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

Blog Posting # 599 @ 21 August 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: Two weeks ago, I sent dozens of MHInsiders (all major HUD-Code housing manufacturers, many property portfolio owners/operators, and other industry/asset class leaders) a lengthy email message with this SUBJECT line:

“Is COVID-19 really the culprit for manufactured housing ills these days, or simply being used as cover for other troublesome realities?’

Then talked about rapidly increasing wholesale housing prices, escalating delivery costs, and shipment backlogs extending into mid-2021. Requested input from recipients, and boy did I ever receive it – a dozen thoughtful, helpful replies to date! Will likely address these timely and troubling topics in next week’s blog posting (i.e. historic #600), but wanted to give ‘blog floggers’ (YOU) this opportunity to provide additional input. Send to GFA c/o gfa7156@aol.com. Won’t use your name unless you make it clear it’s OK to do so.

Now for the lead-off to Part I of this week’s blog. The following dozen or more T-shirts in my collection, described here, were presumed ‘lost’ for the several years. Found them this past weekend as I was cleaning out my Franklin office. Now sharing some of their rich history with you!

I.

A Potpourri of MH T-shirts,
&
How We Can Share Them With Future Generations!

But first, this IMPORTANT ANNOUNCEMENT. ‘Manufactured housing-related collections (i.e. books, T-shirts, coffee mugs, challenge coins and more) must find a home soon, or be lost to our industry forever!’ It’s our business legacy we’re talking about here! More on this a little later in this blog posting. GFA

Two dozen white, black and colored T-shirts trace manufactured housing history from 1936 to the present day. As I close down our corporate office – to work from home, I must ‘find a home’ for at least four collections accumulated since 1978. Carolyn has already said ‘no’ to turning our home into another manufactured housing museum.

So, what are the messages on these T-shirts? Well, just a taste here, as I’ll likely elaborate, maybe even photograph them, for a future Allen Legacy column in MHInsider, magazine, or feature in The Allen Confidential! business newsletter. But no photos here in this blog posting.

‘Visit the NATIONAL TRAILER SHOW, September 10-15, 1937, at 71st Armory in New York City’. So reads the message on oldest T-shirt, provided by the publishers of defunct Lost Highways magazine. To read more about that short-lived firm, and its’ colorful tales of ‘trailer life of yore’, watch for coverage in a future Allen Legacy column in MHInsider – one tracing manufactured housing history via its’ trade publications over seven decades.

Then there’s the iconic Manufactured Home Communities, Inc. (one of the earliest real estate investment trusts or REITs), WORLD TOUR T-shirt (1993) ‘Reshaping the Perception about Manufactured Housing Communities.’ Yes, this is the one with a caricature of (presumably) Sam Zell on the back shaking an accountant by the neck, saying: “For the last time pencil neck, it’s not called a trailer.” And, almost a decade later, MHC, Inc. (IL) came out with another white T-shirt, this one proclaiming: ‘Times Change. KEEP UP. Leading manufactured housing into the new millennium.’

What other T-shirts are in this eclectic collection? Here’re brief descriptions with a minimum of humorous and enlightening messages contained thereon. Details, and maybe photographs, will be published in one or another of the future trade publications mentioned earlier.

Chateau Communities, (MI & CO) another of the original REITs, later sold to Hometown America in 2003, distributed a variety of T-shirts over the years. One even promoting resident relations and ancillary income in their land lease communities.

ARC, a short-lived REIT (2004 & 2005), known at different times as Affordable Residential Communities and American Residential Communities (If my memory is right), designed a T-shirt featuring their corporate logo on the front and mission on the back. The corporate history of this firm, as brief as it was, deserves description someday, i.e. from its’ ‘ARC Way’ formula for turning around troubled communities, to the simultaneous auction of all its’ properties, in a huge hotel ballroom outside Chicago. Hint. The auction was so large; the firm’s stock price fluctuated throughout the day, as properties were bid for and sold – only to have all transactions nullified later, because sale prices did not meet the stated reserves.

Then there’s Community Housing Management Services (CA). The only non-profit public benefit portfolio owner/operator, that I’m aware of, to serve Senior citizens and others.

The Choice Group (MI) broke this T-shirt pattern by handing out dark blue button-top golf shirts to employees, residents, and clients.

The final portfolio firm to market itself in this unique fashion was/is Follett Investment Properties. This one debuted during year 2000, at a training conference in San Diego, CA. For that matter, I still wear, during spring and fall, a good quality windbreaker jacket also bearing the FollettUSA logo.

Oops! Almost forgot one. A jet black T-shirt from the Carlyle Group (Can’t tell you which one of the two firms that go by that name) features a really fearsome animal graphic on the back. You have to see it to believe it. Hence a future article, hopefully, with photographs.

Now for a plethora of miscellaneous non-corporate T-shirts, all of which have stories not told here. Ever heard of the Trailer Park Troubadours? Well, they’re for real-real. Their slogan? ‘I’ve been trailer hoppin’.’ I met the duo at a MH show at the Grand Ol Opry Hotel outside Nashville, TN. decades ago. Another of my corporate mementoes is a framed and signed glossy photo of the TPT guys performing their land lease community-focused country songs.

Then there’s the Bropfs (independent – street – MHRetailers in St. Charles, MO., with their yellow T-shirts featuring ‘doublewides’ and unit pricing; and white ones for ‘singlewides’ and unit pricing. The founder of this firm, now retired long-retired Bob Bropf, was known for attending semi-formal state association banquets wearing a long sleeved T-shirt that mimicked a tuxedo, tie, and cummerbund.

Now, this one was sold at a high-end big box retail store in the Mall of America in MN. An off-color brown, the front features a rendering of an old singlesection ‘mobile home’, with this caption above: ‘I STILL LIVE AT HOME!’

Ever heard of The Kings? It’s a social group of businessmen (i.e. land lease community owners/operators from throughout the Southeast U.S.). Their gray, long sleeve T-shirt features this slogan: “You mess with me…you mess with the whole trailer park!’ And, come to think of it, FollettUSA also has a red T-shirt, out and about, with the same slogan on it.

OK, there’s still a half dozen or more T-shirts I haven’t described here, so watch future issues of MHInsider and TAC! for ‘the rest of the story’ and hopefully, photos as well.

Recalling the opening paragraph of this blog posting, this T-shirt collection – and a few other historical collections, need a home! This is where you come in. Some reading this blog, have the wherewithal to fund part or all the manufactured housing hall and displays at the RV/MH Heritage Foundation Hall of Fame, museum, and library, in Elkhart, IN. The RV industry already enjoys a massive presence at the facility, and funding is all that’s holding up manufactured housing. Please give the matter some thought, then phone (574) 293-2344 and ask to talk to Darryl Searer, director.

So, if you don’t want this (blog) to be the last word on historic T-shirts, or books for that matter – recalling parts I & II of Allen Legacy columns in recent MHInsider magazines, contact the Hall of Fame to learn how much $ it’ll take to ensure manufactured housing’s presence there! In the meantime, know that Carolyn and I donate every year, and have for decades, but we cannot do this alone. Remember, the number is (574) 293-2344, and visit their website online. Better yet, plan to attend the Class of 2020 Hall of Fame Induction Banquet on 3 December 2020, to see for yourself what an impressive facility this is. See you there!

Blog Posting # 598 @ 14 August 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, k& visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing& land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: There’s nothing new in this blog posting. I’ve been teaching and writing about these ‘tools of the trade’ for a long time. However, between attrition and new hires, I know we need to keep this near-proprietary information out and about, for your benefit and education. So, read and enjoy; be sure those you work with in land lease communities know these techniques as well. GFA

I.

