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

Alphabet Soup Firms Acquire 74% of Landlease Communities
In Hometown America’s Portfolio!

&

Letter ‘C’ HUD Code Home Manufacturers Encouraged to
Rejuvenate Their Languid Industry!

&

Thanks for Making June 1st a Special Day for Me!

I.

“I am writing to announce Hometown America has reached an agreement with Equity LifeStyle Properties (‘ELS’) to sell 76 communities…We are scheduled to close on the sale of the first 39 communities on July 1, with the balance of the communities expected to close before the end of November.

As you are aware, we are also scheduled to close on the sale of 16 communities to AMC over this same time period. After the sale of the ELS and AMC portfolios, Hometown will be a much smaller company with 32 remaining communities.” Rich Cline (lightly edited. GFA)

So the company announcement, dated May 31, 2011, reads. But what doesn’t the communiqué tell us?

• ELS, Inc., is acquiring a portfolio of 76 landlease communities containing 31,167 rental homesites on approximately 6,500 acres in 16 states (primarily in Florida and the northeastern region of the U.S., and “certain manufactured homes and loans secured by manufactured homes located at the Hometown Properties…for a stated purchase price of $1.43 billion.”…at an estimated 6.7% cap rate ‘assuming the acquisition was completed on 1 January 2010.’ (That’s the right date. Think about it…) Extracted from an ELS, Inc. press release cited in E – Trade news.

• Previous bullet point news prompted these observations and calculations from a fellow landlease community portfolio owner/operator who’s pretty good with numbers. “The $1.43 billion works out to about $45,000 per rental homesite. Wonder how many of those are vacant? Apparently there are manufactured homes included in the deal as well. Even if as many as 25% of those sites were occupied by homes bought for $20,000. apiece, the per site cost of this deal is still almost $41,000. In addition, the deal appears to be funded by nothing more than debt and the sale of stock, with most of the debt maturing in six years. Good luck ELS!”

• ELS, Inc. property portfolio grows in size, from approximately 307 landlease & RV communities, as cited in the 22nd annual ALLEN REPORT @ 1 January 2011, to approximately 383 properties. ‘Approximately’, as a few properties are almost always ‘in play’, either being acquired or sold during the normal course of business. No change in ranking, however, as ELS, Inc., has long been identified as largest owner/operator of this income – producing property type in the world!

• Hometown America, once the two portfolio transactions are ‘closed’, will drop from 124 landlease communities (despite showing 127 on aforementioned 22nd ALLEN REPORT) to 32. Depending on the actual ‘rental homesite count’ of the 32 retained properties, this could conceivably drop the firm from its’ #7 ranking, down to somewhere in the mid – twenties. Word has it Rich Cline and two senior execs will continue to manage the landlease community portfolio for the Pacific Northwest pension fund owner.

• AMC is the abbreviated name of the new firm to manage 14 ‘other landlease communities’ being acquired from Hometown America. AMC? One wag suggested a rejuvenated American Motors Corporation (i.e. ‘Remember the Gremlin?’). But no, knowledgeable folk claim it’s American Manufactured Communities, established (or to be established) by CAP REIT, an apartment REIT, headquartered in Canada, who’d eventually like to launch an IPO (Initial Public Offering of stock), as a new REIT, here in the states.

• Why reference to an alphabet soup of firm names? Well, beyond ELS, Inc., and AMC, cited in the previous bullet points, the following letter abbreviations appear in the 22nd annual ALLEN REPORT: RHP Properties; YES! Communities; MHPI; UNIPROP; KDM Development; CRF Communities; UMH Properties, the REIT; former CREICO, now Ascencia; SSK Communities; NTH Property Management; HCA Management; A.L.S. Properties; QCA Management; KAFCO, Inc; PLJ, Inc; M.N.A. Investments; MUREX Properties; and, MISA Corporation. And there are many more, beyond the 137 ranked in the report.

Rich Cline, writing in the final paragraph of the company announcement, cited earlier, concludes,

“…I want to thank everyone for their commitment and dedication to Hometown over the past 13 years and ask for your understanding and support as we move to this next phase in the life of Hometown.”

As a long time industry observer, who along with Bill Geary, CPM, from California, was ‘present at the birth of the Hometown America’, when founded by Randy Rowe, it’s been an interesting, and at times exciting scenario to watch unfold and document, as the firm grew in size through acquisition (Remember former REIT Chateau Communities, Inc. acquired in 2003, two years after it had acquired CWS Communities?), and ownership change. This acquisition announcement too suggests an answer to the mystery of CEO Greg O’Berry’s abrupt departure earlier this year. Next phase in the life of Hometown, as well as ELS, Inc., and AMC? ‘Stay tuned’, as it’ll surely make for an intriguing ‘read’ or two, over time.

Speaking of which, ‘News of the ELS, Inc., AMC, & Hometown Transactions’ has already been written into the manuscript of the new ‘historical retrospective’, scheduled for release at the RV/MH Heritage Foundation’s Hall of Fame Induction Banquet, 1 August 2011, in Elkhart, IN. Book title? Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing. Formal invitations to this annual gala event are ‘in the mail’, but to ensure your opportunity to attend, phone (574) 293-2344. Hint. If you’re a personal friend, and or business colleague, of this blogger, contact landlease community owner/operator Dennis Ohnstad, to learn of additional ‘networking events’ planned later that evening and next morning, ‘for everyone in the LLCommunity business’: (217) 493-0083 or drohnstad@aol.com

II.

Letter ‘C’ HUD Code home manufacturers are hereby encouraged to rejuvenate the/their/our languid, listless manufactured housing industry! In the dog – eat – dog world of HR (Human Relations) employment headhunting, reference to ‘C level executives’ is trade lingo for job openings and applicants at the CEO, COO, CFO, & CTO level. In the HUD Code manufactured housing industry arena, letter ‘C’ firms are: Clayton Homes, Cavco Industries, and Champion.

By way of quick review; Clayton Homes, Inc., in terms of number of new homes shipped, boasts a heady 48 percent national market share. Cavco Industries, Inc, recent acquirer, through bankruptcy proceedings, of Fleetwood and Palm Harbor firms, enjoys a growing market share. And Champion Home Builders, Inc., recently emerged from bankruptcy, reportedly stronger than beforehand, commanded a 6.5 percent national market share at the end of 2010.

With that said; what are they to do? I don’t have a particular plan, but all three of these ‘C’ firms are headed and led by smarter men than me:

• Kevin Clayton at Clayton Homes, Inc., in TN, a Berkshire – Hathaway Company
• Joe Stegmayer at Cavco Industries, Inc., in AZ
• Jack Lawless, CEO, at Champion Home Builders, Inc., in MI.

