Uncategorized « George Allen / EducateMHC Blog

September 15, 2013

Status Quo Slow or Game Changer Quick, & Mission Statement…

Filed under: Uncategorized — George Allen @ 4:38 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Resource reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America!

Opportunities to respond. ‘Critiques, reactions, & suggestions for future blog coverage: gfa7156@aol.com or Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.’

‘Status Quo Slow’ or ‘Game Changer Quick’?

II.

NEW ERA Mission Statement for Land Lease Lifestyle Communities!

***

‘Status Quo Slow’ or ‘Game Changer Quick’?

Had a Pithy Topic in Mind & This Title; Then Along Came These Emails…

To this day, I regard Charles (‘Chuck’) Fanaro, developer/operator of beautiful Saddlebrook Farms land lease lifestyle community (A.k.a. manufactured home community) in Grayslake, IL. (West of Chicago), and owner of Hi – Tec Housing, Inc., in Elkhart, IN., (a HUD – Code home manufacturer) to be one of the most visionary entrepreneur businessmen during the 70 year history of HUD- Code manufactured housing!

And lately, I’ve come to regard Steven Lefler, vice president of Modular Lifestyles, Inc., domiciled in southern California, in similar fashion. Steven’s vision and expertise is in the realm of innovative HUD – Code home design, characterized by solar – power off – grid capability and near independence from water resources. Additionally, the firm he works for routinely retrofits functionally obsolete rental homesites, in decades old ‘mobile home parks’ in California, with Solar Green Porch Homes. Reach him via steve@modularlifestyles.com

As the result of a recent exchange of emails between us, I reached out to a couple dozen individuals I consider to be national leaders throughout the HUD – Code manufactured housing industry and the LLLCommunity realty asset class. What follows from here, is a lightly edited version of those email conversations between us, beginning shortly after his reading of last week’s (8 September) blog posting at this website.

STEVEN to GEORGE. There’s an attractive chattel finance alternative available in California, when siting solar power energy – equipped, highly energy efficient homes! LLLCommunity owners are offered a 50% financing purchase option, at low interest rates, by lenders who believe these specially – equipped, nearly ‘off power grid’ homes are a major WIN – WIN for the property owner, as well as the renter or buyer of said home; in large part due to the major utility cost savings.

Furthermore, in California we’re being mandated to have Modular Lifestyle type homes in place by year 2020! We just happened to have designed and developed working HUD – Code homes that fully comply, well before others will be ‘forced to do so’. We are image busters as well, having been recognized as ‘Best in Class’ among retrofitted LLLCommunities, given installations of our innovative, energy efficient housing model.”

Then we banter back and forth about Steven’s plans to incorporate wheel chair lifts into Solar Green Porch Homes; and my ‘decades past’ experience with LLLCommunity portfolio owners/operators in search of ways to keep older, increasingly feeble residents on – site in their properties. And how – due to younger, healthier retired residents’ angst about such ‘new features’, these plans were scrapped. What features? Ramping existing driveways up to door threshold level to ease ingress and egress from vehicles into homes; installation of grab bars, emergency call devices, and wheelchair accessible vanities throughout the home. Why the angst? These features were viewed as unwanted daily reminders of what ‘they’ could expect in years to come – when they became frail and feeble.

Steve then talked and defined Universal Design (i.e. ‘Broad spectrum of ideas meant to produce buildings, products, and environments inherently accessible to older people, those with and without disabilities’) as it related to HUD – Code manufactured homes, citing failures on their part, as he saw it, to be sensitive to changing homebuyer demographics, not having a national brand marketing program, image issues, and the like. It was at this point; I decided to share his forward – looking message with peers in the MHIndustry and LLLCommunity asset class, via blast email, and now this blog posting.

GEORGE to STEVEN. “In a few short paragraphs, you clearly – in my opinion – identify the sorry lack of national and regional market sensitivity (e.g. regarding changing demographics, etc), trend foresight per ‘housing needs’, MHIndustry strategic planning, and more (e.g. national brand promotion, image improvement, etc.), all perennially characteristic of our factory – built housing business model, and in large part, it’s unique, income – producing property type or component as well.

My hope is, one or more of the mostly entrepreneur businessmen and women (receiving this email message & reading this blog posting), will agree with the content of the previous paragraph – and use the type forward – thinking you espouse, maybe even some of the critique I oft voice in our blog and op/ed pieces, to get motivated to finally say collectively:

It’s time NOW, to figure out HOW to bring MHIndustry & LLLCommunity asset class ‘thinkers’ & ‘do’ers’ together in an inexpensive national, retreat style forum – along the lines of two National State of the Asset Class caucuses we facilitated in 2008 & 2009, to finally and effectively address various market, brand, and image matters – in an open, creative, strategic, industry wide fashion! Such a gathering must be Open to all businessmen and women willing to pay a reasonable price to participate, whether a national advocacy body member or not.

I know I’ve often talked about ‘doing this’ in the past, and frankly, if the lions’ share of participants were to be LLLCommunity owners/operators, I’d do so in a heartbeat! But this matter, the way you articulate it – and in truth, the way it must happen, has to involve every major segment of the entire MHIndustry, especially LLLCommunity owners/operators! That’s why such an inexpensive national, retreat style two day venue, maybe even this Winter, must be organized and promoted by One – or the Other, of the two present day advocacy bodies; better yet, both of them working together!

All I can do here is; once again, make the continuing and pressing need for grand thinking, strategic planning, and needed action known; along with the sincere hope this timely Change Challenge Opportunity finally falls on receptive leadership ears. Otherwise, our unique business culture continues adrift – one more reason to believe the MHIndustry will continue on at a snail’s pace of only 50,000+/- new HUD – Code homes shipped per year ad infinitum!

Yet another reason for this ‘stuck in neutral @ 50,000+/- homes shipped’ belief? GSE reform! If pending GSE reform legislation does not contain definitive and mandatory language, to the effect HUD – Code manufactured housing’s chattel mortgage securitization SHALL be included as an integral part of said reform, rather than just saying, ‘may’ be included, we’ll – as an industry, be ‘dead in the water’ going forward – much to the pleasure of our housing competitors, maybe even some folk within the MHIndustry.

Well, I’ve thrown out the Change Challenge Opportunity. Now let’s see if one or more of our MHIndustry Leaders picks it up and, figuratively speaking, Runs with it ‘Game Changer Quick’; or once again, let’s everyone remain stuck in ‘Status Quo Slow’?

II.

NEW ERA Mission Statement for Land Lease Lifestyle Communities!

A NEWER ERA for land lease lifestyle communities (A.k.a. manufactured home communities) will be characterized by 1) effective national political and regulatory matters – related advocacy, 2) ongoing operational statistical research reporting, 3) routine and timely print and online communication, 4) widespread resources distribution, 5) superb peer networking, 6) realty deal – making opportunities, and 7) professional property management training and certification; for properties of all sizes, from coast to coast!

***

George Allen, CPM & MHM
Box # 47024, Indianapolis, IN. 46247

(317) 346-7156

Comments (0)

September 8, 2013

Wha’s the Chattel $$$Buzz All About?

Filed under: Uncategorized — George Allen @ 4:19 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America!

Opportunities to respond. ‘Critiques, reactions, & suggestions for future blog coverage: gfa7156@aol.com or Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.’

What’s the $$$ Buzz About?

Networking Roundtable Set to Celebrate 20 years Camaraderie; ‘Splain’ all ‘bout Chattel Capital Sourcing; Talk of a Private Equity Fund; Promote One’s Brand via Social Media; Examine Good & Bad Realty Deals; Talk to a Dozen+ RE Lenders; &, Learn to Use the ‘5RPs of Marketing’ in Three MH & LLLCommunity Scenarios….

But here today, we’ll focus only on Chattel Capital Sourcing! With permission, I’m quoting from recent email exchanges between one of the manufactured housing industry’s most respected state association executives, and a land lease lifestyle community owner/operator with two decades of hands – on experience, self – financing new and resale home transactions among his properties.

“Yes, ‘stupid money’, especially pertaining to chattel financing available to independent (street) MHRetailers, is likely (Let’s hope!) a thing of the past. However, low interest rates, fewer lending/investing alternatives, tighter credit, more banking regulations, and new willingness on the part of many LLLCommunity owners to truly WORK WITH lenders, appears to be why more (new) lenders are ‘sniffing around’ the manufactured housing industry today. (Some will be at the Networking Roundtable! GFA)

In the meantime, most independent third party chattel lenders (i.e. until recently known as the Big Four + One) or ‘A’ lenders, are apparently doing as much manufactured housing business as they have an appetite for, by focusing on borrowers whose minimum FICO scores are above 650 points. That singular criterion eliminates upwards of 90 percent of those interested in buying new manufactured homes in most all age land lease lifestyle communities! When processing applications for site rent, home rent, or lease – option contracts, LLLCommunity owners generally place more emphasis on front – end & back – end, debt – to – income (or DTI) ratios, employment factors, and rental or criminal histories.*1 In fact, for many LLLCommunity owners/operators, the sole use for FICO scores, is to determine if the applicant should be referred to an ‘A’ lender. (That’s a 180 degree reversal from 20 years ago! GFA)

Furthermore, and confirming the point made in the previous paragraph, severe attrition among independent (street) MHRetailers during the past ten years, and past severe chattel finance losses, suggest the present and future financing ‘play’, these days, may well lie with LLLCommunities, where lenders & property owners form symbiotic relationships, beneficial to all THREE parties involved in a MH finance transaction: the lender or source of capital, the community owner, and prospective homebuyer/mortgagor/site lessee.

To this end, new concepts are being floated to see what gets traction. For example, some involve the purchase of existing chattel notes, and other seller – finance vehicles (e.g. rental and lease – option contracts), and expectation the lender/buyer assumes all risk, citing outrageous cost of funds, @ 15 – 20% per year, to the LLLCommunity owner. Only those note sellers who’re desperate, or holding worthless paper, are likely to be interested; likely resulting, over time, in a potential lose – lose transaction for all involved. (One of several motivations sparking interest in launching a Private Equity Fund. Discussion scheduled at the Networking Roundtable. GFA)

The 21st Mortgage Corporation’s 1 ½ year old C.A.S.H. Program, and the novel in – house finance program offered by Legacy Homes (Texas) are good examples of mutually beneficial relationships much more acceptable to LLLCommunity owners. Both are relatively new and still being tweaked. Word ‘on the street’ is announcements are in the offing, citing significant improvements to both programs – maybe even at the upcoming Networking Roundtable.

Another, mutually beneficial concept being considered for possible rollout, involves a hybrid floor plan program, where floor plan financing routinely provided by a HUD – Code home manufacturer to a MHRetailer (In this case, a LLLCommunity selling homes on – site), is extended to the point when the newly sold home is occupied! This concept is especially appealing to those manufacturers with strong balance sheets, and who are comfortable with the profitability of conventional floor plan financing. (You will only learn about this alternative, at the Networking Roundtable. GFA)

Yet another interesting and recent development, involves new working relationships LLLCommunity owners are establishing with local banks, to fund the acquisition of new homes, and in some cases, effecting the origination and servicing of home mortgages on – site. Various combinations of recourse and underwriting criteria are assuring profitable returns to the lenders; isolation from S.A.F.E. Act licensing for LLLCommunity owners; and, attractive financing for the homebuyer/mortgagor/site lessee. And at least one effort is underway to establish this type ‘small bank’ program throughout an entire geographical region.

Captive finance. This typically refers to either an in – house finance program that originates and services home mortgages, or a separate lending business altogether from the LLLCommunity operation. Since such practices, in the first instance, are prohibited without S.A.F.E. Act licenses, in – house origination/servicing efforts are, or should be, practically non – existent. Other LLLCommunity operations opt for the second alternative. And there are LLLCommunity owners who effect captive finance programs, employing lease – option contracts in states where the use of such arrangements doesn’t require S.A.F.E. Act licenses. An interesting captive finance twist, that likely avoids S.A.F.E. Act licensure, is offered by a few chattel lenders who originate home mortgages, then sell them back to the LLLCommunity owners, while retaining the servicing of said mortgages. And one recent arrival on the third party independent chattel lender scene apparently originates home mortgages on homes sold by the host LLLCommunity, using funds supplied by the property owner per se. (Mr. ‘Captive Finance’ will be presenting at the Networking Roundtable! GFA)

Finally; there’s the old, albeit effective, practice of working with private investors to finance the acquisition of new homes and mortgaging thereof. Millions of private investor accounts, many with balances well over $100,000. actively search, online and off, for practical ways to beat today’s record low ROI opportunities, and the highly volatile stock market. This reality now includes IRA custodians, who routinely include manufactured housing ‘How To’ investing sessions during their annual conferences. (Want to attend one of these? Info available at Networking Roundtable! GFA)

There are even attractive chattel finance alternatives available – in California, when siting solar power energy equipped, highly energy efficient homes. There, LLLCommunity owners are offered a 50% financing purchase option, at low interest, by lenders who believe these specially – equipped, nearly ‘off power grid’ homes are a major WIN WIN for the property owner and the renter or home buyer; in large part, because of major utility cost savings. Last year’s Roundtable featured one of these specialty homes!

Bottom line for LLLCommunity owners/operators in need of chattel capital for new home purchases on – site and mortgaging of same? All is not gloom and doom in this investment arena; there’s more than one ray of bright light shining through to the MHIndustry and LLLCommunity asset class! Most of these ideas – and more, will be formal topics of discussion at the 18 – 20 September Networking Roundtable in Bloomingdale, IL; the Equity Trust annual meeting in Orlando during October; as well as SECO’s Third Annual Super Symposium in Forsyth, GA., 8 – 10 October. Ask, if you want more information….” *2

End Notes.