Once & For All, Here It Is!

How to know the ‘affordable housing payment amount’ in any local housing market, and ‘how much house’ any prospective homebuyer can afford to buy!

As many of you, who know me and read this blog and EducateMHC’s The Allen Confidential! newsletter, I have long maintained that ‘low income housing folk’, a.k.a. ‘housers’ hijacked the concept and reality of affordable housing. A recent article (‘The Changing Face of Affordable Housing’) in the Institute of Real Estate Management’s (‘IREM’) Journal of Property Management magazine, contained this telling paragraph:

“Doing more with less has been the mantra for affordable housing for many years. Program compliance, which is typically not consistent between (sic) the four or five funding sources, means managers are completing multiple reports. This reduces available time to connect with residents.” P.41…and limits the scope of affordable housing to low income, and very low income, housing users! GFA

That has little-to-nothing to do with what makes a local housing market, or prospective homebuyer’s search for a home, in either case, AFFORDABLE! What really and truly does peg the dollar amount of affordability? Here’re the answers:
The local housing market, whether there’s a home-selling presence there now, or contemplating launching such a business presence, here’s how to peg affordability:

1. Identify the postal zip code for said local housing market and visit zipwho.com to ascertain the Area Median Income (‘AMI’) of the populace who live there, e.g. $50,000.

2. Multiply the AMI by widely-accepted Housing Expense Factor (‘HEF’), to identify the $ amount needed, for a prospective homebuyer to rent a conventional apartment or buy a home in that local housing market; e.g. $50,000 X .3 = $15,000 or $1,250 per month.

3. A caveat applies here, as well as in the next scenario. When the $15,000 pays PITI alone (principal, interest, taxes, insurance), the transaction is ‘risky’, requiring the homeowner to pay more each month (i.e. utility bills) for his/her home. When the $15,000 covers PITI & annual housing expenses (i.e. utilities), the transaction is truly ‘affordable’ – but also means the homebuyer buys less home than via the ‘risky’ route.

4. Which way will you sell and finance your home buying customers?

The prospective homebuyer, or in the case of a land lease community – homebuyer/site lessee, the process is pretty much the same, but for the inclusion of monthly rental homesite fee in the 30% Housing Expense Factor set aside to pay PITI & utilities each month – or not.

1. Identify prospective homebuyer’s Annual Gross Income or AGI (equivalent to AMI in previous scenario; amount will vary from person/family to person/family), e.g. $50,000.

2. Multiply the AGI by widely-accepted 30% Housing Expense Factor (‘HEF’), to identify the amount needed by prospective homebuyer to buy a home in the local housing market or live in a land lease community, e.g. $50,000 X .3 = $15,000 or $1,250 per month.

3. The caveat here is the same as described above, relative to ‘risky’ vs. ‘affordable’ transactions, plus this twist. When living in a land lease community, the monthly fee for a rental homesite must be accounted for in the $15,000; covering PITI, annual utilities – or not, and definitely, rental homesite fee.

What you read above is the proverbial ‘bottom line’ relative to affordable housing. Sure, low income housing folk will continue to refer to LIHTC (low income housing tax credits) and Section 8 housing, and other programs, as characteristic of affordable housing. But now YOU know the truth of the matter. Affordable housing has directly to do with the AMI of any local housing market identified by postal zip code; and the Annual Gross Income a prospective homebuyer/site lessee ‘brings to the table’ when purchasing his/her new or resale home.

Believe it or not, there’s actually an easy-to-use worksheet available, for FREE, for you to use when working either or both affordable housing scenarios. It’s called the ‘Ah Ha! & Uh Oh! Worksheet’ and is available to you from EducateMHC. Simply request it via gfa7156@aol.com

II.

Once & For All, Here It Is!

Quickly & Easily Estimate the Capitalized Income Value of Full, and Less Than Full, Land Lease Communities, In Average Condition, Using the New Rule of 72!

Prior to 1994 I made a comfortable living, in part, as a review appraiser of (then) manufactured home communities. Two years earlier, while on active duty during Desert Storm, and working in Honduras, I compiled the ‘first ever’ industry standard chart of operating accounts and related operating expense ratios (OERs’), based on the Institute of Real Estate Management’s professional property management Experience Exchange format. This chart and OER data was published in a J. Wiley & Sons case bound text titled: How to Find, Buy, Manage, & Sell a Manufactured Home Community, 1996 & 98. That pretty much ended my review appraiser days, as ‘everyone’ now had access to the chart of accounts and OERs I’d been using for the past decade. *1

A few years later, Susan McCarty (daughter) and I created the Valuation Calculation Worksheet, a.k.a. VCW, using features from all three income-producing realty perspectives: market, income, and replacement values. The goal was to provide a ‘do it yourself’ tool for sole proprietor community owners, so they would not have to rely on estimate produced by itinerant real estate brokers. And the VCW worked well, and continues to do so, but the perennial need was for something even simpler and accurate. Hence the New Rule of 72.

Everyone, it seems, has heard of, and likely used, the original Rule of 72; to wit: At a given percent return on one’s money, how long does it take to double in value? Simple. ’72 divided by the ROI, e.g. 20%. Or, 72 divided by .2 = 3.6 years to double the value.

New Rule of 72 is amazingly simple to use. Drive through an average land lease community and count the number of rentable homesites, both occupied and vacant, e.g. 200. Then ascertain the monthly rental homesite fee, e.g. $200.00. Now, multiply 200 sites by $200 and that total by 72. Result? $2,880,000.00 is what that property would be worth if 100% occupied and everyone paying rent current at $200/month. Per site value = $14,400/site.

Rarely is a land lease community 100% occupied; always something less. So, ascertain the number of occupied and paid current rental homesites with homeowner/site lessees in place (e.g. 180). Multiply 180 sites by $200 and that total by 72. Result? $2,592,000. Per site value = Again, $14,400/occupied site, plus a lesser value for the vacant rental homesites.

Doesn’t get any easier than that! An important thing to remember, however, is the New Rule of 72 applies only to AVERAGE land lease communities. ‘A’ grade communities will be worth more, and ‘C’ or ‘C’ grade communities less than estimated here. How to know? Use the ABClassification Process form available via EducateMHC (www.educatemhc.com).

***
End Note.

1. Prior to 1992, most MAI appraisers, when it came to manufactured home communities, used an average overall OER of 50-55% (Characteristic of conventional apartment communities). Truth of the matter was, and still is, the accurate average overall OER for (now) land lease communities, was and is, 40+/-%! Why the significant difference? Given their higher turnover of tenants, conventional apartment communities must market much more (i.e. staffing & advertising); and upon turnover, must paint units, service utilities and appliances, and clean or replace floor coverings. Bottom line? Valuations of manufactured home communities, back then, were oft – if not always, undervaluing these income-producing property. And frankly, the larger the community, the more the overall OER shrinks in size (e.g. 40 to 20%), as operating expenses remain fairly constant, while income increases with physical and economic occupancy growth.

George Allen, CPM, MHM
EducateMHC

Blog Posting # 597 @ 7 August 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC< telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

I.

Are You Ready?