But I do know this; as an industry, we can only bump along at a 60 year nadir (‘the lowest point’) of housing production for only so long (i.e. 50,000+/- new homes shipped nationally during each of these years: 2008, 2009, & 2010), before we are no longer viable! So, what are some of the tough love possibilities?

• Letter C firms finish buying up the smaller HUD Code home manufacturers, as they fear is going to happen anyway, and consolidate HUD Code manufactured housing into a half dozen (+/-) firms, per automobile industry history early in the 20th Century. Then move ahead as one focused, consolidated, powerful presence!

• Letter C firms sit down and ‘make truly friendly’ with the smaller, and in some cases financially secure, HUD Code home manufacturers in the South, Midwest, and West, to end differences relative to manufactured housing dealings with federal regulators. Then move ahead as one focused, consolidated industry voice!

• Discuss, speculate and decide whether the HUD Code manufactured housing industry is stronger and better served in our nation’s capitol, by dint of a singular manufacturing/distribution focus, supplemented by a strong working relationship with a sister advocacy body representing all other segments, realty and otherwise; OR, ascribe to either of the previous bullet points (Neither of which is in effect today!), & continue unchanged, appearing to be ‘one big happy family’ – but not!

There’s nothing new in those three bullet points! Each is a relatively frequent, ongoing topic of sometime heated conversation, even debate, wherever and whenever manufactured housing and landlease community aficionados, purists (Some would say Luddites) and self – described progressives alike, gather. All this industry observer suggests is, with as much consolidation taking place among manufacturing firms, during these past three years of ‘only 50,000 home shipments’, perhaps we’re at or near a ‘tipping point’ that could (maybe) reshape our industry and asset class for years to come.

All I ask, and hopefully you blog floggers (readers) agree, of these aforementioned leaders, and others who wield influence; ‘Don’t attempt such a paradigm change alone! Solicit input and buy – in from grassroots manufactured housing business peers ‘with skin in their games’; consider all the options (e.g. Return to truly affordable housing; ensure the Manufactured Housing Improvement Act of 2000 is finally fully implemented; emphasize Community Series Homes design; make far better use of Business Development Managers to access landlease community owners/operator who need new homes; and the list goes on…), and communicate broadly and continually, in print and online, as the process proceeds!

Otherwise be guilty, as observed by a blog flogger commenting on last week’s posting, with its’ nod to the ‘Great & Greater Conspiracy’ topics, of a few weeks earlier:

“Perhaps, aside from NAHB and HUD, the most hurtful conspiracy of all is the ‘not conspiracy’, where (manufactured housing) executives, including our national and state associations, say ‘Not my job!’, when it comes to saving our industry! Keep hammering George.” And I plan to do so….GFA

III

THANK YOU!

For what? The many impromptu birthday greetings, by telephone, attractive cards, and email messages, on Tuesday 1 June. Can truly say, those were the most remembrances I’ve ever received on any birthday. Geesh. Maybe I should turn 66 more often. Not!

Anyway, that evening, Susan and Adam, our adult children, showed up at home with all but one grandchild in tow (Travis is away at USMC boot camp in San Diego, CA.), and of course our two great grandchildren, Hunter and Peyton. And not to forget Flossie, Carolyn’s 98 ½ year old Mother who lives with us. A very nice end to a near perfect day! Know what Carolyn gave me? An amazonkindle. So, I’m learning something new this weekend.

THANK YOU!

***

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

Postscript.

Just received an advance copy of June’s issue of the Allen Letter professional journal. Can this possibly be the ‘best one ever’? Maybe. Not only a preview of this year’s Roundtable event (Including registration brochure), but SOLSTICE Communities’ Good Neighbor Pledge (A worthy template for every LLCommunity owner/operator!), Michael Power’s Mantra: ‘The Manager’s job is mostly outside the office, not inside!’ – and rationale following. Then there’s a color photo of a 13X40 British ‘manufactured home- called a caravan over there. Also photos of a Redman ‘Community Series Home’ or CSH, with recessed front and back steps! Lagniappes? Four: an Ascentia brochure (Remember CREICO?), CSH brochures from Fleetwood and Champion; and this month’s Signature Series Resource Document: the 2nd annual Official Manufactured Housing & Landlease Community Lexicon & Glossary of Trade Terminology. All this and more (i.e. 11 additional monthly issues of the newsletter) for only $134.95/year. How can you possibly manage your business, and properties, without it? Phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156 – or via this website, to Subscribe!

New Landlease Community (History) Book to Debut August 2011;

More Conspiracy Talk; youtube; MHArt & FEMA Housing Input!

(More than 350 MHIndustry & LLCommunity Executives Read This Blog Each Week!)

I.

We’re far enough along to announce publication of my fifth book about manufactured housing & landlease (nee manufactured home) communities. This one has the longest, but entirely apt, title for any such non – fiction business book text to date:

‘Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing.’

The book will debut at the RV/MH Heritage Foundation’s Hall of Fame Induction Banquet, in Elkhart, IN., the evening of 1 August 2011. Invitations to this annual event are almost ‘in the mail’, but if you don’t receive one by mid – June, and desire to join 400 of your manufactured housing and recreational vehicle peers at the industry’s Social Event of the Year, phone (800) 378-8694 or (574) 293-2344 for tickets.
Frankly, ‘anyone who’s anyone’ in these sister industries and asset class, will be present that evening, to tour the museum and library, hobnob with business leaders and industry pioneers from throughout the U.S., and honor the Class of 2011 as they’re inducted into the prestigious RV/MH Hall of Fame.

If you thought the 22nd ALLEN REPORT (a.k.a. ‘Who’s Who Among Landlease Community Portfolio Owners/operators in North America!’) was a ‘good read’, earlier this year, you haven’t seen anything yet! How so? Here’re chapter titles of the new book, as they pre – press appear today:

• How I Got My Start in the Landlease Community Business

• ‘Retrospective to 1988’, first published in 2008, updated in 2011.

• Overview of the Landlease Community Realty Asset Class

• Signature Series Resource Documents

• The Affordable Housing Component

• Summary

Any surprises? Suppose that depends on your business perspective and related matters.

For example, this sentence from the Preface will likely get some folk’s blood – a – flowing, either in hopeful anticipation, or by dint of abject frustration: “To a growing number of manufactured housing purists and aficionados, the industry’s return to affordable housing is likely its’ only possible salvation….”

And this triple mystery in the Dedication: “This book is dedicated, in sincere personal appreciation, to three men who’ve never met.” Here’re three hints: One got me started in this business. One Ensured Landlease Community Owners/operators Nationwide Advanced to Where We Are Today – Without Them Even Realizing It. And One is a Manufactured Housing Manager® known to ‘Manage his landlease community like he owns it!’