1. For those reading this blog posting, who’d like to learn more about the calculation of front end and back end debt – to – income (‘DTI’) ratios, read ‘Contemporary Archetype of Affordable Housing in the U.S.’, featured in the August issue of the Allen Letter professional journal, and or chapter six of the new book, The First 20 Years!. Both available from PMN Publishing via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Sample Allen Letter is FREE, or one year subscription @ $134.95 (12 monthly issues). The book is $19.95.

2. SECO Super Symposium is a two day seminar and new home exhibit planned and hosted entirely by land lease lifestyle community owners/operators in the Southeast. Last year’s event attracted more than 150 attendees; more than that expected this year.

***

II.

And That’s Not All That’s Happening!

Here’s a taste of Three Things to On Their Way Now, & or Coming During, & After this Year’s 22nd annual International Networking Roundtable, 18 – 20 September, in Bloomingdale, IL.

* The cover letter and questionnaire, used to research, prepare, and publish the annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Land Lease Lifestyle Community Portfolio Owners/operators Throughout North America!’ is ‘on its’ way’ to 500+/- known firms in the U.S. and Canada. If and when you receive the mailer, please complete it and return to, via FAX (317/346-7158), on or before 30 September 2013 – coincidentally, the date of MHI’s NCC meeting in Carlsbad, CA. The 25th anniversary edition of the annual ALLEN REPORT will be distributed as a lagniappe (FREE) in the January 2014 issue of the Allen Letter professional journal. Otherwise, the retail price of the ALLEN REPORT is $500.00/copy. So, if not presently an Allen Letter subscriber, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 to subscribe @ $134.95/year (12 monthly issues). Being the 25th anniversary year of the ALLEN REPORT, a very special edition is being planned. As a LLLCommunity owner/operators, you will surely want to have a copy to refer to regularly throughout the year 2014 and beyond.

* The Dawning of a NEW ERA, is something more and more land lease lifestyle community owners/operators talk about openly these days. Hard to say when ‘that talk’ began; but in my opinion, it was as far back as 27 February 2008, at the first National State of the Asset Class (‘NSAC’) caucus, held on – site at FountainView LLLCommunity on the west side of Tampa, FL. There and then, more than 100 businessmen and women gathered to collectively plan the future of their realty asset class, agreeing on a Five Point Plan, later elaborated upon at a Networking Roundtable, by Randy Rowe, founder and chairman of Green Courte Partners/American Landlease. To date, no other national forum, with more than 100 LLLCommunity owners/operators in attendance, has provided a like opportunity!

NEW ERA ‘talk’ took on some urgency, a couple years later, when I publicly announced, via the Allen Letter professional journal, plans to retire. The question became: WHO will take on the statistical Research, online and print Communication (weekly blog & two monthly newsletters), peer Networking (annual roundtables & periodic FOCUS Groups), as well as professional Property Management training & certification (via Manufactured Housing Manager® or MHM®) program responsibilities, and hosting of realty deal – making opportunities for land lease lifestyle community owners/operators, large and small, nationwide?

An early attempt to sell some or all these research, communication, networking, and training resources to a national advocacy body failed. And, to date, there’s been little success in identifying individuals with appropriate writing and verbal communication skills, underscored by industry and asset class experience (preferably with ownership cred), and high motivation – no, PASSION, for advancing the cause of affordable housing via manufactured housing and the land lease lifestyle community realty asset class! For that matter, if YOU, or someone you know, characterizes the three point SUCCESS formula of that entrepreneurial job description, let me know ASAP via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. We are making progress….

NEW ERA talk continues among small to mid – sized LLLCommunity owners/operators nationwide, and may even – though not planned for or scheduled to happen, ‘come to a head’ during, and or immediately following, the NCC meeting, in Carlsbad, CA., on 3 September 2013.

HOW SO? Well, that depends, to large degree, on two groups of land lease lifestyle community owners/operators, and how they decide, with or without my participation – as an elected leader – or not, to implement the following ‘platform’ description of what 50,000+/- LLLCommunities, large and small and nationwide, should expect from a…

‘NEW ERA for land lease lifestyle communities, characterized by these seven functions:

1) effective national political and regulatory matters – related ADVOCACY;

2) ongoing operations statistical RESEARCH & reporting, e.g. annual ALLEN REPORT, RE lenders’ registry, etc.);

3) routine & timely print & online COMMUNICATION via a weekly blog posting & monthly subscriber – supported newsletters;

4) widespread RESOURCE distribution (e.g. Helpful How To Info, various directories, a trade term glossary, & ongoing documented history of the asset class);

5) superb peer NETWORKING at annual Roundtables & Forums, and periodic FOCUS Groups;

6) realty deal – making opportunities;

7) professional property management training & certification, via MHM® & ACM® programs, for properties of all sizes!’

With that said, what groups of land lease lifestyle community owners/operators influence when and how this NEW ERA will emerge?

80+/- direct, dues – paying members of MHI’s National Communities Council (‘NCC’) division, and

36+/- LLLCommunity owners who’ve offered advice and supported the concept of a NEW ERA these past couple years – even though the movement didn’t have a formal name.

So, if YOU own one or more LLLCommunities, and want to influence and bring about an exciting NEW ERA for our unique, income – producing property type – OR express your personal and corporate satisfaction with the present day status quo,

Consider becoming a direct, dues – paying member of MHI’s NCC, by phoning (703) 558-0666 and get involved, by attending NCC meetings in February and June 2014

And or

Phoning the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, to express your support, and desire to participate during the months ahead.

* Watch your upcoming issues of the Allen CONFIDENTIAL! And Allen Letter professional journal business newsletters for a NEW Signature Series Resource Document, to join the dozen already in place (Think annual ALLEN REPORT, & RE Lenders Registry, and 10 other SSRDs). This one is untitled, but will contain all pre & post HUD annual new home shipment totals, with the latter years tagged in accords with ‘what happened’ that year; which HUD – Code home manufacturers garner more than 80% national market share of manufactured housing; and a brief history of LLLCommunity consolidation, from 1975 to the present day.

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

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America!

Opportunities to respond. ‘Critiques, reactions, & suggestions for future blog coverage: gfa7156@aol.com or Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.’

What’s the $$$ Buzz About?

End Notes.

***

II.

And That’s Not All That’s Happening!

Here’s a taste of Three Things to On Their Way Now, & or Coming During, & After this Year’s 22nd annual International Networking Roundtable, 18 – 20 September, in Bloomingdale, IL.

‘NEW ERA for land lease lifestyle communities, characterized by these seven functions:

1) effective national political and regulatory matters – related ADVOCACY;

2) ongoing operations statistical RESEARCH & reporting, e.g. annual ALLEN REPORT, RE lenders’ registry, etc.);

3) routine & timely print & online COMMUNICATION via a weekly blog posting & monthly subscriber – supported newsletters;

4) widespread RESOURCE distribution (e.g. Helpful How To Info, various directories, a trade term glossary, & ongoing documented history of the asset class);

5) superb peer NETWORKING at annual Roundtables & Forums, and periodic FOCUS Groups;

6) realty deal – making opportunities;

7) professional property management training & certification, via MHM® & ACM® programs, for properties of all sizes!’

With that said, what groups of land lease lifestyle community owners/operators influence when and how this NEW ERA will emerge?

80+/- direct, dues – paying members of MHI’s National Communities Council (‘NCC’) division, and

36+/- LLLCommunity owners who’ve offered advice and supported the concept of a NEW ERA these past couple years – even though the movement didn’t have a formal name.

Consider becoming a direct, dues – paying member of MHI’s NCC, by phoning (703) 558-0666 and get involved, by attending NCC meetings in February and June 2014

And or

Phoning the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, to express your support, and desire to participate during the months ahead.

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

Comments (0)

September 1, 2013

Only 18 Days; & Growing Pains = Groaning Pains

Filed under: Uncategorized — George Allen @ 4:00 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America!

Opportunity to respond. ‘Critiques, reactions, & suggestions for future blog coverage: gfa7156@aol.com or Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.’

Only 18 Days & Counting….

II.

When Growing Pains Become Groaning Pains

***

Only 18 Days & Counting….

22nd annual International Networking Roundtable,
in Bloomingdale, IL. @ 18 – 20 2013

Here’s how this year’s only national educational, peer networking, and realty deal – making event, designed specifically for land lease lifestyle community owners/operators, is shaping up ‘two weeks out’:

• If you’re ‘in the market’ to acquire LLLCommunities, you’ll be present at Marcus & Millichap’s Investors’ Symposium on Wednesday afternoon. At least three other national real estate brokerages will be present and including their listings among the more than 50 being showcased between 4 & 6PM.

• Gala Reception Wednesday evening is sponsored by Wells Fargo Multi – Family Capital Group. Frankly, ‘anyone who’s anyone’ throughout the LLLCommunity real estate asset class will be present that evening, from 6 – 8PM. It’s a veritable smorgasbord of national leaders, freelance consultants, and legendary players.

• Thursday morning! There’s no more exciting a day than when the Roundtable event begins. At this time, everyone will receive a copy of Bruce Savage’s new book, The First 20 Years!, the most comprehensive list of industry contacts available anywhere in the industry/asset class, and more!

• What other trade event do you attend, during the course of the year and as a matter of course, gives every single person gathered, an opportunity to stand and introduce themselves to the entire audience? This is one of the most popular and enduring features of the annual Roundtable event.

• Since this year’s theme is ‘Celebrating 20 Years of Camaraderie!’, there’s no more fitting a keynote presenter than Gary McDaniel, founder and chairman of YES! Communities, out of Denver, CO. Gary, among his achievements is former chairman of MHI, and before that, of the National Communities Council division.

• The RV/MH Heritage Foundation’s Hall of Fame, Museum & Library will be featured during the second keynote presentation of the day. Most LLLCommunity owners/operators are unfamiliar with this guardian of our industry and asset class’ legacy in Elkhart, IN. This is our opportunity to learn, and to show our support!

• Following this exciting start to the festivities, there’ll be more than a dozen educational seminars and panels Thursday and Friday; covering everything from product branding, electrical code, types of RVs, ‘ROCs’, RE deals good & bad, social media, ‘5-RPs of Marketing’, small owners emphasis, platform purchasing, benchmark statistics, and more.

• Thursday afternoon there’ll be a two hour forum, led by LLLCommunity owners interested in exploring the idea of starting a Private Equity Fund, for the purpose of providing chattel capital to qualified LLLCommunity owners/operators

• Friday morning, following the ever – popular Real Estate Lenders Panel, there’ll be ‘the first ever’ summary of all the chattel capital programs in effect today, from the ‘Big Five + One’ firms to several home manufacturer partnership programs, to online crowd funding, and more.

• At this writing, there will be no HUD – Code homes on display. When I first asked around, I received a lukewarm reception – which surprised me. One would think these firms would jump at opportunities to exhibit Community Series Homes for LLLCommunity owners/operators to buy. Evidently not. Is it possible they’ve simply become complacent at shipping only 50 – 60,000 homes per year?

• Saving the Best for Last, is how participants oft describe the final hour of every Roundtable event. And this year will be no different, as we caucus in the main conference room to engage in discussion regarding industry issues, current trends, and whatever topics LLLCommunity owner/operator participants desire to parse.

Well, there you have it. No fewer than ten major reasons to make your way to Bloomingdale, IL., between 18 & 20 September, to participate in the only annual trade event designed exclusively for LLLCommunity owners/operators and their favorite lenders. For more information and or to register, visit community-investor.com or phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

Postscript. Here’s what a former chief executive of one of the ‘Big 3 C’ HUD – Code home manufacturers (i.e. Clayton, Champion, Cavco), and past MHI chairman penned last week about this year’s 22nd annual Networking Roundtable: “I have a scheduling conflict, so cannot attend even a portion (of the program). It is great you have continued these confabs over the decades! Maybe this is another reason (land lease lifestyle) communities are now the bulk of the remaining (manufactured housing) industry!! Keep up the Good work. Best.”

II.

When Growing Pains Become Groaning Pains

The Historic Love – Hate Relationship Between Independent (street) MHRetailers and Land Lease Lifestyle Community (a.k.a. manufactured home community) Owners/operators is Renewing in Certain Local Housing Markets Across the U.S.

Amidst little fanfare, and even less recognition after the fact, a heterogeneous group of two dozen MHRetailers and LLLCommunity owners/operators gathered, at the invitation of Rainmaker Associates Bill, Judy & Chad Carr, in downtown Chicago, to explore past, present, and probable future interrelationships between these two distinct segments of the HUD – Code manufactured housing industry.

One result of this two day meeting was the drafting and circulation of a formal White Paper titled: ‘Street Retailer & Community Sales Centers’. Specific contributors to said White Paper included the Carrs, Dick Moore of TN, Ken Rishel of IL, Jim Reitzner, MHM® of WI, Greg Harmon, MHM® of OR, and yours truly.

And as opening paragraphs in the White Paper clearly indicate: In the past, “MHRetailers & LLLCommunities…have needed and worked with each other, to varying degrees of success.” However, (they) “…seem to be more at odds today, than ever before.”

The White Paper, in general terms, described the evolution, from ‘infill of vacant rental homesites in LLLCommunities by MHRetailers – during the 1970s & 1980s, to the late 1990s reality – when said retailers, for the most part, became general contractors. As such, they sold and sited ‘more homelike multisection manufactured homes’, a.k.a. ‘big box = big bucks’ units, as land/home packages, head – to – head against site or stick builders working developed ground conveyed fee simple. In effect, MHRetailers abandoned their traditional infill roll with LLLCommunities. And at first, this didn’t matter much, as the average physical occupancy, among LLLCommunities, hovered in the 95% range between 1995 the turn of the century.