For the 32nd Annual ALLEN REPORT? During the month of August, if you’re a portfolio owner/operator of land lease communities in North America, expect to receive an electronic letter and input form from EducateMHC, asking you about property portfolio size and composition, along with operations performance statistics. When completed and returned before the September deadline, the information you provide will be culled and written into the 32nd annual ALLEN REPORT, to be distributed during the month of January 2021. If you’re unsure you qualify, or fear you won’t receive this timely opportunity to input the longest running, most referenced statistical compendium in the manufactured housing industry, let us know via gfa7156@aaol.com or phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

For the Federal Housing Finance Agency’s (‘FHFA’) Listening Sessions? Pay attention to future announcements about Listening Sessions scheduled to occur from 14 – 16 October, in various locations around the U.S.. Manufactured housing is one of three underserved markets the GSEs (Fannie Mae & Freddie Mac) are tasked, by Congress, to address with Duty to Serve (‘DTS’) plans each year. And these Listening Sessions are our industry and realty asset class’ unique, in-person opportunities to make our needs and frustrations known to federal agencies that can help with finance and more. This weekly blog posting, and EducateMHC’s The Allen Confidential! business newsletter, are two primary sources for this information going forward. Visit www.educatemhc.com to subscribe.

For a dose of manufactured housing history? If you’re active in MH and or land lease community ownership/operations, and enjoy learning helpful and practical lessons from ‘those who’ve gone before’, you need to be reading every issue of the MHInsider magazine! Why? Because every issue, at the end of general content features, is the Allen Legacy column. To date, here’re the titles you’ve maybe missed – and some yet to come:

• Preserving Your Personal & Corporate Legacy. ‘How to pen your memoir.’
• The Last Decade Has Seen a Profound Paradigm Shift – from MHRetailers to in-community sales and home-only finance.
• Tunica’s History Ties Into Industry (Copy of invoice & check from Elvis Presley for his new manufactured home)
• History of MHI Congress & Expo Leads Back to Gub Mix
• RV/MH Hall of Famers: An Eclectic Mix of Pioneers, Leaders with Vision & Talent
• A Confluence of Community Owners (The SECO story!)
• The Quintessential Family Business (i.e. land lease community ownership)
• Stepping Out of the Manufactured Housing Shadow
• Do You Know MH Lingo? (It is certainly a unique way of communicating!)
• Read a Good Book Lately? If you’re a ‘reader’, you need to see this column!
• Tracing Manufactured Housing & Communities History, Part I: 1955-1990
• Tracing Manufactured Housing & Communities History, Part II: 1990 – 2020
• Print Publications Tell MH Story for 75 Years! This one is a real gem for info!)

The last two stories have yet to be published. But this gives you ‘more than a flavor’ of what to expect from this stellar trade publication. Not receiving copies? Simple. Just email Patrick@datacompusa.com and request to be put on the mailing list.

For the postponed RV/MH Hall of Fame Induction Banquet? I am! So many ‘friends in the business’ being inducted this time around. To buy a banquet ticket, phone (574) 293-2344. Responding to popular request and interest, I was planning to host an industry/realty asset class-wide national meeting that day, at the Hall of Fame facility. Goal would have been to seek solutions to our industry’s continuing lagging new HUD-Code housing shipment volume performance. There’s certainly enough interest ‘out there’ to have the meeting. However, have learned a major RV meeting is also scheduled on 3 December, at the RV/MH Hall of Fame facility as well. What to do? Ideas from you?

For Manufactured Home Manager training and certification? If not already an IREM CPM, or MHI ACM, or EducateMHC MHM, you should be! Professional property management continues to be under-represented among land lease communities nationwide. While there’re 50,000 such communities, there’re only 125+/- CPMs, 200+/- ACMs, and nearly 1,500 MHMs at work. All those numbers should be quadrupled, to bring us anywhere near where we should be, compared with conventional apartments, condominiums, office buildings, and shopping centers. To learn more about the popular MHM program, contact EducateMHC vis its’ website: www.educatemhc.com or phone me via the aforementioned Official MHIndustry HOTLINE.
II.

Old News Now; Scary News Earlier…

Jim Clayton narrowly escaped death, earlier this week, in a helicopter crash in TN. His brother Joe died in the accident.

***

Blog Posting # 596 @ 31 July 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www. Educatemhc.com

Motto: ‘U support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION:

I.

National Economic Impact of Manufactured Housing,
Part II.

Last week, via blog posting # 595, we identified four past and present documentations of economic impact of manufactured housing and land lease communities on national and state levels. Remember? They were:

• RV/MH $ Economic Impact in Indiana during 1997, courtesy of the IMHA/RVIC
• MHI’s debut of Dr. Stephen Cooke’s ‘production value’ of a new 2013 HUD-Code home
• Annual ALLEN REPORT, as it pertains to land lease community portfolio performance
• Foremost Insurance’ now defunct manufactured homeowner market demographics

Well, guess what? There’s a fifth economic impact study to add to this list and it comes from the state of Wisconsin – and the stats are less than one year old! Another template to use.

This Economic Impact study was prepared by the University of Wisconsin-Whitewater Fiscal & Economic Research Center. It covered three sectors of the manufactured and modular housing industry: manufacturing, retail and services and park residents. Bottom line? Taken together, these sectors “… generate more than $2.65 billion and 26,063 jobs in Wisconsin annually.”
Furthermore, “…manufactured home manufacturing has a $185.9 million economic impact, and creates 1,115 jobs in Wisconsin each year. Manufactured home manufacturing also accounts for $48.76 million in total wages and $4.2 million in state and local taxes.”

“Manufactured home retail and services are responsible for $456.4 million in annual economic impact, with 2,884 total jobs, $85.7 million in total wages, and $31.5 million in state and local taxes.”

“The economic impact of manufactured home park residents is even more staggering, contributing $2.15 billion to Wisconsin’s economy annually. Manufactured home park residents account for 22,064 total jobs, $881 million in total wages and $157 million in state and local taxes.”

And there’s more! But I think you get the idea: ‘How helpful it’d be to be reading similar economic impact information for states in which you engage in manufactured housing and ownership/operation of land lease communities. But this is not going to occur unless you take steps, via your state manufactured housing association, to initiate and fund such a study in your local housing market (state) area. For advice on identifying and selecting a research firm to serve your association, contact Amy Bliss, CAE, Wisconsin Housing Alliance: (608) 255-3131.

Also remember. EducateMHC plans to enclose the aforementioned RV/MH $ Economic Impact study (circa 1997) as part of the August issue of The Allen Confidential! business newsletter. This could serve as the research and reporting template you need to replicate Economic Impact findings in your state. To subscribe, visit www.educatemhc.com

II.

One More Reason…

‘ How we tend to be isolated as a niche industry!’

I first encountered this reality early in my career as a land lease community owner cum freelance consultant. Back in the late 1970s, and throughout the 1980s, ‘everyone’ – it seemed, had a Rule of Thumb for valuing (then) ‘mobile home parks’, eventually manufactured home communities. But none of these ‘formulae’ were based on facts or research, just whimsy. That is, until the early 1990s, when Larry Allen, MAI and I conducted national studies, via Manufactured Home Merchandiser magazine, to quantify operating expense ratios (‘OER’), patterned after Experience Exchange format and data from the Institute of Real Estate Management (‘IREM’) resources for conventional apartment communities nationwide.

I parlayed the knowledge we gained, into a useful valuation tool, as a review appraiser. And for some time, made good money, demonstrating how virtually every ‘mobile home park appraisal’ was wrong! Why? Because, to that point in time, everyone kinda assumed the OERs were the same as those for conventional garden style apartments. NOT. For example: because homeowner/site lessees were/are responsible for their homes inside and out, the maintenance expenses characteristic of apartment living were far less in a land lease community. And, due to very low turnover (5% for homes & 10% for homeowners) at the time, marketing expenses for land lease communities were much lower as well. How much so? Overall, at least 10-15%, i.e. garden style apartments = 55% OER; land lease communities = 40%. This difference alone resulted in most land lease communities being undervalued.