That’s all I want to pen about the new book at this time. But trust me when I say, You’ll want to be among the first to obtain a copy, as it’s chock full of information about our unique income – producing property type – unavailable anywhere else! We haven’t set a price on it yet, and will likely limit the print run to 500 copies; which if anything like the 22nd ALLEN REPORT, it too will nearly sell out within a few months of its’ release. Speaking of the ALLEN REPORT, if you’re reading these lines, and have yet to acquire and read/use ‘your copy’, this Special Offer is still in effect: For $250.00, receive a copy of the 22nd ALLEN REPORT, and one year subscription to the Allen Letter professional journal! Simply phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156 and order it using a credit card. We have a few dozen still in inventory.

We’ll announce pricing and ordering instructions for

‘Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing’

later, in future blog postings at this website, and via press releases in our newsletters.

II.

Remember the blog posting in early April, titled: CONSPIRACY THEORISTS, GATHER YE AROUND! – ? We sure do. Not a week goes by that blog floggers (readers) don’t contact me by email and phone, to share personal and unique spins on ‘The Great, and Greater Conspiracies’ described back then. But there hasn’t been much ‘new news’, along these lines, until recently….

What’s emerging today is the growing consensus, We’re an industry likened to a ship without a rudder, drifting aimlessly on the still – troubled waters of our national economy, languishing (new) housing market, and no new sources of third party chattel capital. These inquirers routinely ask, ‘When will manufactured housing leaders caucus nationally, agree on a workable plan, and give our industry practical focus toward the future?’ (Excuse me when I point out how that very question reads akin to sentiment expressed by landlease community owners/operators prior to the first of two National State of the Asset Class (‘NSAC’) caucuses; first held 2/27/2009 in Tampa, FL, second on 2/27/2010 in Elkhart, IN. Hmm.) Might there be a timely and pointed message or suggestion here; like, ‘What was good for the goose, might well be good for the gander as well?’ Sure don’t want to wait till 2/27/2012 for next NSAC caucus, but ‘What the hey.’

Frankly, I don’t see the matter really that dire – yet. I believe we have capable, experienced, motivated elected and salaried manufactured housing leaders in place! Hopefully they’re already looking to the future in our behalf, articulating a recovery plan of sorts – though I haven’t heard any requests for ‘input from (us) grassroots folk’ yet. But know what’s sorely missing from the recovery equation, though rarely discussed – if and when the time arrives to ‘go public’ with ‘a plan’? The method(s) by which such a plan is effectively published or broadcast, is severely limited at this time. How so? Neither MHARR or MHI have general trade broadcast ability to non – members; the Merchandiser, Modern Home, and Automated Builder magazines are gone; the Allen Letter professional journal & the Allen CONFIDENTIAL! are limited circulation, subscriber – supported newsletters; and, The Journal, in this industry observer’s opinion, rarely seeks out and publishes trade NEWS beyond two, sometimes sparring, columns penned by MHI & MHARR executives. Those avenues simply won’t get the job done! Only means left, are online ezines which, as good as they’ve become this past year, have yet to realize the stature afforded major journalistic media publishing hard news. So, all those communication constraints combine as ‘one more severe hindrance to our industry’s recovery’.

But that’s not the only ‘conspiracy news’ (i.e. Conspiracy being, “Why isn’t this plan happening? Someone waiting to build market share on the back of their peers”, etc..) that we’re hearing these days. No, we’re also being asked weekly, “Who will be researching the ALLEN REPORT this Fall; Who will compile the landlease community portfolio data; and, Who will publish the new 23rd edition in January 2012?” And that’s not all, lenders and other landlease community owners/operators regularly inquire about continuation of the annual (realty) lenders’ registry they’ve happily referenced, for free, these past 13 years; and ask, “Who will publish the Allen Letter professional journal?” The conspiracy theorists pose this question? “Why isn’t this happening? Someone waiting to cannibalize our resources, and silence the open communication we’ve enjoyed for 20 years?” It doesn’t help when I decry knowledge of any conspiracies; these folk have their own ideas. What ‘good news’ I can offer, however, is there won’t be any significant change in authorship, between now and the end of the year – except for the possible addition of a partner intent on improving the ALLEN REPORT package of information and statistics. But it’s a little early yet, to tell you more details than that.

III.

Miss the MHCongress in Las Vegas? Get a taste of it by going to youtube.com/watch?y=uj3RE1DnnLI Here, Suzanne Felber, Lifestylist® has put together a collage of interviews with various MHIndustry leaders. Well worth watching! Suzanne will be at the Triple Anniversary, Networking Roundtable in San Antonio, TX., @ 14 – 16 September, teaching LLCommunity folk how to effectively furnish, accessorize, and ‘show’ new Community Series Homes on – site in our communities. For information on the Roundtable, phone the MHIndustry HOTLINE listed in para. I.

Did you catch Marisa Murrow’s manufactured housing and landlease community – themed artwork (i.e. paintings & miniature ‘mobile homes’) at the MHCongress? Whether you did or not, it’s worth a visit to her website: http://www.marisamurrow.com

IV.

Looking for something not terribly exciting but maybe necessary to do, on Tuesday, June 7, 2011, from 8AM to 5:30PM? Well, if you’re a HUD Code home manufacturer, and want a piece of future disaster housing production action, you’ll be at the U.S. Access Board, located at 1331 F. Street, NW., Washington, DC. 20004. Registration is required by Friday, June 3, and only one person per firm. To register, email FEMA-Industry@dhs.gov, and on SUBJECT line, put: ‘Small Footprint THU Industry Day Registration’, and include company name, address, attendee name, phone number, and email address. Have questions? Phone (202) 646-1895 between 8AM & 4PM EDT, workdays. I’m even considering attending. If we don’t take this opportunity to input FEMA’s design for future housing product, who’ve we got to blame if we don’t like what they decide? This is a good example of the old bromide: ‘If you’re not part of the solution, you’re likely part of the problem!’ Think about it, and ‘if the house fits’, attend the ‘Small Footprint THU Industry Day’ in Washington, DC., all day Tuesday, June 7, 2011. For more information, phone Lois Stuckey @ MHI: (703) 558-0600.

***

ANNOUNCEMENT. As most veteran manufactured housing and landlease community businessmen and women know, the annual International Networking Roundtable is a ‘by invitation only’ event planned primarily for LLCommunity owners/operators and realty and chattel loan originators. We only exercise the Allen Letter professional journal subscriber list, and our exclusive, confidential data base of 500+/- property portfolio owners/operators, when sending out invitations each year. SO, if you want to attend this year’s Triple Anniversary, 20th annual Networking Roundtable, but haven’t been selected as one of the two dozen presenters, inquire as to sponsorship opportunities, and or an invitation to attend as a LLCommunity owner/operator. Phone (317) 346-7156 to do so.

***
George Allen, CPM®Emeritus, MHM®Master; Consultant to the Factory – built Housing Industry & The Landlease Community Real Estate Asset Class. (317) 346-7156

‘Of What Are WE Afraid & Unafraid?’