When the annual new HUD – Code home shipment rate hit 372,843 units in 1998, another phenomenon began: the conversion of independent (street) MHRetailers into ‘company stores’ via expensive buyout. These previously independent businesses now were managed by salaried staff. This change squelched heretofore entrepreneurial business decision making, that shut off stock housing inventory glutting, when local housing markets were saturated. And anyone (reading this) who was around at the time, knows ‘the rest of the (sad) story’; that when new home markets became overstocked, qualified homebuyer caution was ignored, and in the end, we – as an industry – turned many (some say North of 250,000 deals) customers ‘upside down’ financially.

Well, during the next (almost) decade, roughly 2005 – 2015, the number of MHRetailers plummeted, according to MHI, from more than 1100 nationwide, to 400+/-. So where ‘many were lost’ to the land/home package misadventure; and many ‘independents’ became ‘company stores’; now even more closed their doors, as they were no longer able to secure chattel capital from the quickly shrinking independent chattel finance firms – who eventually became known as the ‘Big Four + One’, and recently, with the addition of Green Hill Financial to the mix, the ‘Big Five + One’.*1 And at the time, LLLCommunity owners/operators too played a role in this enronesque financial debacle, as many offered ‘rent free living’, for a period of time, to attract move – ins to fill, overall, tens of thousands of recently vacated rental homesites, whether they be new, ‘resale’ or ‘repo’ homes.

In a nod to the future, Bill Carr, freelance consultant to the MHRetail segment of the HUD – Code manufactured housing industry predicts the industry’s future will not see a return to 1100 salescenters, but rather a national market dominated by maybe 100 mega independent (street) MHRetailers who’re fully compliant with all state and federal financial regulations, and have relearned how to sell new HUD – Code and modular homes into land lease lifestyle communities, even compete successfully – in some local housing markets – with traditional site builders. But that is only part of the story….

All this (the previous paragraphs) brings us to the present day in MHRetailer/LLLCommunity owner/operators relations. Here’s what we’re hearing from across the U.S.

• From the LLLCommunity owner/operator: ‘MHRetailers have simply forgotten how to sell new HUD – Code homes into our properties! They don’t know us; they don’t know how to ‘sell’ us. My response? What have you, as owner/operator done, of late, to reacquaint local MHRetailers with your property? When was the last time you invited them on – site, say to judge a Home of the Month Contest, or simply to have lunch and ‘talk shop’ with them. Is your literature in full view at the salescenter? And as of 18 September, there’ll be a FREE new training aid available for you to give to them: ‘The 5 – RPs of Selling New HUD – Code Homes INTO LLLCommunities!’ *2 And that’s not all! For the first time in awhile, we’re hearing of disputes regarding protected or inviolable sales territories, granted MHRetailers by HUD – Code home manufacturers – even when said MHRetailer has never, say in a decade, sold a single home into the affected LLLCommunity or communities. Some might call this ‘restraint of trade.’

• From the independent (street) MHRetailer: ‘LLLCommunity owners/operators selling homes on – site ‘Kill & Steal Our Business’! How so? Well, believe it or not – if you haven’t heard this before, it’s not uncommon for property portfolio owners/operators to buy ‘quantities at a time’ of new, often Community Series Homes or CSH Models (Which is to say, smaller multisection or singlesection homes replete with durability – enhancing features. ‘Think about why…’*3), directly from the factory, then sell them at or near cost (minimum profit margin), to make ‘attractive deals’ to get homebuyers/site lessees to move in quickly and ‘Get the ol rent meter a – running again!’ No wonder local MHRetailers are reluctant to send otherwise ‘qualified prospects’ to nearby LLLCommunities to ‘pick out a vacant rental homesite’. They have every reason to believe the on – site sales team will hijack their customer, or the customer will get wind of the ‘better deal’ and switch MHRetailers. And that’s not all! For the first time in awhile, we’re hearing of LLLCommunities ‘closed’ to local MHRetailers; in effect, requiring would be homebuyers/site lessees, to buy their new (sometimes resale) home on – site, before leasing the rental homesite. Some might call this ‘restraint of trade’.

Point in all this? Are the business practices just described a preliminary sign of the manufactured housing industry’s long – awaited recovery? Or perhaps they’re some of the very practices that continue to dog the industry and its’ landlease real estate component; in effect, helping keep us – along with the difficulty in qualifying for chattel capital, at 50,000 – 60,000 new HUD – Code homes shipped each year, when we should be climbing back to the generally acclaimed sustainable shipment level of 250,000 new HUD Code homes per year. What do YOU think about this matter?

***

End Notes:

1. Big Four + One = 21st Mortgage Corporation, CU Factory – built Housing, Triad Financial Services, U.S. Bank – Manufactured Housing Finance, and (Clayton’s in – house) Vanderbilt Mortgage and Finance – and here some would now add (Cavco’s in – house) Countryplace Mortgage, as well as Legacy Home’s in – house lending arm.

2. ‘5-RPs of Marketing’ plastic 3”X 5” wallet cards! There’re two cards, based on the 5 – Ps of Marketing: Right Product, Right Place, Right Price, Right Promotion, Right People! One is designed for HUD – Code manufacturer and independent (street) MHRetailer use, and one for the on – site LLLCommunity salescenter – selling new and resale homes and leasing vacant rental homesites. To request one or both cards, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. And while you’re at it, ask yourself: ‘Who Else in the MHIndustry Makes Material Like This Available to Me?’ Don’t call for the card until after 18 September – when they’ll be distributed for the first time, to attendees at the 22nd annual Networking Roundtable in Bloomingdale, IL.

3. ‘Durability – enhancing features’ = plywood vs. particleboard, solid wood cabinets, panel floors vs. carpeting, and more. Most new homes purchased by LLLCommunity owners/operators today, will be used as rental units or contract sale homes. In either event, the expectation – rightly or wrongly – is the home will ‘turn’ from time to time – and the longer time span the better. But there’s more money to be saved ‘up front’, by toughening up the home when manufactured, than to incur the same (e.g. recarpeting) expenses over and over and over again. For a FREE list of Community Series Home features, and the Business Development Managers that sell them, request said list when phoning the above – referenced Official MHIndustry HOTLINE.

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

Comments (0)

August 25, 2013

NEW Opportunity, NEW Paradigm, New Private Equity Fund! & ?

Filed under: Uncategorized — George Allen @ 4:21 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America!

Opportunity to respond. ‘Critiques, reactions, & suggestions for future blog coverage: gfa7156@aol.com or Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.’

$$$ EXPECTATION DISCONNECT OF THE YEAR =
a MANUFACTURED HOUSING OPPORTUNITY!

II.

Where Others Fear to Tread…

‘The Question’ & Manufactured Housing’s Past, Present, Future Paradigms.

III.

BERKSHIRE HATHAWAY Home Services Revisited!

IV.

FLASH NEWS
Would YOU Like to Increase Your Cash Flow?

Getting Ready for MHI’s annual meeting
& the NCC division Meeting, 1 October…

$$$ EXPECTATION DISCONNECT OF THE YEAR =
A MANUFACTURED HOUSING OPPORTUNITY!

MONEY magazine recently polled subscribers, and asked this question:

‘What’s Most Important To You When Deciding On a Great Place to Live?’

35% responded, AFFORDABLE HOUSING; followed by 30% wanting top – ranked schools; 21% desiring lots of stuff to do; and, 14%, simply, good, high – paying jobs. (September 2013)

Well, here’s the Disconnect, cited by MONEY, and other news media stories of late:

$214,200 is typical price for a four – bedroom home in the U.S. these days! Nothing ‘generally affordable’ about that unless one is making more than $75,000.00 per year.

What an Opportunity for HUD – Code manufactured housing, and its’ real estate component, land lease lifestyle communities, IF we could get our (National Brand Marketing ) act together NOW or in the near future, introducing the American home – buying public to truly affordable housing & professionally – managed community living!.

Recalling last week’s blog (#259) posting at this website: community-investor.com…

‘Hey, Clayton Homes, Inc., the Manufactured Housing Institute, and Berkshire Hathaway Home Services, are YOU interested in accessing this ‘once in several decades manufactured housing opportunity, just waiting to happen or not? or !

***

II.

Where Others Fear to Tread….

‘The Question’, & Manufactured Housing’s Past, Present & Future Paradigm Answers….

The Question: ‘How Will Land Lease Lifestyle Community Owners/operators Participate Effectively in the Present Paradigm Shift Occurring Throughout the Manufactured Housing Industry?’

This question was posed recently by a housing design consultant, known and respected nationally, for his expertise in breathing new life into old, often functionally obsolete LLLCommunities on the West coast. How would YOU answer the question?

Well, first off, ‘Just what paradigm change is being referenced by the question?

To answer, we must take a look back at 50 years of manufactured housing industry history. While opinions will vary, most MHIndustry veterans would likely agree there’ve been at least two major paradigm shifts to date, and we’re now in the midst of an emerging third. Here’s how they pencil out:

1970s; the Early Heydays. That was when 80+% of new ‘mobile home’ shipments were 80+% ‘singlewides’ destined for placement in new ‘mobile home parks’ being developed from coast to coast, with 20+/-% ‘doublewides’ headed elsewhere and on – site. This first paradigm shift started prior to implementation of the HUD – Code, legislated in 1974 and enforced in 1976. Then followed a 20 year hiatus, where the (now) manufactured housing industry, essentially and effectively, ‘made lemonade (i.e. via performance – based, federally preemptive building code) out of the federal regulatory lemon’ forced upon it.

1990s; the Big Box = Big Bucks days. That was when 80+/-% of new manufactured home shipments were 80+/-% high – priced multisection homes intended for installation on ‘scattered building sites conveyed fee simple’, with 20%+/- singlesection homes placed on rental homesites in nearly full (now) land lease lifestyle communities (a.k.a. manufactured home communities) from coast to coast. This second paradigm shifted during the turn of the century, as a consequence of 1) widespread chattel capital abuse; 2) widespread portfolio consolidation of properties – oft accompanied by too soon, too high site rent increases; and in some regions, 3) tract developers siphoning away the front half of the industry’s traditional market, the ‘newly wed & nearly dead’. Said shift escalated, as independent (street) MHRetailers failed in their bid to compete, as general contractors effecting ‘land & home packages’, against site – built housing stick builders; with some MHRetailers acquired by HUD Code manufacturers and converted into ‘company stores’. And then, factories closed by the dozens. This second paradigm shift has pretty much run its’ course, and we’re now headed into a third one….

2010 and beyond. The new, oft less expensive, single and multisection home mix, trends toward more of the former going onto some of the estimated 250,000+/- vacant rental homesites scattered among 50,000+/- LLLCommunities nationwide. This emerging and different paradigm is characterized dissimilarly from the previous two, in significant fashion.

Today, LLLCommunity portfolio owners/operators, near routinely buy single, even multiple quantities of new HUD – Code homes (When they can’t find good quality resale or ‘repo’ homes to relocate), including specially – designed, smaller Community Series Homes, a.k.a. CSH Models, featuring durability – enhancing features like asphalt shingles, wood cabinetry, non – plastic sinks & tubs, and more. These new homes are utilized either as rental units or sold ‘on contract’, for little or the usual profit margin. More on this in the following paragraph. At this point in time, however, few single property owners actively participate in the purchase and resale of new HUD Code homes on – site, unless they’ve paid down their realty mortgages and have excess cash to invest in this do – it – yourself infill process.

Why and furthermore? Given the steep attrition among independent (street) MHRetailers nationwide (According to MHI, from 1100 down to 400+/- after turn of the century), including company stores, LLLCommunity owners are forced to effect their own infill, to the point of engaging in various forms of self – finance, ‘captive finance’, and manufacturer – partnered finance programs, to consummate on – site, new home sales and resale transactions. And where are the independent, third party chattel capital sources these days? While the heretofore ‘Big Four + 1’ chattel lenders, with the debut of Green Hill Financial, has become the ‘Big Five + 1’, chattel capital remains inaccessible, due to stiff underwriting standards, to the majority of would – be homebuyers desiring to live in LLLCommunities.*1

So, what else characterizes this post 2010, emerging manufactured housing and LLLCommunity paradigm? Besides buying new homes (‘Who’d have thunk it?’, 30 – 40 years ago, when ‘street dealers’ were omnipresent and king?) and self – financing them, there’re additional necessities of 1) ‘making do with what you’ve got’, and 2) ‘installing whatever type housing, permanent and temporary, that can be legally and practically installed on vacant rental homesites’. In the first instance, owner/operators now closely evaluate whether to have vacant (abandoned) homes removed from their property or rehabilitate them, versus incurring the purchase and carrying costs of acquiring, including transportation, newer model homes. In the second instance, the presence of ‘other types housing’ on – site, has become so prevalent across the country, that the 1980s & 90s term of choice, ‘manufactured home community’ is being supplanted with the more accurate, image – enhancing, descriptive handle, ‘land lease lifestyle community’, or in its’ abbreviated form, LLLCommunity.*2

There’s a corollary to this ‘post 2010 paradigm shift’, and it involves taking LLLCommunity – sited homes, new and old, to an enhanced level of energy efficiency, even to the point of removing them entirely, at times, from the local power grid, even most water usage! Think I jest? Here following is the best three part composite summary, of this emerging trend, I’ve read to date. It’s penned by Steven Lefler, VP of Modular Lifestyles, Inc., and lifestyle Services, Inc. Edited and reprinted here with permission:

“…a new product, the ‘Solar Powered Manufactured Home’*3, introduced into existing LLLCommunities, where pre – 1978 homes already exist, may be Key to improving consumer perception and success in achieving greater cash flow, dealing with chattel capital issues, and effecting migration to a mix of existing new rental and contract sale homes.

