, living in a house bought six years ago, again in accords with that same 25% factor.”

“Results? In both cases, George, they’ve followed the 25% guideline, and yes, endured difficulty at times, but now have equity and a home! Many of their friends and acquaintances, however, have lost homes, been bankrupted, or are barely scraping by with little prospect of making any headway in their lives financially. Both kids, at times, have coveted what a friend may have, that seems like ‘so much more’ (home). I’ve asked them to wait, and they do. Both now understand what ‘looks too good to be true, is probably not true, or affordable for them’.”

“So, is housing affordability really a question about what’s truly affordable; OR, is it really a question of self – discipline, and an understanding one cannot have all one wants to have now, and that one is not ‘entitled’ to anything? Perhaps this is a hard lesson our entire country needs to relearn, including greedy home manufacturers, street retailers, (chattel) lenders, even some manufactured home community owners.” (lightly edited)

II.

Those long active in the manufactured housing industry and landlease (nee manufactured home) community real estate asset class, have learned to look to certain individuals, some in dominant roles, others not; for information, guidance, and leadership.

As a veteran landlease community (‘LLCommunity’) owner/operator, consultant and author, I see myself in the information purveyor role, via this weekly blog, two monthly newsletters, occasional features or columns in various realty and manufactured housing trade publications, and books.*2

Randy Rowe, founder and chairman of Green Courte Partners in Lake Forest, IL., and teamed with David Lentz, heading American Land Lease in Florida, is one of those individuals who, in my opinion, while eschewing high profile leadership roles in some national trade bodies, is frequently looked to for wise and timely guidance, by his peers.

Leadership? We’ll turn to that tricky but also timely subject shortly and carefully.

This past Fall, at the 19th annual International Networking Roundtable in Phoenix, AZ., Randy Rowe keynoted a gathering of nearly 200 LLCommunity owners/operators from throughout the U.S. During his address, he shared a Five Part Market Share Recovery Plan for the Manufactured Housing Industry and Landlease Community Asset Class. Since that time, the gist of Randy’s ‘plan’ has appeared online and as a print reprint enclosed, as a lagniappe, with the Allen Letter professional journal, & elsewhere.

But ‘Here’s the rub!’ Not only were some of this industry and asset class’ top elected and salaried leaders in the room, when Randy articulated our timely and critical needs for

• Better manufacturer home warranties

• More chattel (personal property) financing sources

• Ensuring economic security of homebuyer/site lessees (residents)

• Multiple listing service(s) access

• National marketing (image improvement) efforts

at least one national trade advocacy body meeting has occurred since that September event, and this challenging, forward – thinking Five Part Market Share Recovery Plan was not on the agenda!

So, here we have a seasoned businessman, with ‘two feet in both business models’ or the industry/asset class, well known for his previous successes at ELS, Inc. (nee MHC, Inc.) & Hometown America, but whose Five Part strategy (A form of guidance) has not been given an airing on the broader, national scale, encompassing both major segments of our ‘double dual industry’.*3 Why do you suppose this is the case?

That’s where leadership returns to this word picture. Life’s too short, to verbally or otherwise, tear down what’s already in place, unless another life is at stake – but even then, often only the courageous will act. Besides, I’m a believer in the bromide, ‘If you’re not part of the solution, you’re part of the problem!’ OK so far?

With that said, the HUD Code manufactured housing industry has been dying (dead?) for the past decade or (now) longer. While there have been some short – lived initiatives to understand, then reposition, ourselves in the housing marketplace (Think New Orleans several years ago, and the national leadership changes & retirements since then), we’ve also been a victim of economic circumstances. Anything of this leadership nature since? Not that I’ve experienced, at any of the broad – based national venues (Thinking MHCongresses and annual meetings). Closest attempts to such ‘taking control of one’s destiny’ have been two National State of the Asset Class (‘NSAC’) caucuses, on 2/27/08 in Tampa, FL. & 2/27/09 in Elkhart, IN., when LLCommunity owners/operators and leaders convened. And this past Summer, there was a First National Manufactured Housing Finance Roundtable, hosted by a U.S. Senator and HUD executive, that came ‘close’ to what needs to be done. Following a morning long meeting of presentations and open discussion, during which the GSE’s represented there, made it clear they wanted nothing to do with the manufactured housing industry ‘going forward’ – What happened? The meeting ended at Noon! In this observer’s opinion, leaders should have announced the Roundtable would continue into the afternoon, open to any businessmen and women passionately concerned about the future of chattel finance in the MHIndustry! That did not happen. And do we even want to get into what some have termed the Arkansas & Texas initiative that materialized in June, popped up again in October, and now what?