Mystery Shopping, Dodd – Frank Fallout, Future of HUD Code Housing, & More

I.

Mystery Shopping. Landlease (nee manufactured home) community owners/operators, portfolio ‘players’ and sole proprietors alike, rarely have their valuable income – producing properties professionally ‘shopped’. Why?

It’s been said of Mickey Mantle, and now a world famous golfer, known for their perennial leg injuries, ‘They’re billion dollar talent on dime store legs.’ Same metaphor appears to apply to most properties in the LLCommunity realty asset class! We routinely put multimillion dollar investments into the hands of oft untrained; rarely certified; frequently underpaid; and loosely – if – that, job performance evaluated (By independent, third party Mystery Shoppers with no personal or job security axe to grind) on – site management and sales staff! Think I exaggerate? Ask yourself, if a community owner: ‘When did we last train and certify (e.g. ACM or MHM designations) our managers, as well as home sales staff (e.g. PHC designation), and have the property and or sales centers professionally ‘mystery shopped’? Your answer disturb you enough to right those wrongs?

What’s it cost to do so? Between $500 and $1,000 per property for a comprehensive evaluation and written report, effected by a capable, experienced, motivated Mystery Shopper (or firm) who ‘visits’ the subject property(ies) by telephone; via the internet – if there’s a dedicated website; and, in person, to conduct anonymous, unscheduled ‘interviews’ with appropriate staffers, after touring the property documenting (photographing) marketing, resident relations, curb appeal, and rules/regulation shortfalls.

Why isn’t Mystery Shopping the job performance evaluation as routine for the LLCommunity asset class as it is for the conventional apartment property type, and builders/developers of site – built housing? In a word, ‘professionalism’, or lack thereof. Within the apartment management, and housing sales disciplines, it’s commonplace to regularly measure, and accordingly adjust, off and on – site marketing measure effectiveness (e.g. Does your staff keep a record of incoming telephone inquiries & visits to the property? More important, are these tallies studied weekly and used?) , as well as OJT performance of leasing and sales teams. In my opinion, there’re additional nefarious, not – so – obvious reasons to ‘not shop’. In the first instance, regional and executive property managers frequently ‘fear’ having their assigned properties ‘shopped’, because results, first time around, are rarely ‘pretty’. In fact, they’re downright awful. All sorts of ‘problems’ with marketing – or, as it turns out, lack thereof; obvious symptoms of sour resident relations, lousy curb appeal (unforgivable), even selective enforcement of rules/regulations becomes glaringly evident. And guess whose fault that is? So, we’re talking job security here, and not just for the on – site sales and leasing staff. Another reason? Frankly, it’s downright difficult to find Mystery Shoppers who know and understand the basics, let alone nuances, of LLCommunity property management and new/resale home sales, even finance. And guess what? That’s not going to change anytime soon, if the major property portfolio folk don’t ‘get on the stick’ and have every one of their income – producing properties professionally ‘shopped’ at least annually – preferably, several months before their local housing market’s leasing and sales season begins.

What to do? Hire a professional Mystery Shopper to visit and evaluate your properties! Contact MHI/NCC and request they address this performance evaluation void at a future meeting. See if the National Apartment Association has a list of Mystery Shoppers who might be comfortable learning the LLCommunity business. Maybe even hire and train your own in – house ‘shopper’. Better yet, talk to Michael or Tim in Florida, Candy in California, Curtis in Texas, Greg in Oregon, John in Chicago, ‘Mac’ or me in Indiana. Need contact information? Let me know via (317) 346-7156.

II.

Dodd – Frank Fallout. Geesh! This bill isn’t even law yet, and finance – related businesses are closing, simply to avoid having to put up with the more onerous of its’ proposed/planned regulations. Already, ‘former employees’, perhaps even potential borrowers, are paying the price for what, to many of us, appears to be excessive regulatory reach into the financial sector. Here’s the plaint of one blog flogger (i.e. reader) writing to us this past week…

‘Dodd – Frank forced us to close our mortgage company in ___________ , and lay off several employees. Reason? Our capitalization with _______________(a major bank) as our JV partner, was slightly in excess of $1,000,000. We were not a broker, but a direct lender, using the bank’s money. Under Dodd – Frank, unless you have a ten million dollar capitalization, you get classified as a broker. And as a broker, you have additional disclosures, the required language of which pretty much scares your customers away to a direct lender. So, we are out of business. Multiply that many times, in every community in America. An apt example of ‘the law of unintended consequences’, as well as job and prosperity killing legislation!’ (lightly edited. GFA)

Remember last week’s blog expose’, describing how the Dodd – Frank bill is maybe the ‘final nail in the coffin of chattel finance’, where manufactured housing is concerned? Whereas the necessity of added fees, will necessitate a minimum manufactured housing loan of $78,000.00., to simply ensure the return of basic and added fees to a chattel lender. And outside certain high – priced local housing markets, how many times do we see manufactured home loans, especially on resale homes, in excess of $78,000.00?

III.

Speaking of the future of HUD Code manufactured housing. During discussions this past week, attempting to match FEMA’s recurring need for emergency shelter for disaster and storm victims, with manufactured housing in general and Community Series Homes (‘CSH’) in particular; with, tens of thousands of vacant rental homesites in landlease (nee manufactured home) communities, across the U.S., the following paragraph popped up, summarizing one of the unfortunate stalemates that continues to stymie our industry/asset class in Washington, DC.

‘As long as HUD continues to consider the MHIndustry as being in the ‘trailer business’, by dint of their relating to us in terms of the 37 year old HUD Code, we ARE temporary housing – as defined and required by FEMA, towed to installation sites on a steel chasis! However, when HUD finally and fully implements provisions of the Manufactured Housing Improvement Act of 2000 – now in bureaucratic limbo for 11 years, but designed to position ‘manufactured housing’ on par with site – built housing, we’ll likely loose the negative stereotype associated with temporary housing!’ GFA

There you have it in the proverbial nutshell. Guess the obvious question that begs answering is this: ‘What are our two national manufactured housing advocacy bodies, in Washington, DC., doing to see that MHIA@2000 is finally and fully implemented during 2011?’ What’s the above – referenced ‘FEMA, CSH, LLCommunity discussion’ all about? Again, look back at the Open Letter to the MHIndustry, in last week’s blog posting at this site. To participate, contact Spencer Roane via spencer@roane.com

IV.