That lasted until J. Wiley & Sons published my book, How to Find, Buy, Manage & Sell a Manufactured Home Community, in 1996&8. My lock on ‘review appraiser’ work continued for a while – until MAI appraisers realized the Industry Standard Chart of (Operating) Accounts and OERs contained therein (e.g. page # 13) was the hands-on tool they needed to effect more accurate valuations of this unique type income-producing property type.

See what I mean? And this sort of scenario continues today, 25 years later. How so? As recently as this past week I was invited to listen-in on a webinar purported to be the ‘last word’ relative to Incorporating Manufactured Housing – as affordable housing – in the Builder Model. First off, I don’t think any of the four or five panelists actually ‘works’ in manufactured housing, let alone land lease communities. And while ‘affordable housing’ was given a lot of lip service during the webinar, not once did anyone actually define or quantify the concept. Furthermore, everyone seemed enamored with CrossMod™ homes and Fannie Mae’s MHAdvantage $ program. But nary one of them knew that only six such homes were placed under the MHAdvantage program during all of 2019. And, as I pointed out in post-webinar correspondence, NO mention whatsoever of land lease communities in this presentation, even though as much a 40 percent of today’s new HUD-Code housing shipments are going directly into this type investment property type! Once again, as an industry and realty asset class, we are little understood.

YES, we tend to be an isolated niche ‘real estate asset class’ within the ‘manufactured housing industry’, and because of that, folk simply don’t study us as one might think. The upside of this conundrum occurs when one (i.e. you & me) takes time to study and understand these sectors. We can, in our own way and timing, parlay what we know into self-serving and self-rewarding opportunities!

George Allen, CPM, MHM
EducateMHC

Blog Posting # 595 @ 24 July 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: Welcome to the world of Economic Impact Analysis, a.k.a. EIA, relative to manufactured housing and land lease communities. Plan now to read more about this timely project, for our industry and asset class, when featured in the August or September issue of The Allen Confidential! business newsletter. Also know, that issue will contain an updated edition of ‘EVERGREEN (‘always relevant’) Issues Pertaining to Manufactured Housing & Land Lease Communities – as EducateMHC’s Resource Document.

I.

National Economic Impact of Manufactured Housing?

No one really knows! Oh, we talk and write about the matter from time to time, sometimes making half-hearted attempts to pull salient numbers together. Bottom line?

First, there’s the 23 year old, comprehensive state-level study of economic impact, relative to RV & MH manufacturing, employment, related industry and tax revenues in the state of Indiana, debuted during 1997. Then, ‘silence’, until 2013, when the Manufactured Housing Institute (‘MHI’) hired Dr. Stephen C. Cooke to peg the ‘production value’ (only) of a new HUD-Code home coming off the assembly line. And today, beyond the annual ALLEN REPORT, there’s even less published $ data, relative to 50,000+/- land lease communities nationwide, e.g. total rent $ collected and related benchmark statistics. Even Foremost Insurance no longer publishes its’ popular description of manufactured housing homeowner demographics. That’s the whole sorry picture!

To this day, that’s all we have to work with, when lobbying state and federal legislators in behalf of the HUD-Code manufactured housing industry and land lease community real estate asset class! In my opinion: ‘No wonder, as an industry and income-producing property type, we’re so generally ineffective in Washington, DC.!’

So, what’s the answer to this manufactured housing Economic Impact desert? One or another of our industry/asset class three ‘national advocates’ should buy into the timely and strategic need to research and publish $ data supporting the manufacturing and marketing of HUD-Code manufactured homes; and yes, recreational vehicles (since so many HUD-Code housing manufacturers now produce RVs and ADUs…or accessory dwelling units, these days) as well. There are already published studies afoot, featuring RVs, that MH would do well to emulate. And the ALLEN REPORT gives us a well-grounded head start where land lease communities are concerned.

So, where to begin? Two places, for sure:

• A template. An $8 Billion Building Block for Indiana’s Economic Success, ‘A Study of Economic Impact’. This slick 8 ½ X 11 print report was commissioned by the Indiana Manufactured Housing Association/Recreational Vehicle Indiana Association (‘IMHA/RVIC’) in 1997, and continues to influence, in political and trade association circles, more than two decades later. A copy of said report is scheduled to be part of the August or September issue of The Allen Confidential! business newsletter – as a prod to MH national advocates, to consider commissioning a standalone, or joint economic impact study, during year 2021.

• Refreshment. This industry observer has been told, on more than one occasion, MHI plans to renew Dr. Stephen Cooke’s economic impact research beyond just the production value of new HUD-Code manufactured homes. And the enlarged project might possibly include independent (street) MHRetailers & ‘company stores’ sales and service; as well – maybe – as new and resale home sales within land lease communities; plus, the value of rental homesite fees collection over time. So much fertile ground to till.

Know what? This proposed research and reference track reminds one of the ‘gift horse’ metaphor – where ‘equine substance’ and ‘teeth inspection’ are concerned. Huh? First the horse. Today’s circumstances are similar to what I encountered during late 1980s, when challenged by peers to identify and describe ‘consolidators’ (i.e. property portfolio firms specializing in – then, manufactured home communities) in what became known as the ALLEN REPORT. Today, 31 years later, it’s not only the oldest statistical compendium, in MH & LLCommunity matters, but is highly respected and frequently referenced within and outside the industry/asset class. The ‘teeth inspection’ allusion? In this instance, I learned early to ignore what had been said and published before 1989, as no one had good or accurate data to contribute.

Point? It’d be GREAT if MHI, MHARR, and or NAMHCO would take this project on, as a valuable service to the industry and realty asset class! However. If they don’t, then no one should be surprised if EducateMHC, or one or another freelance MH consultancy, picks up the baton and runs with it. Sure, the ‘first time out’ is always difficult – if done right and comprehensively. But once the reliable template is in place and known, then one’s present ‘professional cred’ and future industry reputation are all but assured! Someone out there seriously listening? If so, and you ‘can’t’ wait’ to get started, and would like a copy of aforementioned Economic Impact template document, let me know via gfa7156@aol.com and I’ll mail it to you.

And know this. Anyone who picks up this EIA challenge, and produces a credible working document, will find a national publishing platform at EducateMHC. Simply let us know of your intent, time frame, and scope of work, so we can reserve some ‘white space’ for you.

GFA

II.

EVERGREEN (‘always relevant’) Issues for Manufactured Housing & Land Lease Communities

Well, here it comes, the annually-updated Resource Document that identifies and prioritizes more than a dozen EVERGREEN Issues we deal with, day in – day out, as manufactured housing professionals and land lease community owners/operators. A good reason to keep this list handy for reference throughout the year ahead! Where to find it?

Watch for it as the Resource Document attached to the August issue of The Allen Confidential! business newsletter – PRIME edition. To subscribe, visit www.educatemhc.com

***
George Allen, CPM, MHM
EducateMHC

Blog Posting # 594 @ 17 July 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media, for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 33-4764. Also email: gfa7156@aol.com, & visit www.Educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: Today (July 15th) is our – Carolyn and my, 128th day of self-quarantine. All is well. We miss our friends in manufactured housing and among communities. Plan now to join us at the RV/MH Hall of Fame in Elkhart, IN., the evening of 3 December 2020, for the induction of the Class of 2020. For dinner tickets, phone (574) 293-2344.

I.

