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

August 9, 2019

Beware Site Rent Regulatory Reform! (&) Rule of Thumb Bastardization

Filed under: Uncategorized — George Allen @ 8:30 am

2019; Copyright 2019;

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: & visit

Motto: ‘U Support US & WE Serve U!’ Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable obtainable housing! Next MHM class @ 9/11/19

INTRODUCTION: We’re revisiting, from two perspectives, private equity firms acquisition of land lease communities nationwide, and proposed private equity reform legislation. And what the realty asset class can do to influence both matters. Response & participation requested.

And then there’s the perennial issue of how manufactured housing and land lease communities might be better represented (i.e. lobbied in behalf of), in legislative and regulatory matters, in our nation’s capitol.



Yes, that’s the title of Democratic presidential candidate Elizabeth Warren’s – & 13 other Democratic members of Congress – private equity reform legislation. It’s far-reaching, and if land lease community portfolio owners/operators don’t ameliorate rental homesite rate increases going forward, they run the very real risk of being swept up in this turmoil.

If what you read in the previous paragraph is ‘new to you’, scroll back to blog posting # 544/5 for background information, in Part II, titled:’ Legalized Looting: Mobile Home Rent Increases Require Wall Street Reforms’.

Now, here’s what Washington advocacy group, Americans for Financial Reform (‘AFR’), has to say about Warren’s proposed legislation: “It is not anti-private equity, but more about making sure private equity managers have skin in the game”. Contrast that statement with this from private equity advocacy group, American Investment Council (‘AIC’), also in Washington, claims this legislation is simply ‘about politics going into the 2020 election season’, i.e. “When there is no crisis, you have to invent it.”*1

The AIC spokesperson goes on to describe how “…public pension funds are private equity’s biggest investors, where over the last 10 years, it has outperformed other asset classes, returning a 10 year median annualized return of 10.2% in 2018.” *2

Do you see irony (i.e. ‘frustration of hopes’) playing out here; where and how pension funds, private equity firms, and homeowners/site lessees living in land lease communities, are intertwined? Result is a classic ‘rob Peter to pay Paul’ scenario! Specifically, pension funds provide investment capital to private equity firms who oft acquire land lease communities frequently populated by retirees. Who are, in turn, dependent on pension funds for income from which they pay site rent. And within this cycle, private equity firm managers increase rental homesite rates to ensure annualized returns of at least 10 percent per annum.*3 And the beat goes on….

So, where do we, as manufactured housing aficionados and land lease community owners/operators go from here? To date, no national advocacy group affiliated with our industry or realty asset class has stepped forward to address these matters: profuse rental homesite rate increases, and now, private equity reform legislation. As I suggested in the previously referenced blog posting, private equity firms owning land lease communities, and portfolios thereof, should attend one or more of three following events, encouraging discussion of this timely and potentially business – restricting private equity reform legislation:

• 28th Networking Roundtable, 8-10 September, Indianapolis, IN. Register via & I will set aside time to meet privately & productively.

• MHI’s annual meeting in Savannah, GA, 22-24 September. Phone (703) 558-0400

• SECO Conference in Atlanta, 8-10 October. Spencer Roane, via (678) 478-0212

Frankly, if this national ‘rent increase’ imbroglio continues, even worsens, and there are no informal meetings, on this subject, at any of the three venues, a National State of the Asset Class (‘NSAC’) caucus will be scheduled, in November or December, likely (again) at the RV/MH Hall of Fame in Elkhart, IN.*4 Will you be part of the solution or continuing problem?

Your thoughts on this serious matter? So far, every email and telephone message, received here, has been positive and encouraging. Email: or phone using the Official MHIndustry hotline: (877) MFD-HSNG or 633-4764. At that time, let me know if you’re a private equity fund-owned land lease community portfolio owner/operator and plan to attend the Networking Roundtable. Several firms have already registered for this event.

End Notes:

1. Pensions & Investments, ‘the International Newspaper of Money Management’, 5 August 2019, pp. 1 & 25.

2. Ibid.

3. Traditional market(s) for land lease communities = ‘newlyweds & nearly dead’

4. This is the first time in a decade we face business model challenges serious enough to warrant national attention and action. Veterans of the realty asset class will recall previous NSAC caucuses: On 2/28/2008 in Tampa, where we agreed on Five Action Areas to preserve our business model going forward; and, 2/28/2009 when 100 HUD-Code manufacturers and community owners met and agreed on a new housing design suitable for in-community placement. This was the birth of the Community Series Home. And with it, the realty asset class became HUD manufacturers’ new ‘big’ customer, increasing the percentage of new HUD-Code homes going onto rental homesites in communities, from only 25% in 2009, to more than 40% by year end 2015! Now we need answer(s) to this regulator reform challenge.


Rule of Thumb
‘Is a time-proven site rent guideline morphing into a measure that will sink us all?’