So, here’s the question two successful NSAC caucuses, an unsuccessful Finance Roundtable, and questionable AR/TX initiative beg to have answered: ‘Why can’t present day industry/asset class leadership call for a national gathering of individuals with, as has oft been stated in the past, ‘with skin in the game’ to meet, articulate, and agree on a plan and a path out of this sorry state of affairs? Where to begin? With Randy Rowe’s Five Part Market Share Recovery Plan for the MHIndustry & LLCommunity Asset Class’! For a free reprint of Randy’s presentation at the aforementioned Networking Roundtable, simply phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156.

III.

This blog was penned and edited during the last week of December. On Wednesday, I turned in the final edited copy of the 22nd annual ALLEN REPORT to pre – press, pursuant to printing and binding, for initial distribution with the January 2011 issue of the Allen Letter professional journal. Present subscribers to the newsletter are in for a real treat! As has been past practice, they receive (For the last time, sad to say) a FREE copy of what’s now a 50+ page 5 ½” x 8 ½’ booklet, chock full of timely, strategic information, helpful statistics, and a whole lot more resources, in more than a half dozen appendices! This is a limited press run of 300 copies, and once they’re gone, it’s unlikely there’ll be any more. So, if an AL subscriber, look forward to your late holiday present! If not an AL subscriber, there’ll be about 100 copies left, after the AL distribution, available for $450.00 apiece, post paid. To order now, phone either of the two numbers listed at the end of the previous paragraph.

Why these major changes to the ALLEN REPORT format and pricing? Read last couple weeks of blog postings at this website.

A word of caution. Every page of this year’s ALLEN REPORT clearly states this is a legally copyrighted document, from beginning to end, and must not be copied under any circumstances, without the express written permission of the author. Please honor this request! GFA

IV.

ERRATA. Know that the Day of (three) Seminars focused on landlease community operations, home sales, and self – finance matters, at the Louisville MHShow, will be held on 12 January, not the date published earlier in this blog. Sorry ‘bout the misunderstanding.

Furthermore, 3 – 7 January is your last opportunity to sign – up for the one day Manufactured Housing Manager (‘MHM’) professional property management training and certification program, to be held on 11 January, in the vicinity of the Kentucky State Fair Grounds in Louisville, KY. To register, phone (317) 346-7156. Cost? $250.00 per MHM candidate. Very Special Offer: If you register, attend and become certified as an MHM at this particular 1/12/2011 class, you’ll receive a copy of the aforementioned $450.00 22nd annual ALLEN REPORT at no extra cost – or for FREE! What a deal!

And on 13 January, at the nearby Crowne Plaza Hotel, Ed Hicks will be teaching a day long seminar on the FHA 207(m) program. To register, phone (813) 661-5301.
***
End Notes.

1. Generation Y, a.k.a. Echo/Millennial Generation, born between 1981 & 2000 – sometimes called part of the WE Generation (1978 – 2000) oft characterized by the phrases ‘Instant gratification’ and ‘Earn to spend!’ to describe their mindsets and actions.

2. Owners/operators. Once a year, I like to remind my readers that David Helfand, of Helix Fund, American Residential Communities (‘ARC’), and Riverside Communities, based in Chicago, IL., is the originator of that inclusive term for those who ‘own’ and those who ‘operate’ LLCommunities in North America.

3. Double dual industry. A proprietary term describing HUD Code home manufacturing & distribution (i.e. retail sales), on one hand; and landlease community development & investment (i.e. to include property management), on the other hand.

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

New Lions, Old Story, Affordability Conundrum, Social Engineering, More

I.