Present & Future 0f Manufactured Housing & Community Operations

The ‘In Memoriam’ column, in every issue of The Allen Confidential! business newsletter, lists dozens of colleagues who’ve died during the past few years. Five were members of the RV/MH Hall of Fame – one (Burt Dickman), will be inducted 3 December 2020; four were freelance consultants to the industry and realty asset class (George Goldman, Grayson Schwepfinger, Judy Carr, and ‘Mac’ McClanahan); and, 20 who’d been land lease community owners/operators during their lifetime. Seems HUD-Code housing manufacturers don’t die, they remodel and continue on, like Joe Stegmayer, maybe even starting a new career.

Point? I continue to accept one or two consulting assignments each month; and during one conversation this week, was told and asked: “Seems most long term manufacturing and community consultants (Bill Carr, Dave Alley, Ed Hicks, Don Westphal, David Gorin, me, et.al.) are retiring these days, or have done so already. Who’s coming along to fill their shoes? Know what? That’s an apt and timely question. And when I first started thinking about it, I was depressed, as I could not think of much ‘young blood’ coming into the MHBusiness. But guess what? Upon closer examination, I see more hope than nope! (Sorry, but had to have that bit of alliteration!)

In no particular order, here’s how I see the present and future of manufactured housing and community consulting ‘penciling out’ during the year, even decades ahead.

Relatively young execs are now in place at MHI (Dr. Leslie Gooch & Mark Bowersox), MHARR (Mark Weiss), and NAMHCO (Susan Brenton). That’s encouraging. And NAMHCO’s lobbyist is a ‘young turk’ among Washington, DC. players.

Specific to freelance consultants, ‘think’ Rick Robinson, esquire; Ken Corbin, Paul Baretto , John ‘Ace’ Underwood, and George Porter – though semi-retired, he’ll be inducted into the RV/MH Hall of Fame on 3 December, to name a few that come to mind.

Interestingly, during the past decade, several of the founders (and sons of founders) – the old guard of HUD-Code manufacturing, have retired or expired. Today, most execs are approaching – or are, middle age plus. And that’s good for the industry. One industry icon who’s still around (though largely inactive) – and in my opinion, remains the most visionary individual to grace manufactured housing, is Chuck Fanaro – developer of beautiful Saddlebrook Farms in Grayslake, IL., and owner of Hi-Tech Housing in Elkhart, IN.*1

Nothing pleases me more than to see second and third generation family members follow in their parents’ steps, taking over and owning/managing land lease communities. This continues to occur, with the Landy father and son at UMH Properties; Rob Shouhayib leading his father’s management team at Choice Properties; partners’ progeny at Bessire and Casenhiser in CA; Barbara and Troy Hames following in their parents’ footsteps in Iowa; David Voss and sons in MO; Bob & Brad Cohron, sons of RV/MH Hall of Fame twins, Darrell & Harrell Cohron; Jared Surnamer, MHM, of Valley Community Management; the Newby clan of Newby Management, in Ellenton, FL; Tunnell family (three generations) in DE. (Recall Pots-n-Nets, and Baywood Communities in Lewes, DE.); and, Ed Zeman, successor to the late Bud Zeman.*2

Unfortunately, ‘consolidation’ continues to exact a toll among lifelong community owners/operators. The recent Jensen family (In CT.) sell-out to REIT Sun Communities, Inc., and Stephenson family (Anderson, IN.) sell-out to REIT UMH Properties.

Probably the youngest and tightest group of young executives can be found at DATACOMP, a.k.a. MHVillage, and MHInsider magazine. Founder and patriarch, Ted Boers, has been succeeded by his son – co president with Darren Krolewski, and Patrick Revere, all officed in Grand Rapids, MI.

Some, but not all inclusive, signs of young blood coming into real estate and personal property finance as well. Remember how much we missed Creighton Weber and Cary Monroe when they retired, and Bruce Tolchin when he passed? And Lew Vela – who knows when he’ll finally ‘hang it up’? Today there’s a plethora of young guys and gals filling those loan originator vacancies. Think Nick Bertino at Wells Fargo, son Chad working with Charlie Williams at Berkadia Commercial, MJ Vukovich at Bellwether Enterprises, Chris San Jose at Yale Capital Advisors, Matt Gentile at Monroe & Giordano, and Eric Oaks at Oxford Bank & Trust (chattel capital).

Know what? It’s much harder to find young execs among the nearly 50 state manufactured housing associations across the U.S. Most are led by industry veterans. Though there is physical fitness enthusiast Jen Allen in DE., Melissa Caron in Massachusetts, and Amy Bliss, who succeeded Ross Kinzler when he retired a few years ago.

Finally. As you likely expect, I’m pleased with how COBA7, a.k.a. GFA Management, Inc., dba PMN Publishing succession is progressing. Spotlight-Strategies, headed by Susan McCarty, MHM, and Erin Smith, MHM, continues my legacy of Mystery Shopping land lease communities – as well as other consulting assignments, training & certifying Manufactured Housing Managers (‘MHM’), publishing a monthly newsletter this weekly blog posting, and more than a dozen books about manufactured housing and communities.

So, obviously, business life continues for HUD-Code manufactured housing and the land lease community real estate asset class. Two continuing questions however, which beg answering – relating to the futures of these business models, are these:

• What is it going to take to increase and sustain HUD-Code housing shipments at a level above 100,000 units per year? Made some suggestions to this end in last week’s blog posting (#594) and continue to await your response….

• What must we – anyone do, to ameliorate, better yet lessen, ‘local regulatory barriers to all forms of affordable housing’, facilitating development of new land lease communities throughout the U.S.?

Answers anyone?

End Notes.

1. The Saddlebrook Farms story, from concept thru infill, is told in ‘One Man’s Vision Realized!’, by Mary Anderson, in the book, SWAN SONG, history of land lease communities and official record of HUD-Code housing shipments, 1955 to present day, PMN Publishing, 2017. Available from www.educatemhc.com

2. ‘A Toast to the Community Owner!’ was penned, August 2010, to honor the memory of Bud Zeman, Chicago area owner of land lease communities.

Until every homesite is filled and every bill paid
With mortgage refinancing approved and dollars on the way
We’ll ply this trailer trade, selling & financing affordable homes, factory made
Knowing lesser men truly fear, this business we embrace with our peers
‘So, to community owners everywhere, I offer this toast to our worthy trade;
“May hitches hold, site rent flow, and all our homes be sold!” GFA

Blog Posting # 593 @ 10 July 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media, for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, Also email: gfa7156@aol.com, & visit www. Educatemhc.com

Motto: ‘U Support US & WE serve U! Goal: To promote HUD-Code manufactured housing & land lease communities as U.S> # 1 source of affordable attainable housing! Attend MHM Class!

INTRODUCTION: Let’s stop sitting around doing nothing about our industry’s present new home shipment malaise-cum-crisis! No one else is sounding any sort of alarm, so I’ll do it here in Part I of this blog posting. Part II? A very important announcement relative to the RV/MH Hall of Fame!

I.

Let’s Not Waste This Latest MHShipment Crisis!

2009 = 48,789 new HUD-Code homes shipped (lowest # since 1940s), & 2019 = 94,615. Yes, up from 2009, but 1,940 fewer than year before (2018); with 2020 looking even more dismal!

So, how did we address the first manufactured housing shipment crisis, circa 2009? Simple. More than 100 HUD-Code housing manufacturers and land lease community owners/operators met for a day (2/28/2009) at the then new RV/MH Hall of Fame facility in Elkhart, IN. Their express purpose that day? To jointly address the shipment shortfall crisis from two perspectives:

• Decide what manufacturers must do to entice community folk to buy more homes!