Furthermore, property owners must move away from street dealers! They, for the most part, ‘have no skin in the game’, when it comes to improving the home product in LLLCommunities, since they continue to offer (in some, if not many cases) cheaply made, not so low cost homes. And the home manufacturers they buy from, appear complacent in their business model, even the status quo of low shipment volume. No one is looking five to 10 years out, where housing Research & Development is concerned.*4

Finally; our younger generation is priced – out of the traditional housing market, suffer high unemployment, and are encumbered with student loan debt. But if they’re to be our target market, for rental, and eventual homeownership, we must find and have the right housing (low price, low cost to live) product! High mortgage debt, and the accompanying mortgage interest deduction, do not make for a good housing market, but rather create housing bubbles and eventual financial losses.”

In a recent (8/13/2013) online article, ‘What makes solar power contagious?’, the writer, Brooke Clark cites a recent paper by two marketing professors, ‘Peer Effects in the Diffusion of Solar Photovoltaic Panels’, to this end: “10 extra solar installations by someone in the same (local housing market) area, increased the incidence of additional solar power by 7.8%, (&) there’s a 10% increase in the number of people with solar panels, in a like area, when solar panel adoption occurs within the same postal zip code.”
So maybe we need to take a closer look at retrofitting existing manufactured homes, and ordering new ones, with solar panels and extreme water conservation devices….

A little more from Steven Lefler. Here’s a self – description that makes one desire to learn more about the contemporary reality of low carbon footprint, off grid, low water use manufactured and modular homes designed for in – LLLCommunity installation.

“…I am the only dealer/builder/community owner/community management company representative, and real estate agent (in the U.S.), diligently working toward proving our company’s 2020 California – compliant manufactured and modular ‘Net Zero’ Homes Work Well For Real People! Our goal is to establish this proven brand, using diverse climate communities as testing grounds, then to subcontract and license out to housing factories, a proven and affordable home model design, for scattered site and in community build – outs. As a company, we’ve been doing this for five years, and remain one of but a handful of home builders to receive the ‘CALIFORNIA ADVANCED HOME’ rebate.. Our motto? ‘If you built it right, they’ll come back to your community!’ “ Reach Steven Lefler by visiting modularlifestyles.com

Well, there you have it. The description of the new paradigm shift in which we now live and work as manufactured housing and LLLCommunity aficionados. And to top it off, there’s the additional challenge of making our already affordable, quality manufactured homes even more energy and water efficient, from end to end.

NOTE. This is one of those rare occasions where every reader should take time to read the End Notes to Part II, located at the end of this blog posting. GFA

III.

BERKSHIRE HATHAWAY Home Services Revisited!

Recalling last week’s blog posting, ‘BERKSHIRE HATHAWAY Home Services, a precursor for affordable manufactured housing?’, know one blog flogger (reader), after perusing the column, forwarded an online article from MODULAR HOME BUILDER, titled: ‘Who Speaks for Residential Modular Housing?’ This was a fascinating ‘read’! Why? Because it turns out the modular housing folk have the same darn shortfall as HUD Code manufactured housing: NO National Brand Marketing effort in place now, or envisioned anytime in the near future!

Here’s the most telling quote from this article: “…there is absolutely No
Nationwide Modular (Brand) Industry Marketing Plan.”

And when this not so rhetorical question was posed, ‘Who speaks for modular housing?’, the writer identified

1) NAHB’s Building Systems Council, commenting. “What is missing from their website is any kind of marketing for residential modular homes.” STRIKE ONE!

2) Modular Building Systems Association. Here the writer pens, “I give this a ranking of three out of 10 on the Modcoach, ‘Excellence in Marketing scale.” STRIKE TWO!

3) MHI’s Modular Housing Council’s website is characterized as “…they offer next to nothing in the way of marketing modular homes to prospective new home buyers.” STRIKE THREE!

For some reason, the writer does not describe the Modular Building Institute. Maybe because this trade body has a commercial structure bent, but it has had residential modular builders as members in the past, if not the present. In any case, residential modular housing, just like HUD – Code manufactured housing, effectively ‘STRIKES OUT!’ when it comes to (Not) having a National Brand Marketing!

Again, is all this surprising or not surprising to you; since many, if not most, HUD – Code home manufacturers also build modular units? Bottom Line: Neither the HUD – Code manufactured housing industry, or the modular housing industry, have a National Brand Marketing program in place, or one even on the drawing board!

Kinda ‘splains’, as a past employer was known to say to me at times, ‘Why factory – built housing, as a whole’ is languishing when it should be vanquishing hi – priced, site – built housing! And until the present day No National Brand Marketing reality changes, given we have two types of quality factory – built housing in hand, ‘housing affordability’ in the United States will continue to go a – begging!

Hey Warren, Kevin, Joe, Nathan, and Danny & John, are you reading, listening, paying attention to what restrains your/our respective factory – built housing business models today? An inquiring national audience would like to know….

IV.

FLASH NEWS

Would YOU Like to Increase Your Cash Flow?

Do YOU have empty rental homesites within one or more land lease lifestyle communities that need filling? Are YOU confident your property has a high local housing market demand for good quality homes, if they were available on – site? And, are you dismayed at the lack of accessibility to competitive chattel capital funding at this time?

Well, we’re a couple land lease lifestyle community owners/operators who’re also tired of the lack of chattel capital financing available for buying and reselling homes into our properties, and want to discuss options and develop some practical solutions! All options are open, including arrangements with financial institutions, manufacturers, even the creation of a private equity fund, to provide such capital to qualified, participating LLLCommunity owners!

We will be at the 22nd annual International Networking Roundtable, 18 – 20 September 2013, at the Hilton Chicago Indian Lakes Resort; specifically, Thursday afternoon, September 19th at 4PM. Specific in hotel location will be announced during the Roundtable earlier in the day. And the forum will be open to anyone interested in participating.

To register for the Networking Roundtable, phone the Official Manufactured Housing Industry HOTLINE: (877) MFD-HSNG or 633-4764.

Note. The creation of a private equity fund has become a topic of lively interest of late. Know that the September issue of the Allen Letter professional journal will feature an article co – authored by LLLCommunity owners/operators also very interested in taking this unprecedented step in manufactured housing industry history.

Getting Ready for MHI’s annual meeting,
& the NCC division meeting, 1 October…

Coming soon. A position paper relative to the National Communities Council division

***

End Notes.

1. Big Five + 1 = 21st Mortgage Corporation, CU Factory Built Lending, Triad Financial Services, Inc., U.S. Bank – Manufactured Housing Finance, and Green Hill Financial. Major regional and national chattel capital sources.

2. Types of housing now found in land lease lifestyle communities: pre – HUD ‘mobile homes’, post – HUD manufactured homes, modular homes (DE & elsewhere), ‘park model RVs’ (i.e. less than 400 square feet in size), ‘RVs for a season’ (seasonal & worker transient populations), even stick – built homes constructed on – site to look like HUD – Code homes (in FL. After hurricanes).

3. Reference to the Quest home (and its’ successors), exhibited at the 21st annual International Networking Roundtable in San Diego, during the Fall of 2012. According to Steve Lefler “… the Quest is a concept and educational tool used to attract people to Newport Pacific’s 80+ LLLCommunities – where the strategy is to position the firm’s communities as ‘Best in their Zip Code’, letting others stagnate in their operations. The purpose of the Quest home was not to sell industry folks, but be showcased at communities, fairs, and expos. There are only nine in existence today.”

4. Steve Lefler goes on to indicate the designers of the Quest home “have perfected a low cost HUD version; however, most are unaware of its’ existence.” This comment was in response to a veteran LLLCommunity owner’s observations after examining the Quest home: “My views are essentially the same as Steve Lefler’s – the economic circumstances of the 20 – 35 year time segment, combined with the sustainability ethic, make a Net Zero manufactured home (i.e. Quest home) the perfect solution. Here’s the problem. The Quest home, exhibited at the Roundtable prices out in the $70K range and is equivalent to the $25,000 HUD code home we just purchased (sans the remarkable energy efficiency). Why the high price? Because it’s a one – off, rather than mass – produced.

***

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

Comments (0)

August 18, 2013

Berkshire Hathaway Home Services, precursor for affordable manufactured housing?

Filed under: Uncategorized — George Allen @ 3:52 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America!

BERKSHIRE HATHAWAY Home Services,
a precursor for affordable manufactured housing?

RISMedia’s REAL ESTATE magazine, for the month of August 2013, describes BERKSHIRE HATHAWAY Real Services as being “…a residential real estate franchise brand…set to invigorate the real estate industry.” P. 3. This is such a grand story, its’ two principals command the cover photo of the magazine, and the Publisher’s Desk column (more about this later) gushes with enthusiasm; this followed by a five page feature story beginning on page 66.

Here’s what the magazine’s publisher has to say about branding in general, and the official launch of the ‘Berkshire Hathaway HomeServices’ brand in particular. All the while, watch for the logical, but as yet unrealized, tie – in to HUD – Code manufactured housing and its’ real estate component, the land lease lifestyle community (a.k.a. manufactured home community)….

Effective branding has always been an important cornerstone of the real estate
business. From the local independent firm to the national franchisor, real estate leaders of all shapes and sizes strive to maximize their brand and thereby create
that all important consumer recognition and loyalty.

That’s what makes the official launch of the Berkshire Hathaway HomeServices
Brand such a big deal. Perhaps enacting one of the most significant branding coups to date, the brokerage network – operated by HSF Affiliates – is banking on the power of Warren Buffet’s Berkshire Hathaway name to bring the concept of real estate branding to a whole new level! (Underlining for emphasis. GFA)

There it is! The potential double tie – in to, and with, HUD – Code manufactured housing and LLLCommunities! If I have to spell it out for you, here goes:

• Branding. HUD – Code manufactured housing has never had really it – thanks to entrepreneurial self interest & perennial internecine squabbling – but ever since Berkshire Hathaway acquired Clayton Homes, Inc., ‘MH branding’ has been on the minds (and in the fears) of manufactured housing aficionados and competitors alike, e.g. ‘When and how will it (MH branding) eventually happen?’ After all, given present ownership of Clayton Homes, Inc., Berkshire Hathaway already commands 48+/- percent of new manufactured housing market share nationwide – even amidst rumors of further soon growth in the Southeast. They’re there (brand positioned), it’s just not their focus – yet. So, if not yet, perhaps in the near future, we’ll see ‘an affordable housing franchise brand’ , or better yet, ‘MH brand’ also launched!

• Real Estate. And, HUD – Code manufactured housing is an inexpensive, quality housing type and affordable lifestyle, already in place, routinely siting new homes on scattered building sites conveyed fee simple, as well as into 50,000+/- multifamily rental properties nationwide! So, it’s but a hop – skip – and – a – jump to envision what a factory – built housing product, brand, and affordability awareness, like ‘Berkshire Hathaway Home Services’, would bring to the manufactured housing industry and land lease lifestyle community realty asset class.

Bottom line? BERKSHIRE HATHAWAY Home Services likely hits its’ realty brand stride during year 2014. And let’s hope a similar ‘affordable manufactured housing franchise brand’ isn’t far behind – whether launched via Clayton Homes, Inc. and its’ parent company; or, on a broader scale, via the Manufactured Housing Institute – and dare I suggest – better yet, a joint national brand marketing effort between MHI and the Manufactured Housing Association for Regulatory Reform!? After all, in the case of the institute, and its ‘Big 3 C’ members: Clayton, Champion & Cavco, they already corner more than 80 percent of the national market share of HUD – Code manufactured housing! So, let’s get the ball rolling together!

We’re already nearly there – but for pernicious self – interest and internecine squabbling, within the institute and between associations. Let’s overcome these bugbears and get on with recovery and a return to profitability! Hey, Warren, you listening? We hope so!

II.

Know What?

There’s more I could, and maybe should, share with you this Sunday morning. But the gist of Part I of this blog posting is important and timely enough to stand on its’ own! How so? Because if YOU buy into what’s penned here, and are not distracted by any other newsy notes and musings that’d otherwise follow in Parts III & IV following, YOU might be motivated to speak out to your state MHAssociation leaders, even our elected and salaried national advocates in and around Washington, DC., telling them

We’ve Waited Long Enough For Them to Wax Creative and Take Definitive Leadership Steps to Resurrect the HUD – Code Manufactured Housing Industry from its’ five year malaise of shipping but 50,000 new homes per year, and head back to the 250,000 shipment mark thought to be sustainable over the long haul!

WILL TELL YOU THIS. Not only are rumors afoot of further consolidation within the home manufacturing segment of the manufactured housing industry, but at least one HUD manufacturer has become so busy of late, in part due to a unique in – house finance program available to land lease lifestyle community purchasers of their new homes, that said firm has reached out to other manufacturer(s) to build new homes to their unique ‘specs’, to be shipped into the secondary manufacturer’s region, to save on freight costs. All this and much more, especially along the lines of ‘creative chattel finance alternatives’ will be disclosed at the 22nd International Networking Roundtable, 18 – 20 September, in Bloomingdale, IL! Registration already eclipses 50+% of the max number of attendees allowed. So, if not already signed – up for the 20+ educational sessions, nine peer networking events, and major realty deal – making opportunity, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 Today!

***

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

Comments (0)

August 11, 2013

Meetings $ & # Expose’, IPOs, & ‘DENSITY’

Filed under: Uncategorized — George Allen @ 3:50 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America!

Anticipation Passion may be in the $s,
But Participation Proof is in the #s!

II.

IPO Time Once Again
for Land Lease Lifestyle Community Portfolios?

III.

IF NO MORE CHATTEL CAPITAL. WHAT’S NEXT?

***

Anticipation Passion may be in the $s,
But Participation Proof is in the #s!