“It’s not the deal. It’s what a man does next that makes him great – or not!” Anonymous. No slight intended toward distaff property owners in the landlease community business, but frankly, there’re precious few of them. Back to the quotation. When I heard it recently, my thoughts turned to a significant ‘changing of the guard’ taking place among male portfolio owners/operators during 2010, and into early 2011.

On one hand, a few have retired, several expired, still others have been or are being forced from leadership roles, and some are moving on to other interests outside manufactured housing and LLCommunity milieus. All have been deal – makers; but few of them, sad to say, leave great personal or corporate legacies to distinguish their tenure. Fortunately however, there’ve been a few significant exceptions.

On the other hand, many have already observed a fresh pride of New Lions on the industry and asset class leadership horizon – not to be confused with the pride of Young Lions identified each year in the ALLEN REPORT. Historically, Young Lions have been the most aggressive of LLCommunity portfolio builders in years past, and without exception, entrepreneur businessmen. This bevy of New Lions however, with but a couple anomalies, are not sole proprietors or general partners, but salaried property management executives saddled with heady leadership responsibility within existing portfolio firms. Identity hint. They’re readily visible within trade bodies such as MHI’s National Communities Council (‘NCC’) division; ULI’s Manufactured Housing Communities Council (‘MHCC’); and involved in at least one initiative to seek out and secure new or renewed sources of chattel (personal property) financing for new and resale home sales transactions effected on – site in LLCommunties.

This is where the ‘greatness’ challenge resurfaces. Sure, portfolio consolidation continues throughout the asset class throughout North America, but with precious few new firms being formed – from scratch, during the past few years. And there may well be ‘a positive bump in the numbers this year’, as REO (bank ‘real estate owned’) properties find new owners. But what will these ‘salaried property management executives’ do to accomplish what most of their entrepreneur predecessors were unable to do? Maybe achieve and maintain greatness! But then, perhaps ‘greatness’ isn’t their challenge at all; but rather, simply protecting that bottom line and little more. Can’t fault that. Guess we’ll have to wait and watch what happens during the next 12 months and longer, to clearly see ‘…what a man does next that makes him great – or not!’

II.

“Forget what people are saying, watch what is happening!” opines Vermont –based MHIndustry consultant Marty Lavin, esquire. This quote graces every email message Marty sends to friends and associates in and outside manufactured housing and landlease community environs.

Got to thinking about it the other day, and know what? He’s right! Without much effort, I can think of a half dozen examples where and how his truism plays out in the manufactured housing and LLCommunity ‘double dual industry’.*1 Here’s just one contemporary example: the flurry of press & association ‘talk’ about The CAMPAIGN! Surely you know what I mean! The proposal, made by ‘the four women from New Jersey’ (i.e. creativehaven.com), before ULI’s MHCC, our industry’s de facto Think Tank, at it’s Fall meeting in Washington, DC. The CAMPAIGN, is a proposal to plan and effect regional new home displays, supplemented with Infomercial seminars, in partnership with Big Box retail stores! Goal? To ‘sell more HUD Code homes’ by putting our best (design & product) foot forward in a very public way, to counter ‘image issues’ and frankly, Tell Our Story Our Way! There were news stories about this exciting initiative in every print and online trade press publication but one. Action to date? Little that this industry observer has seen or heard, beyond ‘putting some numbers together’, in the event someone has the brass to step forward and ‘try it one time’. And our HUD Code home manufacturers continue to wonder why the home buying public does not beat a path to their door!?

Again, as Marty is wont to say: ‘Forget what people are saying, watch what is happening!” In this case? ‘The rhetoric has ceased and nothing is happening!’ Shame on us as an industry!

III.

Following quotation is from a short article titled, ‘The Affordability Conundrum’, featured in the December 2010 issue of MULTIFAMILY EXECUTIVE magazine. “Ron Terwilliger, former chairman of Dallas – based multifamily builder and owner Trammell Crowe Residential (‘TCR’) and creator of ULI’s J. Ronald Terwilliger Center for Workforce Housing, noted earlier this year that 19 million Americans spend at least 50 percent of their income on housing.” P.36.