Triple Anniversary, International Networking Roundtable. Last week’s blog posting titillated you with a smorgasbord of timely, cutting edge topics scheduled for this year’s annual Roundtable event, 14 – 16 September at the Hyatt Regency Hill Country Resort & Spa on the western outskirts of San Antonio, TX. This time around? Let me ask you: ‘Where else, during 2011, even 2012, will MHIndustry aficionados and LLCommunity owners/operators, hear the likes of Joe Stegmayer (Cavco Industries & MHI chairman), David Lentz (American Land Lease), Joe Adams (Housing Marketplace), Lisa Brechtel (MHI’s NCC exec.), Spencer Roane (Pentagon Properties), Don Westphal (LLCommunity rehab specialist), David Gorin (RV guru), Earl King (underground leak detector), Suzanne Felber, Lifestylist®, Ed Hicks, Donna Rishel, Greg Harmon, Stephen Wheeler, Pat Ford, Jack Johnson, Mike Bowen, Dr. David Funk, Jeff Mishkin, Susan McCarty, and your truly? Answer: Nowhere else! And don’t forget, we’re celebrating three anniversaries this year: MHI’s 75th, Roundtable’s 20th, & NCC’s 15th! Be there! After last week’s blog posting, we received a dozen requests to receive invitations to the Roundtable. How ‘bout you? Are you on the short list? Be sure; call the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156.

V.

Manufactured Housing Manager professional property management training and certification class scheduled! At the request of many of you reading this weekly blog posting, we’ve scheduled the popular one day MHM class, to be hosted by the New York Housing Association, on 20 July 2011. Interested? Contact Nancy Geer via (800) 721-HOME or (518) 867-3242 to register and obtain local hotel information. Retirement Estates of Big Flats, in Horseheads, New York, is the host LLCommunity where this superb educational event will be held, from 8AM thru 4PM. Cost? Only $250.00 per MHM candidate. For this, you receive a copy of the asset class classic, Landlease Community Management, a monograph of contemporary MHIndustry ‘readings’, gold MHM pin and MHM Certificate! To date, nearly 1,000 MHMs own/operate LLCommunities throughout North America. And this is the only professional property management certification class taught in the U.S. by a LLCommunity owner, & Certified Property Manager®Emeritus, of the prestigious Institute of Real Estate Management®.

Ask your state MHAssociation exec or governing board, to schedule the one day MHM professional property management training and certification class in your state! When a class contains more than ten MHM candidates, the association is rebated $50.00 per student; so, with a class of 25 (max size), that’s a potential of $1,250.00 income for the association. And if the class is held on – site, like the one in New York, other than promotional mailings, there’s little cost to the state MHAssociation. Phone (317) 346-7156 for details.

VI.

Still looking! At one time or another, we’ve all heard about, seen, bought, even used weather radios, smoke alarms, burglar alarms, radon detectors, and on and on. Well, several years ago, when weather radios were all the rage at MHI meetings, I opined the perfect, needed device, for voluntary installation and use inside HUD Code manufactured and modular homes, as well as in site – built homes, is a hardwired – with battery backup, electronic device that ‘triples’ as a weather (tornado alert) radio, smoke alarm, and intrusion device! Well, guess what? Still waiting for such a multipurpose device to appear on the national housing market. Anyone out there, reading this blog, have a line on such equipment? If so, please let me know. Why? A national market awaits! Call MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

VII.

Gossip? Received this terse email message from ‘a friend in the MHBusiness’ earlier this week: ‘With the proposed $35.00 charge (subscription) for The Journal, starting August 2011, is it too early to plan a wake? Sad.’

Turns out it’s true. “You will continue to receive your copy of THE JOURNAL free until August 1, 2011. Thank you all for over 30 years in business. We look forward to serving you in the future.” Jim Visser, Publisher.

Why is this news? Because, if there’s no alteration to this announcement, the last of the ‘free’, advertiser – supported trade publications passes from the MHIndustry scene! As you’ll likely recall, Community Management was the first to disappear, then a couple years ago, Modern Home and Systems Building magazines; and during Fall of 2009, the venerable Manufactured Home Merchandiser ceased publication, followed shortly thereafter by Don Carlson’s Automated Builder magazine.

If you’re an Allen Letter professional journal subscriber (as most readers of this weekly blog posting are); you know, from the ‘2nd annual Official Manufactured Housing Resource for Print & On – line Media, plus Social Networking Web Sites’ directory, enclosed with May’s issue, that The Journal, the Allen Letter professional journal, and the Allen CONFIDENTIAL!, after 1 August will be the three remaining, subscriber – supported, national print trade publications, supplemented by five online newsletters and ezines, including this weekly blog posting. For a free copy of the above – referenced directory, call (317) 346-7156; and while you’re at it, if not already a subscriber to the Allen Letter professional journal, do so @ $134.95/year. The ‘Do – it yourself Guide to Social Media’, featured in the directory is incomparable, and was prepared by Lifestylist® Suzanne Felber or The Home Idea Factory.

***

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

August 1st Might End MHBusiness Chattel Finance as We Known It & September 14-16 to Celebrate 3 MHBusiness Anniversaries!

I.

Dodd – Frank Act, as it stands ‘today’, will likely break our MH $ Business!! Huh? That’s right. Letters are already going out to MHRetailers and LLCommunity folk (I’ve seen them), warning of the likely end, on 1 August 2011, of all chattel finance for manufactured homes selling for less than $78,000.00! Tragically, most MHIndustry & LLCommunity businessmen and women aren’t even aware of this end game scenario – our industry’s veritable Armageddon, despite best efforts by MHI and others to stop it!

Rationale for above headline & statement? MHI’s Dodd-Frank Task Force uncovered provisions in the Act that force lenders (‘Including LLCommunity self – finance programs!’), into increased fixed transitional costs amounting to about $4,000.00 per loan, above existing costs. Furthermore, since the great majority of chattel loans fall into ‘high risk’ and or ‘high interest’ categories, ‘closing costs’ are limited to 6% of the amount being financed. To recover those additional costs, plus existing costs, a chattel loan will have to be for more than $78,000.00! And with the exception of California, and some East coast states, the majority of chattel loans made today, are well under that dollar amount, unless made elsewhere, for example, in ‘A’ grade luxury LLCommunities.

Need more information on this downright scary subject? Phone Thayer Long @ MHI: (703) 558-0678. And perhaps YOU have a solution none of us have considered to date!

II.

Triple Anniversary, 20th annual Networking Roundtable to occur 14 – 16 September at the Hyatt Regency Hill Country Resort & Spa on the western outskirts of San Antonio, TX. Probably the nicest venue we’ve enjoyed to date for the annual International Networking Roundtable! This is a ‘by invitation only’ event, intended for owners/operators of landlease communities, but all major realty lenders will be present, along with a few HUD Code CSH home manufacturers, nearly two dozen specially – selected presenters, and event sponsors. For a registration brochure, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633 – 4764. Don’t wait to be solicited. Only contact lists we exercise for this seminal event are Allen Letter professional journal subscribers and the exclusive 500+/- name data base of LLCommunity portfolio owners/operators in North America. Don’t delay. Attendance is limited to first 200 registrants and sponsors!