Amount of event registration fees and hotel overnight room rates oft predict, even presage (i.e. ‘give a warning of’) potential attendance at manufactured housing and land lease lifestyle community (a.k.a. manufactured home community) trade events and meetings. The 2013 Fall lineup of 16 national and regional gatherings, between 5 August & 5 November, offers a unique look into the near future, relative to participation level meeting planners and hosts might expect, based on 1) announced registration fees, 2) hotel overnight rack rates, and 3) past attendance numbers at like events.

For a complete list of the aforementioned 16 national and regional meetings, along with contact information, visit community-investor.com. Left click on the blog icon, then scroll back to blog # 257 and read the list therein.

For a comprehensive list of state MHAssociation meetings and training sessions, visit mhi.org. Left click on CALENDAR, but do NOT expect to find the aforementioned national and regional events listed there; e.g. NO RV/MH Hall of Fame Induction Banquet, NO 22nd annual Networking Roundtable, NO 3rd annual SECO Symposium, NO MHM® training & certification, NOT even ULI’s MHCC meeting! Why the omissions? It’s not like MHI didn’t receive Press Releases at least some of these ‘other events’. If you’re an MHI member, Ask WHY?! The institute either represents all segments of the manufactured housing industry or it doesn’t.

OK, let’s ‘run the $s & #s for four of what might be the biggest, most important national and regional meetings this Fall, where the HUD – Code manufactured housing industry and LLLCommunity real estate asset class are concerned.

• 22nd International Networking Roundtable for LLLCommunity owners/operators, 18 – 20 September, in Bloomingdale, IL. Registration is $395.00 for LLLCommunity owners/operators; resort hotel room rate X two nights = $278.00; and add $100.00 for ‘taxes, fees, miscellaneous’, for an event total of approximately $773.00, plus travel expenses. Last year’s attendance = 240 LLLCommunity owners/operators & their preferred lenders.

• MHI’s annual meeting, including the National Communities Council, 29 September – 1 October, in Carlsbad, CA. Registration is $399.00 for MHI members; resort hotel room rate X two nights = $438.00; and add $100.00 for ‘taxes, fees, miscellaneous’, for an event total of approximately $937.00, plus travel expenses. Last year’s attendance = slightly fewer than 100 MHI members, including only a dozen or so NCC members.

• 3rd annual SECO Symposium, 8 – 10 October, in Forsythe, GA. Registration is only $195.00 for LLLCommunity owners/operators; resort hotel room rate X two nights = $120.00; and add $100.00 for ‘taxes, fees, miscellaneous’, for an event total of approximately $415.00, plus travel expenses. Last year’s attendance = 142 paid registrants.

• 1st National Communities Council Leadership Forum, 16 – 18 October, in downtown Chicago. Registration is $549.00 for NCC members; downtown hotel room rate X two nights = $578.00; and add $100.00 for ‘taxes, fees, miscellaneous’, for an event total of approximately $1,227.00, plus travel expenses. No historical precedent for attendance estimate.

In summary; and given the accuracy of announced registration fees and quoted hotel rack rates, it appears the bottom line ‘per person’ cost to attend each of these four regional/national two day meetings, ranges from a LOW of only $415.00/person at the 3rd annual SECO Symposium in GA; to $773.00/per person at the 22nd annual International Networking Roundtable in IL; to $937.00/person at MHI’s annual meeting in CA; to a HIGH of $1,227/person, at the National Communities Council Leadership Forum in Chicago, IL. – or, in the latter instance, nearly triple what it’ll cost a LLLCommunity owner/operator to patronize the SECO event – where there’ll be six new HUD – Code homes on display!

Tried, albeit unsuccessfully, to resist commenting on the perennial problem of ‘high cost national meetings’ throughout the manufactured housing arena. Know what this wide range of meeting costs suggest (to me)? Someone at the national advocacy level is either 1) insensitive to the difficult economic times member companies and state MHAssociations suffer at present; OR, 2) are well aware of the matter, but also clearly realize how high meeting costs 1) Discourage Participation by anyone other than a few loyal and financially flush businessmen and women, along with high – salaried executives, all who write – off these meeting and hotel fees as deductible business expenses; and 2) Enable & Enhance ‘trade politic control’ for the few who do attend, often at the expense of peers who can’t or won’t waste the money! This is a situation that begs fixing, the sooner the better….

So, is this a new national advocacy association phenomenon? NO; it’s been the manufactured housing industry’s sorry, self – serving reality for decades!

II.

IPO Time Once Again
for Land Lease Lifestyle Community Portfolios?

Following quotes taken directly from the USA Today newspaper; ironically, on the same day the RV/MH Heritage Foundation hosted its’ annual Hall of Fame Induction Banquet, 5 August, in Elkhart, IN. Were YOU one of the 320 recreational vehicle and manufactured housing pioneers and businessmen and women present for this impressive soiree?

Title of the article lead in section B: ‘IPOs are back on the street’

“The world may not be ready for another dot-com boom, but Wall Street is definitely warming up to IPOs again.” (IPO = Initial Public Offering of a firm’s stock to the investing public)

“Companies are lining up to sell shares to the public for the first time, signaling the long – awaited reawakening of the market for initial public offerings might be happening.”

“It’s a strong year for the IPO market”, says Josef Schuster of IPOX Schuster. “It’s the best environment since the mid – 1990s for good companies. It’s amazing.”

FYI. The mid – 1990s, is when three (present day) real estate investment trusts, or REITs, were formed: ELS, Inc., (then MHC, Inc.), Chateau Communities, Inc. (now gone), and Sun Communities, Inc. UMH Properties (then United Mobile Homes) is not included in ‘the three’, as it became a REIT back in the 1980s, during the first such wave. Source of this REIT information? The 24th annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Portfolio Owners/operators of Land Lease Lifestyle Communities (a.k.a. manufactured home communities), available for $500.00/copy from PMN Publishing via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. OR, for FREE, when subscribing to the Allen Letter professional journal for only $134.95/year (12 monthly issues).

“The clip of IPOs this year is already on the verge of blowing away recent deal activity. There have been 116 IPOs this year, up 35% from this time last year. The number of IPOs is just about to pass the 128 done in all of 2012, and 125 in all of 2011.”

Three reasons, cited by the USA Today article, as to why the IPO market is finally showing signs of life:

The rising broad stock market

The Facebook effect. (After initially spooking investors, Facebook stock has rebounded.)

Strong performance of recent deals.

The article concludes with this warning: “You have to be selective and not just go in and think guaranteed returns.”

Well, with the foregoing in mind, this industry observer reached out to the four large LLLCommunity portfolio owners/operators rumored to be ‘growing & positioning themselves to go public’ in the near future with their own IPOs. Not unexpectedly, there were no replies. But then, that in itself, might be viewed ‘as a reply’. Hmm.

What do YOU think? Are we ready for more REITs in the LLLCommunity real estate asset class? Some would surely say YES to the broadened investment opportunity scenario. Others however, a resounding NO, recalling the out of whack (i.e. ‘out of sync with rent rates of other multifamily rental housing types in the same local housing markets) rental homesite rent rates laid at the feet of REITs formed during the aforesaid ‘second wave’ in the mid – 1990s. Proof? Recall the short – lived REITs now out of the business. See last page of 24th ALLEN REPORT for ‘name & number’ details.

And are we ready to have Wall Street analysts, once again, view our unique, income – producing property type as ‘growth stocks’ (expecting firms to pay a dividend every quarter, as opposed to reinvesting retained earnings for capital projects), rather than ‘value stocks’?

Whatever the case, when the new IPOs start rolling out; remember, you read about it here first!

III.

IF NO MORE CHATTEL CAPITAL. WHAT’S NEXT?

Though it genuinely pains me to say so, with each passing day and waning week, it’s looking more and more like the days of chattel capital financing new and resale homes in land lease lifestyle communities, as we’ve known it for decades, have come to an end. If TRUE, what is next?

Well, just this week, an email message crossed the PCs and desks of some owners/operators announcing the arrival of DENSITY, a.k.a. Legiance’s ‘Game Changer’. DENSITY? It’s an acronym for Develop Every Non – producing Site, Increasing Total Yield! Seriously.

Specifically and according to Dennis Duling, VP at Legiance Investments, Inc., DENSITY is a program “…for any (LLLCommunity) owner who has a community with high vacancy and limited capital.” The program’s sponsor will “…bring significant private capital (i.e. $1 – 10 million) to a community to: 1) renovate vacant homes, if appropriate; 2) bring in new homes to fill empty sites; and, 3) improve infrastructure where needed. In exchange, at the end of a period of two to three years, the community is sold or refinanced in order to cash out our investor(s) and allow Legiance, the investor, and the community owner, to share in the upside.” The deal can be structured as a joint venture or an outright purchase by Legiance. The firm is also agreeable to taking an equity stake in the community in lieu of a complete cash out from a ‘refi’ (refinance).

To be considered for the program, the LLLCommunity must be ‘C’ grade (or some would say 3 Star) or better, contain 60 – 200 rentable homesites, charge a minimum site rent rate of $275.00, have a vacancy level of 30 – 50%, and be able to document ‘solid demand’ in the local housing market.

OK, all that’s kinda the Good News. But keep in mind, this is a new $ program, likely with kinks to be worked out during the days ahead, relative to terminology, methodology, definitions, cited data, and more. If, however, you’re interested in learning more, contact Dennis Duling via (626) 653-2728. NOTE. The preceding is not to be taken as an endorsement of this or any other particular $ program, at this time. GFA

And know what? DENSITY is not the only NEW Program out and about these days. There are at least three HUD – Code manufactured housing factory cooperative home finance programs afoot, as well as budding interest in various manifestations of online crowd funding, and more. That’s why you need to plan NOW to participate in the 22nd annual International Networking Roundtable, 18 – 20 September, in Bloomingdale, IL. WHY? Well, Friday morning, immediately following the ‘always popular & heavily attended’ real estate lenders (loan originators) panel, there’ll be another group participation presentation, led by the most analytical LLLCommunity owner I know, focused on ‘What remains of the chattel capital market & beyond!’ YOU will not find a comparable program, anywhere, anytime, in the U.S. the rest of this year, and well into year 2014! Why? Because no one else is bold enough to take this sensitive, multifaceted subject on, in your behalf!

So, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 today to get Roundtable information and or to register. Also visit community-investor.com online. For specific questions, reach GFA via (317) 346-7156.

***

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

Comments (0)

August 4, 2013

Fourth Tough Question Refuses to Go, & Mtg. Schedule

Filed under: Uncategorized — George Allen @ 4:00 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

That ‘Fourth Tough Question’ Refuses to Go Away!

Surely you remember, the ‘fourth tough question’ posed two weeks ago in Blog Posting # 255 at this website:

“Does the HUD – Code manufactured housing industry Really Want to See the
Return of ‘easy access to chattel capital’, stimulating new home shipment volume and filing vacant rental homesites in LLLCommunities, of all sizes, throughout the U.S.? – OR – has the nearly Five Year Shipment Nadir (i.e. ‘Lowest point’ in MHIndustry shipments history!’) become the accepted and manageable status quo benchmark in the minds and operations of one or more regulatory compliant lenders who’ve cornered the severely constricted manufactured housing loan origination market?’

Think about this matter carefully. Therein might lay the very crux of what put us where we wound up five years ago; where we are indeed today; and if we don’t break the vicious nadir cycle, where we’ll continue to be five years from now!

Within last week’s Blog Posting # 256, two MHIndustry veterans, each a successful entrepreneur businessman in his own right, responded with ‘heady & timely commentary’; one from the land lease lifestyle community perspective – 1) expressing dismay at independent, third party loan originator ‘cherry picking’ (i.e. via FICA scores) of manufactured home purchasers; 2) frustration with recent attempts by HUD – Code home manufacturers to roll out cooperative plans for selling/financing new home sales on – site, but with interest rates ranging from 12 – 20 percent; and now, 3) product price increases! And the other commentator boldly told us ‘easy access to chattel capital’ simply isn’t going to happen – EVER, and cited reasoned logic, couched on past bad performance of manufactured housing – secured chattel loans, as to The Why!

Well, this week, since Blog Posting # 256 appeared on 28 July, new additional ‘heady & timely commentary’, on that same ‘fourth tough question’ has arrived. The first is a mantra of sorts, being “Manufactured housing is fast becoming a cash business!” Reminds one of similar telling shibboleths of the past, e.g.

• During 1998, when we shipped 372,843 new HUD – Code homes, the commonplace pitch was: “We have no $ down, no job, no problem deals for you!’ Yep; that’s what we said back then to our prospective home buying customers.

• During 2002, when shipment levels plunged to their worst level since 1963, we frequently heard: “Be a stud, sell a HUD!” And 12 months later, we ballyhooed the “Year of the hudular!” –albeit a short lived production fad that went nowhere.

• During 2006, the everyday question was: “When does hurricane season begin?”, reminiscent of the ‘Katrina Factor’ that goosed home shipments a year earlier.

• During 2007, as more and more LLLCommunity owners/operators sold and self – financed new homes on – site, we frequently heard the clarion call for a “Return to Our (manufactured housing’s) Affordable Housing Roots!” – a plea that fell on deaf ears until 2008 & 2009, when National State of the Asset Class caucuses were held in Tampa, FL., & Elkhart, IN. (The NSAC has since been relabeled the MHInitiative®. Watch for announcement of a third national strategic planning caucus; planned, promoted and hosted by MHInitiative®, unless MHI or MHARR ‘steps up to the industry leadership plate’ beforehand, to lead us out of our self – generated & perpetuated new home shipment malaise (‘uneasiness & discomfort’) and morass (‘a marsh, a bog’ – as in ‘bogged down’).