To begin with, a Rule of Thumb is an informal means of estimation that’s made according to a ‘rough & ready’ practical rule, not anchored in science or some exact measurement. With that said…

The Rule of Thumb referenced here, has been commonly referred to in manufactured housing circles, since the early 1970s, as the 3:1 Rule. Simply put, conventional apartment rent, for a 3BR2B unit, in a given local housing market, is generally three times larger than the amount of site rent charged in a land lease community located in the same local housing market. For example: apartment rent @ $900/month; suggests site rent to be near $300/month.

Since 1994, when the REIT (real estate investment trust) wavelet, comprised of four privately-owned portfolio firms, consolidated 88,450 rental homesites in (then) manufactured home communities, the unique income-producing property type has seen rental homesite rents increase moderately at first, then profusely, as Wall Street analysts pressed for ‘ever increasing’ financial gains. This rental increase trend continued, some say worsened, as we entered the new millennium, and private equity firms joined in the consolidation of privately-owned properties and portfolios thereof, into new and larger collections of land lease communities.*1

Results? By year end, 2018, the three remaining public REITs (ELS, Inc., SUN Communities, Inc., and UMH Properties) owned/operated 300,566 rental homesites throughout the U.S. and Canada. And overall, there are 500+/- known land lease community portfolio owners/operators in North America, with an average of 43 properties per portfolio and average size community with 211 rental homesites – based on data provided by 100 respondents to the ALLEN REPORT questionnaire circulated during Fall 2018.*2

Another, more difficult to ascertain result, has been the morphing – among larger communities – of the 3:1 Rule into a 2:1 Rule. Meaning, if apartment unit (3BR2B) rent in a given local housing market is $900/year; expect rental homesite rent for larger properties to be close to $450/month. Consequences? Homeowners/site lessees, coming into the land lease community, spend $450/month in site rent, and have $150/month less to invest in the new or resale home they’re buying there.

A sidebar issue is published market surveys purporting to show average adjusted site rent rates for metro areas throughout the U.S… Generally speaking, these surveys include only ‘institutional investment grade’ properties located in said SMSA. and not ‘all’ such properties, especially smaller ones. Result? A convenient ‘excuse’ for owners/operators of larger communities to justify site rent increases based on ‘studies’, rather than on operational needs of the property per se, and ability of homeowner/site lessees to pay.

Bottom line? As the subtitle of this part (I) of blog # 546 questions: ‘Is a time-proven site rent guideline morphing into a measure that will sink us all?’ If we’re not careful, that’s precisely what will happen!

End Notes:

1. 30th anniversary ALLEN REPORT, EducateMHC, IN., 2019
2. Ibid


Has Anyone Else Noticed?

On 6 August 2019, MHARR’s ‘Exclusive Report & Analysis’, featured the headline: MHCC Regulatory Enforcement Subcommittee Advances MHARR Regulatory Reform Proposals.
On 7 August 2019, MHI’s ‘News & Update’ Press Release featured this headline: MHI Proposals Serve as Guide for MHCC Regulatory Enforcement Subcommittee Actions.

Reading through both Press Releases, one wonders: These proposals are so similar, ‘Why does it take two national manufactured housing industry advocates to tell the same story?’ Answer? It doesn’t! That’s just how we’ve been relating to the HUD-Code, and other regulatory reform measures since 1985. And now, with the debut of the National Association of Manufactured Housing Community Owners, during late 2018, we have a third hand in the mix. Don’t you think, after 35 long years, it’s time for a sweeping change in how the manufactured housing and land lease community realty asset class lobbies in Washington, DC? I certainly do!

At this point (and this is not the first time this issue has surfaced), the question that begs answering is always: ‘How to accomplish this needed and widely desired consolidation of political presence ‘inside the beltway’ at our nation’s capitol?’

Hint. In my opinion, and to begin with, it’s going to take a charismatic, capable, experienced, motivated ‘leader of men & women’ who has manufactured housing in his/her blood, and is capable of communicating well online, in print, and in person. Does such a person exist? Yes.

The 2X factors.

1) As you may or may not know, MHI will be changing top salaried leadership the first of year 2020. Some opine that’s a good time to effect this needed industry consolidation.
Will it happen? Only if you’re reading this and are an active, dues-paying member of one or more of the present national advocacy entities and make your views well known!

2) Narrow the focus of MHI’s activities, going forward, to lobbying and regulatory reform. This could mean, no more national social meeting venues and leadership forums; leaving those to rapidly growing regional (e.g. SECO Conference in Atlanta, Louisville MHShow, Tunica MHShow, and Western Summit), and the nearly three decades old educational, social event, like the annual Networking Roundtable.

Yes, this is a tall tall order for any industry entrenched in its’ ways for more than a half century. But if we’re going to continue recovering from our industry’s shipment nadir year 2009, of only 48,789 new HUD-Code homes shipped, to beyond where we are today (96,555 units in 2018), then we have to be prepared to do something different, something better than has been done to date. And this is certainly one of those possible, albeit difficult, alternatives leaning forward.

The purpose of this blog posting is to get you to thinking about the matter, and exerting influence where you may.

George Allen, CPM, MHM
(317) 346-7156

If not yet registered to attend the upcoming (8-10 September) 28th Networking Roundtable, visit today! And MHM professional property management training & certification class (one day, no tests) will als

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