Alas; but is that 50 percent factoid the true, whole and accurate story? Without clarification from Mr. Terwilliger there’s no way to know for sure! Here’s why…

First off, the ’50 percent’ reference springs from the well known ‘affordable’ Housing Expense Factor (‘HEF’) concept, whereby a certain percentage – varying among lenders, but usually between 25 & 30 percent – or more, defines the maximum amount of income citizens (should) pay for housing, whether owned or rented. But variable limits is just ‘half the problem’! The other, oft ignored half, is simply and tellingly, ‘What comprises targeted or actual income percentage citizens pay for housing’, owned or rented?

For example; are the aforementioned 25, 30, or even 50 percentiles ‘fully loaded’ (As they should be, in this writer’s opinion) with loan principal & interest, taxes and insurance (i.e. PITI) and household/utility expenses, but not including telephone expenses; OR, are those very same percentages ‘bareboned’, to include just P&I, leaving the home buyer/renter to still have to pay Taxes & Insurance, and household/utility expenses, but not including telephone expenses, ‘above and beyond’ what’s included in the (latter) stripped – down (.i.e. ‘barebones’) payment factor? Percentile composition makes a big, big difference!

Bottom lines? The Ideal, from an admittedly conservative, ‘affordable housing’ perspective is for said guideline AND applied percentile to be fully loaded 25 or 30 percentiles. Consequence? Probably less house for the buck allocated from one’s monthly or annual income! Reality, however, often finds lip service being paid to the 25 or 30 percentile guidelines, using them to peg just P&I. But when T&I and household/utility expenses, but not including telephone expenses, are added to such a percentile base, it’s easy to see how the ‘total percentage’ mushrooms to the ‘risky housing’ 50 percent or more cited by Mr. Terwilliger.

What’s to be learned from this? Simple. When housing industry spokespersons, like Mr. Terwilliger, set forth the type statement published in the referenced trade publication, they owe it to their listeners and readers to clarify, as in the previous three paragraphs, just what they mean when they describe ‘affordable housing’ using this one, or more, of four commonly recognized measures of housing affordability.*2

IV.

Following paragraphs, quoted from ‘The Courage of Marine Corps Leadership on DA,DT’ (‘Don’t Ask, Don’t Tell’), printed in American Thinker magazine, was penned and published prior to the Senate vote repealing DADT on 20 December 2010.

“Despite recent attempts to socially engineer our military, the bulk of the fighting and dying continues to be done, as through the ages, by young men. The bonds of men in combat cannot be replicated in any other activity, though our society likes to think they can. We loosely use the word ‘combat’ on the gridiron or in the courtroom. Those who have served in combat will tell you there is no physical or emotional challenge equivalent to actual combat. Those bonds between warriors, that brotherhood, that philia, cannot be replicated outside combat. Most warriors will tell you that without brotherhood, a unit in combat cannot be effective.”

“In combat, loss of effectiveness can mean failure of the mission. Defeat is anathema to the warrior. Failure increases the risk of death, injury, or capture of both soldiers and non – combatants.”

“Into this ageless formula for military success, the Pentagon and the Congress want to insert Eros, or erotic love, by ending the awkward ‘Don’t Ask, Don’t Tell’ policy for homosexuals serving in the military. These REMFs (pejorative acronym for desk – bound staff officers) have never had to duck and cover as the rounds or RPGs go whistling by. They have followed the lead of a completely inexperienced commander in chief and his Hollywood – raised chairman of the joint Chief of Staff to satisfy a constituency that is unaware and unappreciative of the sacrifices our young men and women make on their behalf.”

Now that you’ve read those sobering paragraphs, and know the DADT policy has been reversed, reflect on the serious, at times fatal, distraction this levels on the young men and women we know and respect, who’ve voluntarily placed their very lives on the line, to serve and protect you and me as American citizens.

V.