How’s this a triple anniversary celebration? Simple. Year 2011 commemorates the 75th anniversary of the Manufactured Housing Institute (‘MHI’), our industry and asset class national advocacy body, headquartered in Arlington, VA. Year 2011 commemorates the 20th annual International Networking Roundtable. How many recall our first Roundtable event in Clearwater, Florida in 1991? And, year 2011 commemorates the 15th anniversary of MHI’s National Communities Council (‘NCC’) division! And how many recall the first meeting of NCC’s predecessor, the Industry Steering Committee, when 18 LLCommunity owners/operators convened in Indianapolis, IN., on 31 August 1993? Yes, this is a very special opportunity to celebrate three key anniversaries in MH & LLCommunity history. Plan today to participate!

What’s on the program? Nearly two dozen presenters, including two panels, variously holding forth on the Rebranding of LLCommunities; ‘lease option’ alternative to captive finance, ‘buy here – pay here’ & rentals; Siting ‘park models’ on functionally obsolete rental homesites; Lifestyling ‘Community Series Homes’ to Sell; ever popular realty lenders’ panel; a panel comparing ‘book value’ & ‘market value’ methodologies for home appraisals; and, a host of other informative topics. Also an Investors’ Forum, featuring dozens of LLCommunities ‘for sale’! Be sure to read June’s Allen Letter professional journal for program details, plus a Roundtable registration form will be enclosed! To subscribe, phone (317) 346-7156 or via website: community-investor.com Another topic: ‘Past, Present & Future of LLCommunity Research, Communication, Education, Networking & Resources’. This particular session will likely, and markedly, influence the very nature of your LLCommunity(ies) going forward!

III.

An Open Letter to National & State Representatives, Counties & Municipalities Impacted by Recent Storms, as well as FEMA, Manufactured Home Builders, and Landlease Community Owners/operators Nationwide!

During the last two weeks, as storm waters ravaged south central U.S., two Georgia LLCommunity owners/operators, David Roden and Spencer Roane, conceived and articulated a practical plan and means to provide quick, cost – effective, attractive housing for flood water – displaced citizens; a plan free of most shortcomings and problems associated with efforts post – Katrina housing.

Enter the Community Series Home or CSH. Designed and built during the past two years, for in – landlease (nee manufactured home) community placement, these smaller but functional, attractive – inside and out, sturdily built, affordable HUD Code homes, are ideal for quickly housing storm victims and other displaced individuals and families! Add to that, the plethora of vacant rental homesites within 50,000+/- LLCommunities across the U.S., and there’s a WIN WIN proposition in the making, for everyone involved! And just think; no more ‘overnight trailer cities’ in the secular press! In addition, since LLCommunity owners/operators already market, sell and often self – finance CSH homes on – site, reselling them once FEMA needs are past, will be a whole lot easier than getting rid of unsightly Katrina homes, featuring oversized hallways and bathrooms, and undersized bedrooms.

Are you enthused about this practical plan for providing quick, cost – effective, attractive housing, and LLCommunity access, for flood water – displaced citizens? If so, encourage you to soon contact one or more of the following key ‘players’ in this timely scenario, and offer your support and assistance:

• David Roden @ (423) 760-4818 & davidroden@mtnviewestates.com

• Spencer Roane @ (678) 428-0212 & spencer@roane.com

• Don Westphal @ (248) 651-5518 & don@dcwestphal.com (Keeper of CSH info!)

• Lois Starkey @ (703) 558-0654 & lstarkey@mfghome.org (MHI’s MHSpecialist)

• Lisa Brechtel @ (703) 558-0666 & lbrechtel@mfghome.org (LLCom. Specialist)

• George Allen @ (317) 346-7156 & gfa7156@aol.com (Source of BDM List: HUD Code home manufacturers’ Business Development Managers marketing Community Series Homes)

Know what? This is the first, potentially large scale, eminently society – serving, manufactured housing – focused concept and plan, I’ve seen in a very long time! This is a viable opportunity for several segments of the HUD Code manufactured housing industry and landlease community asset class, to ‘work well together’ for the greater cause of helping folk experiencing hard times and tragedy; at the same time, putting our ability to quickly provide truly affordable housing, and an attractive community lifestyle, ‘center stage’, for all to see, experience, and appreciate! Let’s go for it! GFA

IV.

‘Yours truly’ debuted on youtube this past week, interviewed by Suzanne Felber of LifeStylist.com at the Manufactured Housing Congress in Las Vegas, NV. Interested in seeing it? Go to http://www.youtube.com/watch?jwns2Aql19U By the way, if you presently stock and sell Community Series Homes on – site in your LLCommunity(ies), don’t miss Suzanne’s feature article in June’s Allen Letter professional journal, titled: ‘Lifestyling Community Series Homes to Sell!’ She’ll also be a presenter, on that hot topic, at the Triple Anniversary, 20th annual Networking Roundtable in San Antonio!

V.

Mark your calendar! Next one day Manufactured Housing Manager (‘MHM’) professional property management training and certification class will occur 20 July 2011, from 7:30AM to 4PM, at the Retirement Estates of Big Flats Community Center in Horseheads, New York. Only $250.00 per MHM candidate. MHMs receive a copy of Landlease Community Management text, monograph of contemporary MHIndustry ‘readings’, gold MHM pin and calligraphy – printed MHM certificate! To register, phone (800) 721 – HOME or (518) 867-3242. Hosted by NYHA. I’ll be instructing. Ask your state MHAssociation to sponsor an MHM class during 2011! For info: (317) 346-7156.

1 August 2011. This is the date the 2011 Class will be inducted into the RV/MH Heritage Foundation’s prestigious RV/MH Hall of Fame, in Elkhart, IN. There’ll be about 400 RV/MH aficionados present for the banquet that evening. If you’ve never visited ‘our museum & library’, plan to do so now. For information: (574) 293-2344.

***

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

Blog Flogger (reader) Comments: MHIndustry, Home Valuation & finance!

&

Proofing – Spoofing the 3:1 Ratio for Pegging Rental Homesite Rent Rates

&

The Triple Anniversary Networking Roundtable, 14 – 16 September in TX.

I.

“There is no question, we in the MH World have lost the political, economic and social high ground relative to what authentic ‘affordable housing’ is and ought to be. (And) it’s no longer enough for us to say, ‘We lack clout’ in DC or statehouses. We need to creatively, individually, and collectively engage the media, public and government, demonstrating true affordability relative to our quality, eco – minded ‘green’ homes!” TK

“Between HUD, our national and state organizations, and (corporate) ivory towers, we departed the (affordable housing) market that fed us, and now wonder where we are. Appears foreign competition could easily take over this industry, like so many others, that ‘forgot their customer base’.” NB

Appears landlease communities have a viable ongoing ‘business model’ ensuring their survival. They’ll still need a few (home) manufacturers, but likely can succeed nicely. Those remaining manufacturers will have to relearn ‘success’, by building economically – sized, well – designed and built homes! In the meantime, the remainder will fade and die that ‘death of a thousand cuts’, as you aptly put it. George.”