• Decide what features community owners wanted in new housing product to buy & sell!

Result? Manufacturers agreed to begin producing “…single section and modest-sized multi-section HUD-Code homes with updated, attractive, functional, and durability-enhancing features…” Quoting from sales literature at the time. The features? Shutters on exteriors of windows, vaulted ceilings, asphalt shingles and roof overhangs, linoleum in kitchen, utility room and front door areas, 40 gallon hot water tank, 200 amp service, wood cabinetry, non-plastic sinks, tubs and shower stalls. NOTE the numerous durability-enhancing features; to keep turnover maintenance expenses low, and speed ‘make ready’ between tenants and or homeowners/site lessees.

This ‘new line of manufactured homes’ did not receive a working name until seven months later, when landscape architect consultant Don Westphal proposed, at the Networking Roundtable, we call them Community Series Homes. This, in recognition of the demise of Developer Series Homes, manufactured during the 1990s, as ‘big box = big bucks’ land-and-home packages, in failed competition with traditional site builders.

Consequence of this action? During 2009, only 24% of all new HUD-Code homes were sold directly into land lease communities (i.e. bypassing independent-street-MHRetailers and ‘company stores’). By year 2015, more than 40% of all new HUD-Code homes were being sold directly into land lease communities. In other words/numbers: 2009 = 12,000 homes; 2015 = more than 28,000 homes. Some say 16,000 more Community Series Homes, upping the 2015 total to 70,544!

There’s one more piece to this ‘solving the shipment volume crisis’ puzzle to be acknowledged, though it’s seldom described or discussed. And that’s how land lease community owners/operators, many for the first time in their careers, learned how to effectively market and sell new HUD-Code homes on-site within their communities, not relying on aforementioned MHRetailers. How’d this happen? IMHA/RVIC (Indiana) state association led the way, with a novel ‘Two Days of Plant Tours & Home Sales Seminars’ program, again – hosted by the RV/MH Hall of Fame, in Elkhart. Here, community owners/operators learn:

• How to get their properties (and staff) ready to sell new HUD-Code homes

• How to spec and buy new homes directly from factories, in accords with their local housing market’s Area Median Income (‘AMI’), and not solely on the advice of corporate sales representatives.

• How to actually market and sell new homes, using product and property USPs (Unique Selling Propositions) and the Six Right Ps of Marketing.*1

• How to seller-finance new home-only sales transactions via cash, lease-option, and conventional sources of chattel or personal property financing.

Well, there you have the ‘answer to the first MHShipment crisis’; pretty much where we are today – as we face yet another similar crisis.

Again; HUD-Code housing shipment volume during year 2019 was 94,615; no one expects this year (2020) to eclipse that number. Guestimates? Some say 90,000; others suggest 92,902 = which is the number shipped during year 2017.

So, where do we go from here? Well that is not an easy question to ask and even more difficult to answer, for these reasons:

• ‘Let Kevin, Bill & Mark do it!’ One would expect the Big 3-C manufacturers (Clayton, Cavco, & Skyline-Champion) to be publicly (to avoid accusations of collusion) working this out among themselves, but are they? Not that I know of. So, likely a non-starter.

• Second. Who am I, to be addressing this crisis issue? As a 40+ years freelance, factory-built housing consultant and land lease community owner, I planned and hosted the 2/28/2009 meeting in Elkhart, and believe I could, with assistance from one or both national advocates for manufactured housing, do so again! Will that happen?

• Third. Some say this crisis is within the purview of two national advocates for manufactured housing – and they’d be right, except for one controversial reason:

The most recent design innovation, championed by one advocate, intended to address said crisis, has not been successful to date! Specifically, the CrossMod™ product line, according to 2019 DTS reports by Fannie & Freddie, saw only six MH Advantage loans (Think CrossMod™ homes) bought that year, of which only two were DTS eligible. So, there’s territorial jockeying, maybe even hard feelings in play at this point.

What do YOU think we should do going forward? If you offer no suggestions, and don’t encourage me to continue down this crisis-resolution road; well, guess ‘you’re part of the problem’ and there’ll be no short term crisis solution… Do I have a definitive answer in mind at present? No I don’t. But I’m a strong believer in ‘group think’ and brainstorming, where business matters are concerned. And as far as I’m concerned, We haven’t even started on this!

And there’s this bugaboo; a.k.a. ‘The cow is already out of the barn!’ When land lease community owners/operators routinely market and sell new HUD-Code homes on-site, as they do now, local housing market MHRetailers are understandably reluctant to send qualified, motivated would-be home buyers into communities to select a rental homesite, fearing they might be poached there. How to resolve this sensitive matter? Do we even want to do so?

In closing, I’ll say this. Just like it wasn’t until the strangely-named ‘Ah Ha! & Uh Oh! Worksheet’*2 came along, in 2009, weaning land lease community owners/operators away from 100% reliance on manufacturer’s rep advice as to new home specs and pricing, we now – in my opinion – must go the next step. How so? We know the AMIs of local housing markets – usually defined by postal zip codes, and how AGI (annual gross income) of would be homebuyers, ‘should’ determine how much new home is to be transacted. A dynamic combination of this core information should be researched, prepared, and widely distributed, in print and or online, throughout the U.S. In other words, provide a ‘next generation tool’ by which community owners/operators can determine 1) what their local housing market will bear and 2) what specific customers can truly afford!

POSTSCRIPT. Just how serious is the (home sales resources) disconnect, raised in the previous paragraph? Well, How to Successfully Sell New & Resale Manufactured Homes was authored by Gary Pomeroy, of Golden West Homes, way back in year 1977 – that’s 43 years ago! Sure, there’s been a plethora of HOW TO advice over the decades (e.g. the late Grayson Schwepfinger, Joe Morris,’ Lonnie deals’, et. al.), but Gary’s tome remains the ONLY text to specifically deal with this important subject! What I’m proposing here, is ‘someone’, who’s qualified, experienced and motivated in MH marketing and sales – within and outside land lease community environments (i.e. They’re two really different sales perspectives), to use this shipment crisis education opportunity, to help (save?) the manufactured housing industry, and frankly, ensure their personal professional legacy! Are YOU the person for whom this paragraph is penned? If so, and you’d like advice and or assistance going forward, email me at gfa7156@aol.com This is not a project for me, but we have resources available to this end.

End Notes

1. Six Right Ps of Marketing: product, Place, Price, Promotion, People, Process. For a FREE copy of a 3X5 plastic wallet card containing details of these six ‘Ps’, phone # @ end of End Note # 2.

2. “…estimates maximum recommended ‘affordable’ & ‘risky’ purchase prices for new & resale, privately-owned homes of any type, sited on realty owned fee simple with home or ‘home-only’ on leased land.” For a FREE copy of the ‘Ah Ha! & Uh Oh! Worksheet’, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

II.

RV/MH Hall of Fame Induction Banquet Postponed until 3 December 2020!
For additional information, phone (574) 293-2344. Event details to follow during months ahead. I’ve already changed my hotel reservations to ensure being present for this gala annual event!
***

George Allen, CPM, MHM
EducateMHC

Blog Posting # 592 @ 3 July 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, and communication media, for all land lease communities throughout North America!