Lest you missed it at the end of last week’s blog posting, this is your final reminder that paid Allen Letter professional journal subscribers prior to December 31, 2010, will be the last to receive the annual (22nd) ALLEN REPORT for free! After January 1, 2011, the ‘per copy’ price for the much expanded 22nd annual ALLEN REPORT (now includes appendices & more) will be $450.00 per copy! So, if not already a paid subscriber to the monthly newsletter (@ $134.95/year), consider becoming one this week: 27 – 31 December 2010, by subscribing via this website (community-investor.com) or phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156. Leave a message if necessary and we’ll phone you back. This way, you’ll save $315.05. and tap into the LLCommunity asset class singular statistical resource document!

*****
End Notes.

1. I pen ‘double dual industry’ in recognition of the facts that HUD Code manufactured housing, as an industry, is comprised of ‘manufacturing’ and ‘distribution’ elements; while the LLCommunities, as an asset class, encompass raw land ‘development’ and existing income – producing property ‘investment’.

2. 30% Housing Expense Factor (‘HEF’), Housing Opportunity Index (‘HOI’), Housing Wage (‘HW’), & ‘One Who Believes…’ From HOUSING AFFORDOGRAPHY, ‘Study of Affordable Housing Formulae & Measures of Housing Affordability’, George Allen, Realtor®, CPM®Emeritus, MHM, PMN Publishing, Indianapolis, IN., 2008.

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

A Much Different Christmas Story Than You’ve Ever Read Before

‘Twas the night before Christmas; he lived all alone, in a one bedroom house made of plaster and stone.

I had come down the chimney with presents to give, and to see just who in this home did live.

I looked all about, a strange sight I did see, no tinsel, no presents, not even a tree

No stocking by mantle, just boots filled with sand, on the wall hung pictures of far distant lands.

With medals and badges, awards of all kinds, a sober thought came through my mind.

For this house was different, dark and dreary; I found the home of a soldier, once I could see clearly.

The soldier lay sleeping, silent, alone, curled up on the floor in this one bedroom home

The face was so gentle, the room in such disorder, not how I pictured a United States soldier.

Was this the hero of whom I’d just read? Curled up on a poncho, the floor for a bed?

I realized the families I’d see this night, owed their lives to these soldiers, who were willing to fight.

Soon round the world, children would play, and grownups would celebrate, a bright Christmas day.

They all enjoyed freedom each month of the year, because of soldiers, like the one lying here.

I couldn’t help wonder how many lay alone, on a cold Christmas Eve, in a land far from home.

The very thought brought a tear to my eye; I dropped to my knees and started to cry.

The soldier awakened, and I heard a rough voice, “Santa don’t cry, this life is my choice. I fight for freedom and don’t ask for more; my life is my God, my Country, my Corps.”

The soldier rolled over and drifted to sleep. I couldn’t control it, so continued to weep.

I kept watch for hours, so silent and still, and we both shivered from the cold night’s chill.

I didn’t want to leave on that cold, dark night, this guardian of honor so willing to fight.

Then the soldier rolled over, with a voice soft and pure, whispered, “Carry on Santa, it’s Christmas day, all is secure.”

One look at my watch, and I knew he was right. “Merry Christmas my friend, and to all a good night.”

Anonymous

*****

Next week’s blog posting returns to serious matters affecting the manufactured housing industry and landlease community asset class, going into year 2011. Don’t miss it! GFA

Hint. A very special edition of the 22nd annual ALLEN REPORT, a.k.a. ‘Who’s Who Among LLCommunity Portfolio Owners/operators Throughout North America!’ will be distributed during January 2011, to subscribers to the Allen Letter professional journal. Will you be a recipient of what might be the last ALLEN REPORT researched and published? To ensure you are, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 to subscribe today! Price per standalone copy of report is $450.00 postpaid.

*****

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

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

***

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

I.

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

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

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

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

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

Schwep NOTEs. If you’d like FREE copies (one blank & one filled – in sample) of the form Grayson developed, over the years, to apply the above – described income qualification methodology, simply email your request to schwep1@aol.com And, given the present day finance regulatory climate, ensure your on – site staff is appropriately trained and licensed. For information on this subject, phone Schwep @ (610) 533-4969.

***

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

II.

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

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

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

III.

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

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

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

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

14 January 2011. Last day of the Louisville MHShow.

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

End Notes.

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

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

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