• During 2010, at a heavily attended Manufactured Housing Finance Roundtable in Elkhart, IN., federal government regulators and GSE representatives made it absolutely clear: “Manufactured housing is on its’ own!” – and frankly, they were not only right but prescient, as nothing has changed since then – 3 ½ years later!!!

All of which brings us back to this new shibboleth” “Manufactured housing is fast becoming a cash business!” How do YOU see this scary prognostication? TRUE or FALSE? As they say, inquiring minds would like to know! Via email: gfa7156@aol.com or the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

Then there’re these convicting remarks from yet another manufactured housing business executive:

“I’m with SR (commentator quoted in last week’s blog), who notes there ain’t no such thing as a free lunch! The MH industry has fouled its’ nest, and it’s not alone. So has the whole housing industry – the government, the entire nation. Collectively, we’ve bought far more than we can pay for, and now we’re paying for it. And we will be for some time. Nobody owes us nuthin. We owe everybody. There’s plenty of money available, sloshing around, just looking for good secure returns. That money will find its’ way to our (housing) product when we offer good housing that people of ordinary means can afford! By that, I don’t mean housing they can buy, if prepared to stretch to more than 30 percent of their annual household income.” BV (lightly edited. GFA)

If you’d like to read more on this heady and timely subject, i.e. What ‘affordable housing’ is, and how to measure it in terms of 1) the Annual Median Income (‘AMI’) of local housing markets, 2) Annual Gross Income (‘AGI’) of prospective home buying individuals and households, 3) the 30% Housing Expense Factor or HEF (One of six recognized measures of affordable housing), and 4) how ‘50% of AMI’ has become our nation’s ‘affordability benchmark’, make it a point to read and study the August 2013 issue of the Allen Letter professional journal.

The lead feature is titled ‘Contemporary Archetype of Truly Affordable Housing in the U.S.!’. It walks the reader through the multistep process of estimating ‘affordable’ & ‘risky’, new & resale home transactions, within & outside land lease lifestyle communities – and in the end, makes a compelling case for HUD – Code manufactured housing and its’ real estate segment lifestyle, as indeed being, ‘the contemporary archetype of truly affordable housing in the U.S.’! To subscribe, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Only $134.95/year for 12 monthly issues. (During the 23 years I’ve been writing and editing the Allen Letter professional journal, this is the most important and challenging housing – related article I’ve penned to date! GFA)

***

II.

Upcoming Opportunities You Don’t Want to Miss!

Last week we listed 11 MH, RV, RE & PM – related trade, educational, networking, and deal – making events YOU should be aware of this Fall; and deciding now, which ones to support with your participation. Well, since then, we’ve learned of more events to add to the list, increasing the total to 16 – all occurring between 5 August and 5 November, a scant three month period of time! Venues containing (*) are the ones I plan to patronize, and ‘Hope to see you there!’

5 August @ RV/MH Hall of Fame Induction Banquet (*) in Elkhart, IN. (574) 293-2344. Craig Bollman & Theresa Desfosses among ten inducted in this Class of 2013. Be sure to look at the new Fairmont HUD – Code home installed in front of the RV/MH facility, right along Interstate – 80. That means an average of 55,000 auto drive – bys per day, or more than 20 million people, viewing an attractive new example of our type factory – built housing, during the course of the next 12 months!

8 August @ four Webinars (*) having to do with New Advertising Rules as they apply to LLLCommunity owners/operators selling and financing new and resale home transactions on – site. For times and details, contact Donna Rishel via (217) 971-3968.

18 – 20 September @ 22nd International Networking Roundtable (*) in Bloomingdale, IL. (317) 346-7156. ‘Celebrating 20 Years of Camaraderie!’ 100+ already registered! Don’t miss this unique annual educational, peer networking, deal – making opportunities!

19 September @ Equity University’s Networking Conference in Orlando, FL. (888) 382-4727 x 127. Spencer Roane, MHM® is being considered as a presenter at this venue.

29 September – 1 October @ MHI’s annual meeting (*) in Carlsbad, CA. (703) 558-0678. If you’re a direct, dues – paying member of MHI, make it a point to participate!

30 September, 1:45 – 3:45PM @ MHI’s National Communities Council meeting (*) in Carlsbad, CA. (703) 558-0666. Rumor has it, ‘a New Era for LLLCommunities begins!’

8 – 10 October @ 3rd annual SECO Symposium in Forsythe, GA. (865) 385-9675. This is the only regional event planned & hosted entirely by LLLCommunity owners/operators, with an emphasis on seller – financing of homes, and with several homes on display! For information, contact Spencer Roane, MHM®

10 & 11 October ! MHC of Arizona meeting (*) in Tucson, AZ. (480) 345-4202. Very special program being planned for LLLCommunity owners/operators, by Susan Brenton.

15 – 17 October @ WMA’s annual convention & expo in Reno, NV. (916) 448-7002 & talk to Sheila Dey.

15 – 19 October @ Institute of Real Estate Management’s Leadership Conference in Scottsdale, AZ. (312) 329-6000.

16 – 18 October @ MHI’s National Communities Council division’s Leadership Forum (*) in downtown Chicago, IL. (703) 558-0666. Sam Zell to be guest presenter.

20 & 21October @ Legacy Housing’s first ‘Park Show & Seminar’ in Ft. Worth, Texas. For information, contact Mark Ledet via (817) 632-3351 Special celebrity guest is Randy White of the Texas Cowboys.

23 October @ a PMN Publishing – sponsored national Manufactured Housing Manager® professional property management training & certification class (*), in Indianapolis, IN. (317) 346-7156. Only certification program taught by a Certified Property Manager® member of the Institute of Real Estate Management® & LLLCommunity owner/operator

23 & 24 October @ New York Housing Association’s annual meeting at Turning Stone Resort in New York. (518) 867-3242. Talk to Nancy Geer

5 & 6 November @ London Computer’s annual Rent Manager® Conference (*) on Marco Island, FL. Primarily for Rent Manager® users. Contact regional sales rep for details

5 – 8 November @ Urban Land Institute’s Fall Meeting (*) in Chicago, IL. Manufactured Housing Communities Council or MHCC, to meet during the same time frame. Randy Rowe of Green Courte Partners is co – host of ULI’s meeting. Sam Zell is a guest speaker

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

Comments (0)

July 28, 2013

4 Tough Questions; the NFPA, NEC, GAO & U

Filed under: Uncategorized — George Allen @ 4:52 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

Pithy Responses to ‘Four Tough Questions’ Continue….

II.

Here’s Why the NATIONAL FIRE PREVENTION AGENCY Should Have Land Lease Lifestyle Community Representation & Participation During NATIONAL ELECTRIC CODE Proceedings

III.

Manufactured Housing Association for Regulatory Reform Meets with the GOVERNMENT ACCOUNTABILITY OFFICE in Behalf of YOU & the Entire Manufactured Housing Industry…

IV.

Preview of Year 2014. Maybe Landfall by then, for Manufactured Housing’s PERFECT STORM (It Is Indeed On the Horizon), &
Certainly a New Era, one way or another, for Land Lease Lifestyle Community Owners/operators, of all sizes, Nationwide!

***

Pithy Responses to ‘Four Tough Questions’ Continue…

“George. To successfully build a lasting home or an organization, one must have a strong foundation, in accords with one’s landscape or market. The recent commentaries to your (blog) questions are well – crafted and thought – provoking. I propose this group of intelligent, industry – experienced, successful men and women ‘start from the beginning’ with: Who are we? What do we want to be? How will we achieve agreed upon goals? How much will we spend to be successful? Where and when will we do this? Perhaps our contemporary model should be akin to what we experienced in the late 1960s and early 70s, before acquiescing to a national building code that – in the minds of some – has contributed to our eventual suicide as an industry.” NB (lightly edited. GFA)

Well, I promised in my reply to this blog flogger (reader), I’d throw this challenge out to ‘any and all takers’ in the manufactured housing industry and land lease lifestyle community realty asset class. What I read in the previous paragraph was a plea for National Dialogue Relative to Issues that plague us today; everything from the woeful lack of trade communication (e.g. ‘Why is there no manufactured housing – specific finance language in the GSE reform legislation’, and now, the Protecting American Taxpayers and homeowners Act or PATH legislation?’) to the increasing presence of ‘big business’ cliques on manufactured housing’s national advocacy scene.

There’re historic precedents such strategic coming – together of various MHIndustry segments. The first National State of the Asset Class caucus occurred 27 February 2008, when more than 100 (then) manufactured home community owners/operators convened in Tampa, FL., and identified five foci to guide their collective future; foci, that two years later, was crafted by Randy Rowe of Greene Courte Partners, into a Five Part Market Share Recovery Plan for the entire MHIndustry.

And the following year, on 27 February 2009, more than 100 HUD – Code home manufacturers and (then) MHCommunity owners/operators, from throughout the U.S. convened for a second NSAC caucus, at the RV/MH Heritage Foundation’s Hall of Fame facility in Elkhart, IN. Results? Agreement on the need for specially – designed lines of new HUD – Code homes, to eventually be labeled as Community Series Homes or CSH Models (i.e. singlesection & smaller multisection homes with durability – enhancing features), for siting in MHCommunities nationwide.

Well, it’s been half a decade since anyone has stepped forward, from either the manufacturing/distribution or real estate development/investment segments of the MHIndustry, to ‘collectively and strategically plan how to break out of the five year new home shipment nadir of only 50,000+/- units shipped per year.’ Perhaps the suggestion and passion expressed in the opening paragraph will motivate one or more national MHIndustry leaders, salaried or elected, to take the first step to this end. Know when the perfect time might be to do this? At the annual meeting of the Manufactured Housing Institute (‘MHI’) the end of September and beginning of October, in Carlsbad, CA. Anyone out there listening? Anyone out there willing to lead? Nathan? John? Dick? Danny?

NOW, let’s turn our attention to the ‘Fourth Tough Question’, to wit: “Does the HUD – Code manufactured housing industry Really Want to See the Return of ‘easy access to chattel capital’….? Well, this one spawned two really interesting responses, and they’re posted here in their edited entirety. The first is from a veteran land lease lifestyle community owner/operator who routinely buys new HUD – Code homes to sell on – site, and finance said transactions within his properties.

“Chattel lending seems to have evolved into two distinct categories. The first occurs where loans stand on their own, via independent third party lenders like the Big Four + One (now, Big Four + Five) = 21st Mortgage Corporation, Triad Financial Services, Inc., CU Factory Built Lending, and U.S. Bank – Manufactured Housing Finance; and recent debut of Green Hill Financial. These firms know default – related costs will be high, so create very restrictive (i.e. high credit scores) and expensive (i.e. high interest rates) chattel mortgage programs. The second, and newest category, involves what’s advertised as a cooperative efforts between LLLCommunity owners and lenders, e.g. the 21st Mortgage Corporation’s two year old C.A.S.H. Program, Cavco’s (new in 2013) 360 Program, and a unique home finance program offered by Legacy Homes, domiciled in Texas. While most LLLCommunity owners feel these programs are certainly a step in the right direction, they’re presently too one – sided, making lenders appear to be taking advantage of the property owners, with chattel loan terms as high as 12 – 20 percent.” SR

Then, from another equally successful and veteran manufactured housing industry businessman, this contrarian conundrum:

“SURE THEY DO! The problem is, it’s not going to happen! Why? Sources of capital well understand the problems related to financing manufactured housing – and they’re reacting accordingly. For example; when Wall Street financiers call, they ask ‘on target questions’ regarding the challenges and weaknesses of financing manufactured housing. And once they confirm what they suspect is the case, they’re gone!

Furthermore; banks and credit unions routinely hear their respective regulators quote national directives critical of manufactured housing lending. So, even though chattel lending, on this type housing, can be the most profitable consumer loan they originate, it is from their perspective, fraught with peril.

Another example. Recently received notice from a regional lender pulling out of chattel lending on manufactured housing. Why? Because land lease lifestyle community owners resist forming meaningful relationships, and express lack of willingness to assume part of the loan risk – by eliminating some of the home seller’s ability to take advantage of the lender if or when chattel loans go bad.

What the manufactured housing industry wants, it isn’t going to get! What they can get, they don’t like! Specifically, they don’t like being forced to engage in regulated and professionally – operated seller finance operations; so, many independent (street) MHRetailers and LLLCommunity owners avoid the business opportunities staring them in the face. So, until the players ‘grow up’ and face facts, as they exist today, and embrace performing like mature (finance) professionals, not much is going to change on the chattel loan lending front!” KR

End of Story. And if we’re not careful, ‘End of an Industry’; or, certainly one that’ll not return to the oft cited ideal performance level of 250,000 new HUD – Code manufactured homes shipped per year.

II.

Here’s Why the NATIONAL FIRE PREVENTION AGENCY Should Have Land Lease Lifestyle Community Representation & Participation During NATIONAL ELECTRIC CODE Proceedings.

While NFPA and NEC might be familiar entity and code abbreviations to some segments of the HUD – Code manufactured housing industry, I’d wager few, if any of you reading these lines, have any idea that ARTICLE # 550 of the National Electric Code, clearly labeled as ‘Mobile homes, Manufactured Homes, and Mobile Home Parks’ even exists, and WHY it should be important to you. *1

First the (kinda) good news. Though both national manufactured housing advocacy bodies have ignored suggestions, over the years, to petition to participate in behalf of mobile homes, manufactured homes, & mobile home parks seat on the NFPA – created NEC Code Making Panel, there is one RV/MH supplier who has kept the manufactured housing industry informed of proposed changes to the NEC that might detrimentally affect it, and the LLLCommunity asset class. In this latter instance, think electrical pedestals, and electrical hook up of manufactured homes within and outside this property type. *2

The not so good news. “This Summer (2013), the NFPA board will give final approval to the 2014 edition of the NEC.” Do we, as an industry and realty asset class know of changes therein that might or will affect our type housing and installation of electrical components thereto pertaining? Nope! Should we, as an industry and realty asset class be aware, beforehand, of any changes to the National Electric Code that might, or will, affect our type housing and installation of electrical components? Yes! Talk about leaving ourselves open to be blindsided by a code – writing agency, particularly the land lease lifestyle community segment of the manufactured housing industry.