Some pretty heady words there, from our peers throughout the MHIndustry and LLCommunity asset class, responding to blog posts of the past few weeks. Are any of our elected and salaried executives ‘out there’ listening? How ‘bout that still quiet charismatic, visionary – but – effective leader, who’s yet to step forward to bring us together to plan and effect the rejuvenation of the industry and property type? Hmm? Know what’s interesting about the previous sentence? At the MHCongress in Las Vegas last week, a half dozen attendees talked to me individually about this very matter. Each had his/her idea as to whom I’ve been referring to as ‘our reluctant leader’ – and guess what? All but one of them was ‘right on the money’, so my commentary to date has been Right on Target! But we continue to wait….

II.

Remember the heady, if not heated discussion, of the past few weeks on LinkedIn, that spilled over into this weekly blog posting, on the subject of ‘book value’ versus ‘market comparables’ approaches to valuing HUD code manufactured homes sited within and outside landlease communities? Well, the conversation continues online at that social media site, but here’re a couple commentaries, again from blog floggers, to this blogger:

“I agree 100% with your point on NADA book value. There is indeed, a sad irony behind the question: ‘Do manufactured homes depreciate?’ Of course they do, if loan amounts are based on a depreciation schedule! And, if older homes can’t be financed, then of course there’s no lasting value outside of pennies on the original (purchase) dollar. It’s ridiculous.
&
And yes, I have a position on the matter. I think the ‘depreciation factor’ is so deeply ingrained in the consumer’s mindset, it’s going to be touch to shake. But it needs to be changed. In my view, the principle is: ‘Do what’s in the best interest of the customer, and long – term, you’ll make out just fine. Abuse them at every turn, and you’re a short – timer, with them and your business interests. And whether my associates in ‘MH land’ agree with me or not, that’s how it works!” PB

And from yet another source: “Real estate appraisers DO know how to appraise manufactured homes ‘on land’ as realty. The problem is, we routinely site these homes in awful locations, ‘miles from civilization’ and the values do come in low. Any time a value comes in low, our industry screams, “They don’t understand manufactured housing”, when, in fact, they don’t understand you can’t place a good home in a horrible location and expect to get top dollar.
&
Furthermore, it’s true, few real estate appraisers outside FL, AZ & CA are interested, willing, or qualified to do chattel (in LLCommunity) valuations. But the job can indeed be done, when you hire manufactured housing valuation specialists to seek out market ‘comps’ in local housing markets where subject homes are located. DR

Note. How ‘bout the expectation Dodd – Frank regs will make for expensive housing appraisals? Quite likely, for ‘real housing’! Now, this question begs answering: Which camp will we be in, going forward, real housing or manufactured housing – continuing with our very own set(s) of rules, like book valuation, and no secondary housing market? We can no longer afford to have it both ways! What do YOU think?

III.

Here’s an interesting commentary received from a LLCommunity owner/operator who attended the MHShow in Tunica this year. Seems he/she picked up a loan rate sheet from one of the third party chattel lender exhibitors, and figured out the following….

Note that a $35,000 singlesection home transaction, with 10% down payment, and customer with a 650 – 700 credit score (i.e. a premium buyer), would pay 11.99%+0.5% (for an under’ $50,000 loan), or 12.5% plus 2% origination fee. Based on a 15 year loan, that works out to an effective interest rate of 12.88%

Buyer’s monthly payment would then be $388.00. Assuming site rent of $250.00/month, his/her total payment would be $639.00. That same buyer would probably be approved for a 5% site – built loan. His $/her $638/month payment (15 year term) would qualify for a $80,000 loan. What percentage of the eligible home buying prospects do you think would sign up with this lender for a $35,000 singlesection manufactured home in a LLCommunity versus $85,000 site – built home?

The numbers are similar, when manufactured home is put on private property (chattel only). That buyer’s interest rate would be 10.25% + 0.5% = 10.75%, plus 2% origination (effective rate on 15 year loan would be 11.1%). Door # 1 leads to a $35,000 singlesection manufactured home. Door # 2 leads to a $48,000 site – built home.

Bottom line? “Those (typical) terms from that lender suggest their experience financing chattel – only manufactured homes is pretty poor. Probably just the nature of the beast. The spread between manufactured housing and site – built rates is simply too great to ever make the former very attractive to prospective homebuyers.

IV.

Are landlease communities pricing themselves, homesite rent rate – wise, out of their local housing markets? Anecdotally, the answer appears to be ‘Yes’, as urban and semi – urban LLCommunities, across the U.S., experience significant declines in physical and economic occupancy rates (i.e. Or, as some say, higher vacancy rates). While this topic deserves more research than I can give it here, an article in the March/April 2011 issue of Multihousing Professional (p.28) titled, ‘Where rents are rising the most, and least’, relative to conventional apartment communities across the U.S. was illustrative. Here’re a half dozen SMSAs (Standard Metropolitan Statistical Area), for which we were able to compare monthly apartment rent rates in the subject article, with adjusted site rent averages in ‘family’ & ‘all adult’ LLCommunities surveyed and published in a recent JLT & Associates report. In the following examples, I used the divisor of 2.5 instead of 3, per the 3:1 Rent Ratio Rule (for comparing LLCommunity & apartment rent rates), since 2.5 is oft recommended for SMSA markets vs. decidedly suburban and rural markets.

SMSA Apt. Rent LLCom. JLT & Associates adjusted rates

Seattle $1094 / 2.5 = $438 model vs. $477 @ family & 526 @ adult

Portland, OR. $877 / 2.5 = $351 model vs. $442 @ family

Tucson, AZ. $683 / 2.5 = $273 model vs. $323 @ family & $379 @ adult

Las Vegas $811 / 2.5 = $324 model vs. $488 @ family & $532 @ adult

Phoenix, AZ. $763 / 2.5 = $305 model vs. $384 @ family & $435 @ adult

A practice that tends to skew published average LLCommunity site rent rates upward in urban markets, relates to the property composition of SMSA survey samples Generally speaking, only larger institutional investment grade LLCommunities are researched and tallied; while the smaller, far more numerous properties, e.g. under 100 sites in size, are oft not included in SMSA survey samples. Result? In a sense, rendering a ‘false positive’ result, i.e. SMSA area average rent is ‘higher’ than would be the case, if all LLCommunities in the SMSA were included in the survey sample. But then, this 85%+/- of the nation’s LLCommunity stock, ‘under 100 sites in size’, are also difficult to track, due to lack of on – site staff to respond to rent surveys. These smaller properties too, frequently have lower site rent rates than larger institutional investment grade ones found in LLCommunity portfolios. Why? Often older with more functionally obsolete rental homesites; owned by Mom & Pop investors who’re frequently emotionally attached to their residents – along with a fear of not being able to replace ‘older, smaller homes’ if they depart.