To input this blog&/or affiliate with EducateMHC, telephone Official MHIndustry HOTLIUNE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: To promote HUD-Cade manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: Everyone associated with national manufactured housing advocacy (i.e. MHI & MHARR for starters), has already weighed-in with their respective responses to HUD’s PD&R Winter/Spring 2020 edition of Evidence Matters. MHI, as usual, was supportive and complimentary. MHARR, not so; rather describing the subject matter as ‘An Unequaled Opportunity about to Go to Waste’, considering HUD writers’ light treatment of regulatory barriers to all forms of factory-built housing, especially HUD-Code manufactured housing; and, home-only financing (a.k.a. personal property or chattel capital). With that said, what follows here, are a few of my observations, pro & con, relative to industry statistics, trade terminology, ADUs, ROCs, and CrossMod™, all covered therein.

Feature article begins (pp.4&5) with a well-penned, but still shaky, summary of HUD-Code manufactured housing statistics:

• In 2018, 37 percent of all new HUD-Code homes “…were placed in manufactured home communities (parks, courts, or subdivisions).” I was OK with this until reading the word ‘subdivision’ in a sentence/stat that historically relates to land lease communities. More on the terminology issue shortly.

• Most new homes (65%) were placed on piers (also known as blocks). Really?

• ‘Most new homes were placed outside manufactured home communities.”

• ‘The average sale price of a new manufactured home in 2018 was $78,500 ($52,400 for a single-piece home and $99,500 for a two-piece home.” OUCH! We stopped making ‘singlewide & doublewide’ differentiations decades ago; today preferring ‘single section & multi section’ manufactured homes. But ‘single-piece & two-piece’ homes? NOT. This obviously penned by a novice to manufactured housing.

Trade Terminology. Here we go again; referring to past editions of Evidence Matters, where/when manufactured housing trade terminology was ‘all over the place’. It still is! As you already read in the first bullet point, no fewer than four terms are used to describe this unique, income-producing property type! Which raises the question, ‘Why include subdivision in this list?’ It’s a different application of property rights – those conveyed fee simple, not leaseholds.

So what are other terminology shortfalls? Manufactured housing communities (p.10), manufactured communities, p.10, park (owners) p.10), manufactured home community (pp.5, 9, 11), and – what should have been used all along, land lease communities (p.10). Perhaps the next manufactured housing-focused edition of Evidence Matters will get this matter right!

Accessory Dwelling Units or ADUs. Yes, like Tiny Houses (though not mentioned in this piece), a mini-housing fad of the decade (2010-2020). Don’t misunderstand, I’m a fan – just would not, could not, ‘live’ in one of them (e.g. ‘How does one ‘make up one’s bed’ when two corners are pushed against two walls?’). But they’re a good ‘bait & switch’ housing sales ploy – as ‘many land lease community owners, selling new HUD-Code homes on-site, have learned’! My beef? No definition as to what constitutes an ADU! Presumably, and ADU has to be livable, but what size? Methinks, less than 400 square feet in size to exempt it from the HUD-Code. Would have been helpful to learn those details here.

Emphasis on ROCs or resident-owned communities. According to this article, only 2.4 percent of all land lease communities in the U.S. today are ROCs. And for them, that’s Great Progress! However, only critical mention of the other 97.6 percent of land lease communities. Why the extreme imbalance? Is there a political or societal axe to grind here? Plus, the ROC info was supplemented with no fewer than three attractive color photographs of said properties. And then there’s this intriguing sentence:

“Residents of these communities are able to keep their site fees below market rates, make health and safety improvements, engage with other community members, and enjoy other economic benefits such as being able to sell their homes more quickly and for higher prices.” P.11

When I checked the origin of the footnote documenting these glowing advantages, I learned it was simply an email message, not a formal study of any kind. HUD should do better than that.

CrossMod™. Don’t think the writer really knows what’s going on here with this new design of HUD-Code manufactured home. It is NOT a ‘financing vehicle’, but a housing product with features designed to appeal to manufactured housing’s underserved markets: millennials, retirees. Furthermore, it is a HUD-Code home designed for placement on scattered building sites conveyed fee simple. And both GSEs (Fannie Mae & Freddie Mac) have customized ‘financing vehicles’ to support the CrossMod™ concept.

Here’s a puzzle for you. Two stats were prominent in this article. 37 percent of all new homes in 2018 went into land lease communities; and, “…as many as 53 percent of new manufactured homeowners owned the land and might have been eligible for a mortgage but instead financed their home with a personal property loan.” Frankly, I don’t believe the latter figure is accurate and here’s why:

2008 = 96,555 new HUD-Code homes shipped X .37% = 35,725 new MHs into LLCommunities

2008 = 96,555 new HUD-Code home shipped X .53% = 51,174 new homes maybe mis-financed

Now, subtracting 35,725 from 96,555 (2018 shipment volume total) leaves 60,830 new MHs going elsewhere (outside LLCommunities), in turn leaving but 9,656 new MHs ‘properly financed’ onto private building sites in and out of subdivisions. These figures don’t feel right to me. In manufactured housing we do a better job with home financing than those numbers suggest. Think the providers of the 53% stat need to dig deeper….

My ‘rub’ with the staff of Evidence Matters, and by extension, some staff at HUD, is this: When researching and preparing an article like this, that’s going to explore HUD-Code manufactured housing and land lease communities, make it a point – in the near and interim future – to reach out and actually converse with capable, experienced industry and realty asset class professionals, who actually ‘make their living’ in these two closely-related fields of housing endeavor! Think how much more accurate, interesting, and useful the end product will be!

If you’d like to comment on the content of this blog posting, do so via gfa7156@aol.com or write GFA c/o 170 Commerce Dr., Franklin, IN. 4613. Also visit www.educatemhc.com

GFA/cc

Blog # 591 @ 26 June 2020; Copyright 2020. Educatemhc.com

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, and communication media, for all land lease communities throughout North America!

To input this blog &/or affiliate with EducateMHC, telephone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: To promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: Ah, this is a classic GOOD NEWS/BAD NEWS Communique!

I.

Land Lease Communities Extolled by NREI Magazine

“Manufactured housing properties are not only surviving the economic crisis created by the spread of the novel coronavirus. By some accounts, the sector is thriving compared to other types of real estate. There are some estimated 50,000 land lease communities of all sizes in the United States. Of these communities, a majority are properties comprised of 100 or fewer rental home site, and a minority are properties with 100 or more rental home sites. The larger properties, consisting of 100 or more sites, are already widely owned by the 500 known major players.” P.9 June 2020 issue of NREI magazine.

In my opinion, this superior operating performance (i.e. relative to physical and economic occupancy measures) during the coronavirus pandemic, has been one of the better kept positive secrets among land lease communities. Sure, there are, and continue to be, exceptions to this generality; but time and again, I hear reports of near 100 percent rental homesite fee collection! Reason? Can only guess at this point, but probably due to homeowner/site lessees being sincerely grateful to be living a lifestyle replete with an eminently affordable home.

II.

The Other Side of the Land Lease Community $ & Lifestyle Coin

Here’s correspondence penned by a 20 year homeowner/site lessee (i.e. resident, tenant) of a land lease community in Montana.

“…they…raised our lot rent – the monthly fee we pay for the land our homes sit on – from $285 to $450. They also started charging us new fees, like for garbage and water, which used to be included in our monthly lot rent. When you add in the extra fees, the new property owner) basically doubled our rent. And they have indicated more increases are on the way.”

What’s happening here is not unusual these days! Consolidators (i.e. land lease community portfolio owners/operators from within or outside the manufactured housing industry), in order to acquire investment grade (i.e. usually more than 100 rental homesites) properties are willing to over value and over pay for them – in the near term, enriching the sellers; but in the long term, financially handicapping homeowners/site lessees. Once in control, and to be able to pay the already known operating expenses, AND very large debt service (mortgage) payments, the new owners/operators increase the site rent rate to whatever level accomplishes these ends.