Frankly, I understand maybe why the manufacturing/distribution segment of the manufactured housing industry eschews participation here. After all, they’re pretty much sheltered from local – if not all building codes, by the federally preemptive nature of the HUD – Code, and existence of the MHCC or Manufactured Housing Consensus Committee. What is not ‘sheltered’, however, is what happens after new HUD – Code homes leave the factories and are installed, permanently or temporarily, on scattered building sites conveyed fee simple, or on a rental homesites within LLLCommunities. Right now we, as LLLCommunity owners/operators, are completely ‘unprotected’ from arbitrary electric code – making, except for the presence of one industry – friendly person on the NFPA board’s Code Making Panel, capable of recommending proposed changes, good and bad, to the NEC.

Are YOU happy with the foregoing happenstance or status quo? I’m not. And while not presently in a position to influence or effect a soon change thereto, it’s certainly on my agenda to bring the matter to a head during the months ahead. If YOU feel similarly, let me know via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or via email: gfa7156@aol.com

In the meantime, ‘Thanks Wade!’ By the way, he’ll be present at the 22nd Networking Roundtable, 18 – 20 September, in Bloomingdale, IL., If you’d like to learn more about this game of Russian roulette we’re playing with the NEC these days, talk to him there.

End Notes.

1. ARTICLE 550.1 Scope of Article. “The provisions of this article cover the electrical conductors and equipment installed within or on mobile and manufactured homes, the conductors that connect mobile and manufactured homes to a supply of electricity, and the installation of electrical wiring, luminaires, equipment, and appurtenances related to electrical installations within a mobile home park up to the mobile home service – entrance conductors or, if none, the mobile home service equipment.”

2. ARTICLE 550.4(B) General Requirements. “In Other Than Mobile Home Parks. Mobile homes installed in other than mobile home parks shall comply with the provisions of this article.”

III.

Manufactured Housing Association for Regulatory Reform Meets with the GOVERNMENT ACCOUNTABILITY OFFICE in Behalf of YOU and the Entire Manufactured Housing Industry…

Remember a few months ago (March), when This Blog ‘broke the story’, describing how a team of federal government interviewers was traveling the U.S., meeting with HUD – Code home manufacturers, and others, asking:

“What effect would it have on your business if HUD was no longer the federal regulator tasked with overseeing the manufactured housing industry?”

Well, that matter came to a head recently, when “A group of MHARR member – company chief executives (comprised of the current MHARR Chairman – John Bostick – and two past chairmen) met in Washington, D.C. , with officials of the Government Accountability Office or GAO, tasked with conducting an investigation of the HUD manufactured housing program, at the request of Congress.” This, and following passages, quoted from a story in the July 2013 edition of the Journal.

Result? A clear and timely look at how the Manufactured Housing Association for Regulatory Reform looks after our manufactured housing business interests, whether we’re (That’s YOU & ME) members of their trade advocacy body or not: “During a nearly two – hour session at GAO headquarters, the MHARR – member executives spelled – out, in no uncertain terms, the absolute necessity of the federal manufactured housing program in ensuring both the affordability and availability of manufactured housing, for Americans – and especially lower and moderate – income families. The group also addressed and put to rest questions previously posed by GAO, which raised concerns that it could be considering recommendations either to eliminate or significantly downgrade the federal manufactured housing program.”

Furthermore, the MHARR team “…provided the GAO investigative team with specific examples of HUD’s resistance to, and non- implementation of, major provisions of the Manufactured Housing Improvement Act of 2000 (a.k.a ‘MHIA @ 2000’), methodically explaining the ramifications of each, while walking GAO officials through the importance, relevance, and inter – dependence of the full and proper implementation of all those reforms.” (Lightly edited. GFA)

All that needs to be said at this point, is ‘Be Grateful the MHARR is in Washington, D.C., Looking After the Political & Regulatory Interests of Manufactured Housing &, when possible, the Post Production Segments of the Industry!” GFA

IV.

Preview of Year 2014. Maybe Landfall by then, for Manufactured Housing’s PERFECT STORM (It Is Indeed On the Horizon), & Certainly a New Era, one way or another, for Land Lease Lifestyle Community Owners/operators, of all sizes, Nationwide!

Geesh! I’d really like to tell you more, but can’t. Why? Well, in the first instance, I’d be violating confidences of individuals still in their decision – making process; and frankly, consequences of such a PERFECT STORM, where manufactured housing is concerned, are at the same time, unpredictable – and as such, could wind up being either a Middle Ages – like hiatus, OR ‘not really bad at all’, depending on who, if anyone, steps into the gap and how they perform. Perplexed? At this point in time, I am too.

In the second instance, a New Era for Land Lease Lifestyle Community owners/operators is unfolding according to plan. The first steps have already occurred; with the program being refined this month and next. During the hectic Fall meeting schedule…

LLLCommunity owners/operators will see their perennial need for effective national advocacy, ongoing statistical research, timely print & online communication, superb peer networking & realty deal – making, as well as professional property management training & certification addressed, consolidated, and improved!

Suggest you copy or clip the lines immediately before this sentence, carry them with you this Fall, challenging present and future industry/asset class leaders, salaried and elected alike, to deliver this Six Part Agenda, ushering in a New Era for LLLCommunity Owners/operators, of all sizes!

Hectic Fall Meeting Schedule? By way of review, here’s where we (*) can meet & talk:

• 5 August @ RV/MH Hall of Fame Induction Banquet (*) in Elkhart, IN. (574) 293-2344. Craig Bollman & Theresa Desfosses will be among ten inducted. And new Fairmont Home, out in front of the facility will be almost ready for touring!

• 18 – 20 September @ 22nd International Networking Roundtable (*) in Bloomingdale, IL. (317) 346-7156. ‘Celebrating 20 Years of Camaraderie!’ 100 registrants already; so if a LLLCommunity owner/operator, don’t risk missing it!

• 29 September – 1 October @ MHI’s annual meeting(*) in Carlsbad, CA. (703) 558-0678. National Communities Council division (*) will also meet during the same time frame. This will be first time NCC has met since October 2012.

• 8 – 10 October @ 3rd annual SECO Symposium in Forsythe, GA. ((865) 385-9675. Only regional event planned & hosted entirely by LLLCommunity owners/operators, with emphasis on seller – financing of homes; & several homes on display. For more information, talk with Spencer Roane, MHM®

• 10 & 11 October @ MHC or Arizona meeting (*) in Tucson, AZ. (480) 345-4202 Very special program being planned. Call & ask Susan for details!

• 15 – 17 October @ WMA’s annual convention & expo in Reno, NV. (916) 448-7002

• 15 – 19 October @ Institute of Real Estate Management’s Leadership Conference in Scottsdale, AZ. (312) 329-6000

• 16 – 18 October @ National Communities Council division’s Leadership Forum (*) in Chicago, IL. (703) 558-0666

• 23 & 24 October @ New York Housing Association’s annual meeting at Turning Stone Resort in New York. (518) 867-3242

• 5 & 6 November @ London Computer’s annual Rent Manager Conference (*) on Marco Island, FL. Primarily for Rent Manager users.

• 5 – 8 November @ Urban Land Institute’s Fall Meeting in Chicago, IL. Manufactured Housing Communities Council will also meet during this time frame.

***

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

Comments (0)

July 21, 2013

Answers to ‘Four Tough Questions’ & More….

Filed under: Uncategorized — George Allen @ 4:20 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

‘Four Tough Questions’ & Heavy Reader Response!

II.

When It Rains It Pours – Imperfectly at Times….

***

‘Four Tough Questions’ & Heavy Reader Response!

Every once in a while, the gist of this weekly blog ‘hits a nerve, resulting in a plethora of response’. Well that happened last week, when blogs # 253 & 254, in a two day period, posed Four Tough Questions within the news story, ‘More Manufactured Housing Shipment Statistics’. Here are those Four Tough Questions, along with lightly edited, thought – provoking responses from manufactured housing executives from throughout the U.S. My favorite? “I find your questions and comments similar to my observations. Now, how do we get the (salaried & elected) executives of the HUD – Code manufactured housing industry to answer them?” Answer? Unlikely to happen…

1) ‘Why does the MHIndustry eschew (‘shun’) national brand promotion in lieu of stealth deal – making at the local housing market level? Possible answers: Maybe corporate self – protection, a woeful lack of macro vision regarding the industry at large, and or simple resistance to change.”

“There are many partial explanations, most of which are steeped in the tradition of a fragmented industry, dependent upon independent (street) MHRetailers and ‘company stores’. Now however, we have (three) dominant manufacturers (garnering 86 percent of national market share of factory – built housing), known as the ‘Big – 3Cs’, so time is ripe for dealing with the issue, but it remains a highly complex matter, with no simple or quick answers – especially mid – crisis, like now. BV *1

Another blog flogger (reader) writes: “We recently went back and reviewed our (state’s) image campaign activity, and was it ever discouraging. The excitement level was high, until we got to implementation, and then the ‘wheels fell off’, as participants discovered we didn’t have the money to buy coverage deep enough in all the targeted housing markets; and then the competitive juices drowned the project altogether.” RK

Here’s Newport Pacific’s image changing strategy for the next dozen or so years: “Rent new solar homes to upcoming Baby Boomers, with probable life expectancies of another 15 – 20 years, replacing our existing crappy pre-1976 era ‘trailers’, improving the desirability (of the lifestyle) and improving our image along the way.” SL. Amen to that!

“It appears advertising, with some firms, targets a defined demographic, unfortunately (?) perpetuating that pesky ‘trailer image’, rather than a broader cross section of the national market, e.g. ’Clayton Homes has rolled out a Good Call promotion, endorsed by stars of the reality TV show Duck Dynasty. The promotion features a sweepstakes that’ll give four winners, from four geographic regions of the country, opportunity to meet some of the Duck Dynasty cast on location in West Monroe, LA.’

2) ‘Why do HUD – Code housing manufacturers continue to perplex independent (street) MHRetailers and land lease lifestyle community home – buying customers, by routinely ‘mixing & remixing’ building product quality, standard features and unit pricing? Possible answers: Maybe to purposely breed confusion; and, lack of understanding, appreciation, even respect for other business models and segments of the MHIndustry.”

“It’s because the LLLCommunity market you cite, is a small part of a complex manufactured housing market, where every manufacturer is struggling for survival, and every aspect of the small remaining market has its’ own concerns. Development of special CSH Model homes was and is, a major recognition of one relatively small portion of the overall market that remains. Manufacturers find it difficult to cater to changing market requirements, especially in perilous times. The ‘community market’ is hardly new, and represents about as large a proportion of the new home market as in the past. In unit numbers, it’s very small today. Don’t expect too much in a hurry. What’s far from clear now, is when robust growth returns, will there be new MHCommunities to fill?” *2 BV

3) “When will someone finally and definitively ‘make the case’ for HUD – Code manufactured housing, and its’ sister business model, the LLLCommunity, as being this nation’s Perennial Affordable Housing Type & Lifestyle? Possible answers: Maybe the soon – to – be – released, ‘Contemporary Archetype of Truly Affordable Housing in the United States!’, as a lagniappe in the August issue of the Allen Letter professional journal, will be a first step in that direction *3; and, when HUD finally (Maybe too late already) recognizes and promotes manufactured housing to that end!”

Then there’s this contrarian, or perhaps ‘realist’ view. “One thing we could do is give up on the prideful claim to be the only form of unsubsidized housing. Where has that gotten us? (Nowhere). The developers building apartments with tax credits are the darling of city hall – not us.” Now that’s what some might call ‘harsh reality’; but should we simply give up and take our affordable football home with us and ‘play no more’ – or continue to rail away at the manifold barriers to affordable housing in general, manufactured housing and LLLCommunities in particular? RK

“I’m working on that very problem George. However, it is far from clear to me that LLLCommunities are the key to the road ahead. What is strikingly clear, however, is manufacturing has become, and remains, the nation’s most affordable way of building housing, and land availability for low cost housing remains the nation’s biggest housing development challenge. Despite the heavy burdens of expensive financing, and requiring more acreage (i.e. greater density), manufactured homes are roughly competitive with apartments, and generally preferred by dwellers. If governments and local community planners have their way, apartments will win the low cost housing market, as they have done worldwide. If ‘our’ product is to win, we’ll all have to pull together more than we are today.” BV

4) “Does the HUD – Code manufactured housing industry Really Want to See the Return of ‘easy access to chattel capital’, stimulating new home shipment volume, and filling vacant rental homesites in LLLCommunities, of all sizes, throughout the U.S.? OR, has the nearly five year shipment nadir (‘Lowest point’ in MHIndustry history!’) become an accepted and manageable status quo benchmark in the minds and operations of one or more fully (regulatory) compliant lenders who’ve cornered the severely constricted manufactured housing loan origination market?