So, what’s going on here, besides the obvious? Different people call these circumstances different things. Some say profiteering (i.e. ‘making an unreasonable profit on the sale of goods’ – and or leasing scarce property rights and housing units); others say predatory land lording (i.e. ‘seeking to exploit or oppress others’), while still others simply call it capitalism.

Consequences? For those, we’ll have to, for the time being anyway, wait and see. Seriously. During my 40+ year career in manufactured housing I’ve seen and experienced our industry’s ‘boom to bust and back again’ scenario over and over. Examples:

• Mid 1970s when new ‘mobile home’ shipments experienced their historic acme level (i.e. 579,940in 1973), plummeting when prudent lending practices among banks and service companies all but disappeared, and credit (repossession loss) insurance companies unaware of their extreme exposure to uncontrolled loss ‘crashed’.

• Loan term limits in 1980 were extended out to 20 years, increasing to 30 years by 1995. Result? No equity on most ‘home-only’ loans, for extended periods of time, and down payments dropped from ten to five percent.

• During late 1990s, as manufactured housing firms competed with traditional site-builders for ‘land and home’ package sales and placement, emphasis on ‘big box = big bucks’ focused marketing attention away from in-land lease community installation of new HUD-Code homes. Consequences? Loss of easy access to chattel capital for new home seller-financing. And our industry experienced a two decades long paradigm shift characterized by new homes sold, less and less, by independent (street) MHRetailers and ‘company stores’, and more and more, directly into land lease communities (e.g. 24% in 2009; 40+% by 2016).

Now it’s two decades later and we still, as an industry, have not returned, or eclipsed the 100,000 new HUD-Code homes shipped annually benchmark. And what’s happening at the behest of some portfolio owners/operators of land lease communities, relative to rental homesite rates as just described, will not stimulate new home sales and placements! Rather, the practice is akin to ‘shooting oneself in the foot’!

Blog # 590 @ 19 June 2020; Copyright 2020. Educatemhc.com

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

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I.

Industry Watchdog Cuts Through the BS

Were you privy to, and did you read, MHARR’s ‘take’ on HUD’s Office of Policy Development and Research (‘PD&R’) publication titled, ‘Evidence Matters’, released during June 2020? If not, I encourage you to phone (202) 783-4087 and ask its’ author, Mark Weiss, to send you a copy! *1

Why? Because Mark goes to great length to make his case, ‘An Unequaled Opportunity (Is) About to Go to Waste’! Specifically, he calls HUD out for not acknowledging ‘exclusionary zoning is a major problem for the manufactured homes it regulates’ – knowing all the while, it (‘HUD’) ‘has the statutory authority to preempt exclusionary edicts.’ And Mark goes on to describe, in detail, ‘the discriminatory lack of any meaningful federal support for manufactured home consumer financing.’ He also decries the lack of complete implementation of the Manufactured Housing Improvement Act of 2000 (a.k.a. MHIA@2000), though acknowledging the (hopefully) soon arrival of Ms. Dana Wade back at HUD as ‘the top-level political appointee with direct authority over the federal manufactured housing program.’

Stimulated enough to contact MHARR for a copy of this four page communique?!

End Note.

#a. Manufactured Housing Association for Regulatory Reform, or MHARR.

II.

What to Expect in ‘SmittyAlpha6’ Autobiography

What has been your major stay-at-home project during the coronavirus hiatus these past four months? Well, one of mine was to (maybe) finish the autobiography I’ve been penning these past several years…since finishing SWAN SONG in 2017, the combined history of manufactured housing shipments since 1955, land lease communities since 1970, and some of my career experiences. That book, by the way, is still available for purchase from EducateMHC: visit educatemhc.com Contains more MH & LLCommunity info than any other book heretofore published, or that is ‘in print’ today!

Well, I’ve pretty much completed the autobiographical narrative; now deep into content editing and proofreading for clarity and grammar usage. When will it be completed, printed, bound, and ready for distribution? Too early to tell, maybe later this year, more likely during early or mid-2021. In any event, here’s a taste of extraordinary life experiences already described therein….

As a toddler, I fell into an open cesspool behind our home in New Jersey and nearly drowned. Years later, my father taught me an ‘old foundry man’s trick’, of running one’s bare hand (in my case, two fingers) through a one inch thick stream of molten aluminum poured from a red hot crucible into a green sand mold – without being maimed! While in Vietnam, I was trained to chest-carry a soccer ball-sized nuclear munition, via helicopter, to the outskirts of Hanoi to destroy a major bridge. And shortly after returning home from overseas, our reserve USMC infantry company was activated in the middle of the night, issued combat arms and live ammunition, deputized, and ordered into Delaware River –flooded Chester, Pennsylvania, to restore law and order. A patently illegal, unprecedented, historical misadventure! Another decade later, I worked for a multiple mobile home parks owner, from the Middle East, who settled his Indiana and Kentucky major business losses by murdering a dozen attorneys and their clients, using an Uzi submachinegun, in a high rise office building in downtown San Francisco, California. And there’s more….

FYI. ‘SmittyAlpha6’ is the working title for the autobiography. What’s it mean? During the last six months of my combat tour in the Republic of South Vietnam, during 1968 & 69, I was commanding officer of A-Company, 3rd Shore Party Battalion, 3rd MARDIV. ‘SmittyAlpha6’ was my radio call sign.

III

WHITE PAPER

You likely first read about a WHITE PAPER, prepared by Next Step President Stacey Epperson & Clayton Homes Director of Communications Audrey Eason, in the current issue of MHInsider magazine. Therein, the article was titled ‘The Value of Manufactured Homes’. Did you read it? I did and was motivated to chase down a copy of said WHITE PAPER. Here’s some of what I learned from it:

• A thumbnail summary of mobile home and manufactured housing history

• A history and description of ‘affordable housing’ in U.S. markets – but sans any working definition.

• Too few ‘starter homes’, i.e. “…two-thirds of renters intend to continue renting because of financial reasons, up from 59 percent two years ago – with 11 million Americans spending more than half their paycheck on rent, according to the Home 1 Advocacy Campaign…”

• CrossMod™ “…new class of HUD-Code homes is gaining traction in larger metropolitan areas – and challenging zoning ordinances that have limited manufactured housing in the past. These homes are available at a smart, attainable price-point around $200,000, with land, in most markets.”

• Role of off-site built homes in disaster recovery plans.

• “…off-site homes can appreciate (in value) at nearly the same rate as onsite-built homes, with the national housing index experiencing an average annual increase of 3.8 percent…” Sorry; but I need to see more ‘stats’ on that one. In my experience, the only two large land lease communities, in the U.S. where large HUD-Code and modular homes routinely appreciate in value, are SaddleBrook in Grayslake, IL., and Bay Wood in Lewes, DE.

Of course there’s more in the WHITE PAPER than is being described here. One of the lingering questions, in my mind, is where do land lease communities figure into this off-site built housing picture? After all, nearly half of all new HUD-Code homes are now sold directly into land lease communities nationwide, where they are then sold and often seller-financed by the property owners/operators. Seems, to me, this WHITE PAPER delivers but ‘half a loaf’ where the overall manufactured housing industry is concerned. But hey, that’s just me a-thinking and commenting.

Hmm. Perhaps we now need a WHITE PAPER extolling ‘price point’ superiority of new off-site, HUD-Code manufactured homes going directly into land lease communities from factories. Any ‘takers’ out there? I’d be pleased to assist….

***

George Allen, CPM, MHM