Here’s what one of our peers has to say on this business – model changing trend: “There’s long been an appetite for ‘stupid money’ in the (manufactured housing) industry. For a long time, it was my opinion, the bulk of the industry thought easy money would return, but it might take longer this time than before. However, a combination of factors, but most notably banking regulators and regulations, have made that eventuality all but impossible. Can this industry survive as an all cash business? Most new home sales in our state are currently cash transactions; or circumstances where LLLCommunity owners and investors turn them into rentals. This is changing the business model in ways we‘ve not seen before. The traditional LLLCommunity model, where the property owner owns and rents homesites to homeowners is transitioning to: 1) community – owned home rentals, 2) investor – owned home rentals, and 3) low end new or aged homeowner – owned units and the resale thereof. And nowhere in this trifold mix are there moderate to high end homeowner – financed new homes, the very homes that drove our industry’s growth in the 1995 – 2000 period. So, the question might not be so much as to whether the industry wants the return of ‘easy money’ OR is satisfied with the 50,000 shipment status quo, but IF ‘easy money’ returned, would shipments actually increase – or has the model shifted, as described, and said structure is the New Reality for our industry? In my state, the Big Box = Big Bucks’ house is no longer HUD – Code, but modular in nature, with decent financing, based on favorable value appraisals and quality collateral, making them attractive to local lending institutions.”

Hey; it’s not too late for YOU to weigh – in with your considered opinion and answers to these Four Tough Questions. Again; to do so, simply phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 – or as most folk do, email your input to me via gfa7156@aol.com

End Notes.

1. Big 3Cs of HUD – Code manufactured housing: Clayton Homes, Inc., Cavco Industries, Inc., and Champion Home Builders, Inc.

2. Rejoinder: presently 250,000+/- vacant rental homesites to fill with new and or resale homes; asset class was last at 95%+ physical occupancy in 1998, now at 85%+/- nationwide – so plenty of such homesites available now, and in the near future, for new HUD – Code manufactured homes. GFA

3. To subscribe to the Allen Letter professional journal, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. The 24th annual ALLEN REPORT (a.k.a. ‘Who’s Who Among LLLCommunity Portfolio Owners/operators Throughout the U.S. & Canada!) is available FREE to subscribers; otherwise, $500.00 per copy.

***

II.

When It Rains It Pours – Imperfectly at Times….

‘Two New Surveys in as Many Weeks’

Two weeks ago, it was the mislabeled ‘2012 Mobile Home Market Facts’; this week, a ‘Manufactured Housing Survey Summary’. The first, a corporate study updated every four years by Foremost Insurance Company; the latter, a first time effort by Colliers International Valuation & Advisory Services (Specifically, Bruce Nell, MAI® & Charles Schierbeck, II., MICP).

Why ‘mislabeled’? Frankly, having served homeowners’ insurance needs of the manufactured housing industry for decades, one would think such an established business would have long ago moved away from trade terminology officially scrapped by the industry’s regulator, and most of the firm’s peers, way back in the mid – 1970s. Let’s hope, in 2017, when the next study appears, it’ll be labeled as ‘2016 Manufactured Housing Market Facts’

Want copies of these seminal reports? In the first instance, free copies of the Foremost MHMarket Facts are available by contacting Joe Kaffenberger via (616) 956-2514. the MHHousing Survey Summary via Bruce.Nell@Colliers.com

I’ve already quoted many of the interesting and helpful statistics and trade trends identified in the Foremost report, in earlier postings of this blog, within the Allen Letter professional journal (That’s why you need to be a subscriber), and the Allen CONFIDENTIAL! business newsletter. So, just scroll back through the blog archives at this website (community-investor.com) to review them.

Now for a multi – part commentary of the Colliers’ MHHousing Survey Summary:

• TERMINMOLOGY. These guys know better than to use four different property – type labels: mobile home park(1), manufactured home community (1), manufactured housing community (7), and manufactured community (1). As this blog’s aficionados know, my preferred contemporary label for our unique type income – producing property is ‘land lease lifestyle community’, or LLLCommunity in short. But some, if not many folk active, in the realty asset class, aren’t as ready for that moniker, and opt for one or another of the aforementioned aberrations. The one most out of line however, is the rendering of ‘manufactured HOUSING community’. Know when and how this aberration first appeared? Well, back in the mid – 1990s, as the second REIT wave began (First REIT wave occurred in the 1980s; think UMH Properties, Inc.), one of the firms launching their IPO (Initial Public Offering of stock) apparently thought it’d be a strategic marketing coup, to convince their peers a trade term that aped (imitated) their firm’s name would (somehow) be a good idea for all. Not. But that’s when the practice started – despite the fact in 1994, J. Wiley & Sons published Development, Marketing & Operation of Manufactured Home Communities, a text replete with ‘agreed upon trade terms’ based on national terminology surveys via the (then) Manufactured Home Merchandiser magazine, with results confirmed by state MHAssociation execs. The preferred term? Manufactured HOME Community. And, to take the matter a step further; here’s the rationale for the LLLCommunity label. This property type no longer sites just pre – 1976 ‘mobile homes’ & post – 1976 manufactured homes, but modular homes (Think BayWood in DE, etc.); ‘park model RVs’ – throughout FL & other Sunbelt states; ‘RVs for a season’ (i.e. Transients splitting their residency between the Midwest & Rio Grande Valley in TX, etc.); and ‘stick – built homes constructed to imitate manufactured homes’ – in Florida after major hurricanes. One more reason to use HOME & not HOUSE: As an industry, we sell manufactured HOUSING to prospective homebuyers. Once they ‘buy’, the HOUSE becomes their HOME, often sited among other like (manufactured) HOMES. So, ‘Why would anyone want to sully the HOME in which our homeowner/site lessees live, by referring to the property where they live as a ‘manufactured HOUSING community’?’ Again, Not!

• A DISCONNECT? Thinking the MHHousing Survey is national in scope, see if you consider the following sentences, quoted from an introductory letter, track logically. “Manufactured Housing Communities are an area of real estate that lacks comprehensive market data that research institution (sic) supply for other segments of the real estate industry. There are some providers of general data in the industry, but Wisconsin is an area that was largely ignored by these firms.” NOTE: (sic), by the way = ‘quoted exactly as written even though incorrect.’ So, is this a national or Wisconsin survey or both? It’s both, but with unclear delineations, here’s another disconnect. The authors state “The manufactured housing industry does not have a standard rating classification.” But it does! The ABClassification System for the Manufactured Home Community Real Estate Asset Class’ was copyrighted in 1998, revised but not endorsed by MHI’s National Communities Council in 2001; and further updated in October 2003 – ten years ago! The ABClassification System rates LLLCommunities per A, B, C & D grade quality, based on a quantified score (maximum of 100percentage points), drawn from the seven evaluation areas of Appearance, Layout, Individual Homesites, Individual Homes, Infrastructure, Amenities, and Community Management. FREE copies of the ABClassification System score sheet are available from PMN Publishing. To order, see end note (above) # 3.

• ERRORS, or matters in need of CLARIFICATION &/or DOCUMENTATION. Early on in this survey, relative to availability and cost of consumer financing, this statement is made: “One third of all manufactured home purchases are financed through credit.” Credit meaning debt financing or something else? Does that mean two thirds or purchases are cash transactions? And ‘all’ = new and resale transactions taken together, or just the former? And, most important; what’s the empirical source of this statistic? There are no footnotes, to speak of, in this survey. Somewhat apropos to this point, is a recent communiqué (7/16/2013) from the Manufactured Housing Association for Regulatory Reform, telling us: “…per U.S. Census Bureau statistics in 2011, 76% of all manufactured hosing placements are titled as chattel.”, suggesting a much higher credit (debt?) presence than just 33%. Then, later in the report, there’re these unclear statements: “Smaller communities operated with only a resident manager (only two of the surveyed communities which indicated this structure, had more than 76 homesites). One employee was also typical of the smaller communities. Only three smaller communities had more than one employee.” Simply: What homesite number characterizes a ‘small community’; 76 or 100 or some other number? What ‘structure’? And are these fulltime or part time employees?

• CONFIRMATION of an ASSET CLASS Rule of Thumb. While the specific nature of ‘high quality’, ‘moderate quality’, and ‘fair to average quality’ grades, among LLLCommunities, was not specifically defined in this survey, the bar graph numbers for each, confirmed the asset class’ widely used Rule of Thumb – ‘subject to local housing market research and adjustment’, as being: ‘A’ or ‘High Quality’ grade being 8%+/-; ‘B’ or ‘Moderate Quality’ grade being 9%=/-; ‘C’ or ‘Fair to Average Quality’ grade being 10%+/-; and, ‘D’ grade (not covered in this survey) being 11% or worse.

Frankly, this survey was a pretty good ‘first effort’ by Mssrs. Neal and Schierbeck. We have no idea how often they plan to research and update, if ever, this Manufactured Housing Survey Summary, but they’re certainly addressing a longstanding need, for reliable and current statistics regarding this 50,000+/- property real estate asset class, and its’ 500+/- known property portfolio owners/operators domiciled in the U.S. and Canada.

Some may have already noticed. A recent updating of the LLLCommunity Standard Chart of Operating Accounts and related Operating Expense Ratios, distributed as a lagniappe to the Allen Letter professional journal, contained not only the ‘standards’ first published in the early 1990s, but new OERs recently researched and published by the ARA Manufactured Housing Community Group in Austin, TX and Denver, CO. Other national real estate brokerage firms, with a specialty department, marketing LLLCommunities, have been invited to share their like data and have it considered for addition to the next updating of said Standard Chart of Operating Accounts & OER Percentages chart. For a FREE copy of this newly revised document, contact PMN Publishing per end note # 3. Better yet; every LLLCommunity owner/operator should have a copy of the ‘Book of Formulae, Rules of Thumb, & Helpful Measures’ (for this income – producing property type) on their desk or in their corporate library. This 2012 book available for only $19.95 from PMN Publishing.

***

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

Comments (0)

July 15, 2013

The Fourth Tough Question & More…

Filed under: Uncategorized — George Allen @ 11:03 am

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

Oops!

Here’s the ‘Fourth Tough (two part) Question’ Promised, but Accidentally Omitted From Sunday’s Blog Post at the community-investor.com website….

“Does the HUD – Code manufactured housing industry Really Want to See the Return of ‘easy access to chattel capital’, stimulating new home shipment volume, and filling vacant rental homesites in land lease lifestyle communities, of all sizes, throughout the U.S?

OR, has the nearly five year shipment nadir (‘Lowest point’ in MHIndustry history!) become an accepted and manageable status quo benchmark in the minds and operations of one or more fully (regulatory) compliant lenders who’ve cornered the severely constricted manufactured housing loan origination market?”

Now, don’t just sit there! Give this two part question some deep and serious thought; then let us know your ‘take’ on the matter. Respond via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, email: gfa7156@aol.com, or phone (317) 346-7156.

And know what? There was even more substance to the first three questions in the edited – but – not – posted version of Sunday’s blog, than in the DRAFT copy as accidentally published. Here are those questions, along with some probable answers:

• “Why does the MHIndustry eschew (‘shun’) national brand promotion in lieu of stealth deal – making at the local housing market level? Possible answers: Maybe corporate self – protection, a woeful lack of macro vision regarding the industry at large, and or simple resistance to change.”

• Why do HUD – Code housing manufacturers continue to perplex independent (street) MHRetailers and land lease lifestyle community home – buying customers, by routinely ‘mixing & remixing’ building product quality, standarad features, and unit pricing? Possible answers: Maybe to purposely breed confusion, and lack of understanding, appreciation, even respect for other business models and segments of the MHIndustry.”

• When will someone finally and definitively ‘make the case’ for HUD – Code manufactured housing, and its’ sister business model, the LLLCommunity, as being this nation’s Perennial Affordable Housing type and Lifestyle? Possible answers: Maybe the soon – to – be – released, ‘Contemporary Archetype of Truly Affordable Housing in the United States!’ will be a first step in that direction; and, when HUD finally (Maybe too late) recognizes and promotes manufactured housing to that end!

Again; we welcome you’re musings, opinions, critiques, and suggestions relative to all four tough questions. And while you’re at it, maybe pose these same questions to the MHIndustry & LLLCommunity ‘salaried & elected’ leaders you know….

Here’s what else was in the edited version of Blog # 253, but not in the DRAFT copy you received and read on Sunday….

Add this to the list of dozen or so meetings planned for this Fall:

15 – 19 October. “Institute of Real Estate Management (‘IREM’) will have its’ annual Leadership Conference in Scottsdale, AZ. For information, visit IREM.org or phone (312) 329-6000.***Since there’re nearly 150 Certified Property Manager® or CPM® members of IREM who express PM affinity for the LLLCommunity asset class, I plan to try to be present.”

Who are the most well known CPM®s throughout the LLLCommunity asset class? Mike Sullivan, Brian Fannon, John Rogosich, Alan Alt, Bill Cramer, Greg Johnloz, Casey Kelly, Russ Petralia, Jon Zorn, Lori Burger, Mike Campbell, Leonard frenkil, Lu Hocker, Bev Schmidt, & George Allen.

***

Next Sunday?

Depends on whether I describe the imminent PERFECT STORM rapidly approaching the HUD – Code manufactured housing industry & land lease lifestyle community real estate asset class – or not.

For these housing manufacturing/distribution & real estate development/investment halves of the HUD – Code manufactured housing industry, this pending PERFECT STORM carries potential for two ‘failure to perform’ scenarios, and a stellar opportunity for two ‘fresh starts’!

But since wholesale ‘change’ is rarely – to – never easy, especially on simultaneous fronts, what will be the probable consequences, pro & con, of such a PERFECT STORM?

‘Ah’, as they say, ‘there is the rub!’ – and why said PERFECT STORM has not been heretofore described and warned of, so significant are the consequences of failure and opportunities for simultaneious fresh starts!

***

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

Comments (0)

« Newer Posts — Older Posts »

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

September 15, 2013

September 8, 2013

September 1, 2013

August 25, 2013

August 18, 2013

August 11, 2013

August 4, 2013

July 28, 2013

July 21, 2013

July 15, 2013