Point? In the face of declining physical occupancy, a LLCommunity owner/operator must look at every aspect of his/her operation to remedy that situation. Are marketing measures generating sufficient volume of incoming telephone and online inquiries, and on – site visits, to drive conversion percentages needed to more than offset move – outs? How do you know? Is a daily record being made of such inquiries (Including the key question: ‘How did you first learn/hear of this LLCommunity?’), and is this record of inquiries being evaluated at least weekly, by the property owner or a regional or executive property manager? If not, start NOW! And just how sure are YOU, on – site staff is performing the way they were trained (‘They were trained weren’t they?’) to handle telephone and online inquiries, as well as on – site, in person interviews? Only one effective way to know: Have your property (ies) Mystery Shopped regularly and anonymously by professional ‘shoppers’, especially by individuals who clearly understand the MHIndustry & LLCommunity business, to the extent of being sensitive to basics and nuances of our housing product and unique lifestyle, whether ‘family’ or ‘all adult’. When was the last time you had your LLCommunities shopped? Perhaps therein lies the answer to your declining physical occupancy rate. And economic occupancy? Well, that’s another story altogether.

V.

Don’t miss reading next week’s blog posting on this website! We’ll be announcing details of this year’s TRIPLE ANNIVERSARY ROUNDTABLE, scheduled for 14 – 16 September, somewhere in Texas! Triple anniversary? Yep. We’ll be celebrating manufactured housing’s 75th anniversary; International Networking Roundtable’s 20th anniversary; and National Communities Council division of MHI’s 15th anniversary! How can YOU not want to be present for such an historic and gala celebration?

And this year’s two dozen presenters? Wait till you see the list! Can already tell you there’ll be folk there ‘Everyone knows, but rarely see!’ One in particular (might) be the Allen Letter’s ghost columnist MH Ronin (It’s not me!). Others? Well, you’ll just have to wait for the blog posting, then the registration brochure which’ll be enclosed with the June issue of the Allen Letter professional journal. That alone, is a good reason to ensure your subscription is current. Know why? We use only four data bases for this ‘by invitation only event’: Allen Letter subscribers, the exclusive 500+/- name contact list of LLCommunity portfolio owners/operators in North America, 13th National Registry of Realty Mortgage Lenders & Brokers, and last year’s Roundtable registration list. If you’re not on one of those four lists, and desire to attend this year’s TRIPLE ANNIVERSAY ROUNDTABLE, I strongly recommend you subscribe to the Allen Letter professional journal today! (317) 346-7156 or the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. As in years past our maximum capacity is 200 attendees.

***

George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247 (317) 346-7156
Gfa7156@aol.com

“Where’s Lou Vela?”, More ‘MH’ Questions, & GSE Reform!

‘Do YOU advocate CSH, attend the NCC Forum, MHCongress, & INR?’

I.

Community Series Homes or CSH. It’s been two years and two months since a hundred HUD Code housing manufacturers and landlease (nee manufactured home) community owners/operators caucused, for first time in MHIndustry history, at the new RV/MH Heritage Foundation’s Hall of Fame facility (museum & library) in Elkhart, IN.

Why? To agree how to better market and site new manufactured homes on vacant rental homesites! How to do so? Via exciting new exterior designs (e.g. smaller ‘footprints’, front load porches and more), interior floor plans, appropriate specifications, even WOW features enticing to LLCommunity buyers. And, to market these exciting new homes, via three dozen newly appointed Business Development Managers or BDMs, employed by the HUD Code home manufacturers. It’s been almost as long a time, since the Community Series Home (differentiated from heretofore Developer Series Homes of the late 1990s), was identified and labeled as such, at the 18th annual Networking Roundtable in Chicago. Since then, CSHs have become the LLCommunity owner/operator’s ‘home of choice’, to fill vacant, and frequently functionally obsolete (i.e. ‘too small for today’s behemoth – sized manufactured homes’) rental homesites in properties throughout the U.S. and Canada.

But, ‘Guess what?’ While there’s been some significant progress, among a few enlightened HUD Code home manufacturers – now shipping increasing numbers of CSH models into LLCommunities, they’re still rarely identified as such, in corporate literature. And at regional MHShows, HUD code home manufacturers continue to exhibit the ‘bigger box = bigger bucks’ behemoths (e.g. 16X80 & large multisection units) that helped get us into our present sour business pickle! Adding ‘insult to injury’ was the absence of an awards category, at the recently completed Manufactured Housing Congress in Las Vegas, singling out these industry – saving CSH models, as being worthy of national recognition! Hopefully that‘ll be addressed at the 2012 MHCongress.

In the meantime, it’s increasingly difficult not to surmise HUD Code home manufacturers have resigned themselves to ‘die the death of a thousand cuts’. How so? Four indicators and counting: 1) at the mercy of federal regulators intent on increasing floor fees; 2) benign neglect of loan origination and secondary market financial institutions, where third party chattel capital is concerned; 3) abject reluctance to return to their ‘affordable housing’ roots, the very today market that brought them shipment volume success in the mid – 1970s; and, 4) aforementioned ‘foot dragging’ where forging active CSH partnerships with LLCommunities nationwide, is concerned. And this list doesn’t even include lack of viable warranty, responsibility for home installation, and customer service symptoms….

For the seriously interested MHIndustry aficionado, here’re the Top Ten Features that characterize contemporary Community Series Homes today:

• 3BR (bedroom), 2B (bath) design, either singlesection or small multisection homes, oft times with a front load porch, sometimes with recessed steps.

• Open floor plan with WOW factor interior treatment

• Shutters on all windows

• Vaulted ceilings

• Asphalt shingles on roof

• Linoleum in kitchen, utility & front door areas

• 40 gallon water heater

• 200 amp service panel

• Wood cabinetry throughout

• Non – plastic sinks and tubs

And, if you’d like a FREE copy of the aforementioned list of nearly three dozen official BDMs, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 and request it. For detailed information about CSH product design; and, ‘Why it’s important, even critical, to upgrade older LLCommunities before buying and siting new CSH homes!’, contact Don Westphal @ (248) 651-5518. You’ll be glad you did.

II.

5th National Communities Council Forum Attendance up by about 50 from last year’s 200 registrants! Most frequently asked question this year? ‘Where’s Lou Vela?’ Answer: He’s pretty much semi – retired these days, but maybe expect to see him at the International Networking Roundtable (INR’) later this year, when two dozen specialty realty – secured lenders and loan brokers with affinity for the LLCommunity asset class, gather for their annual Lenders’ Panel! To ensure you’re on the invitation list for the 20th annual INR, 14 – 16 September, phone (317) 346-7156 or email via gfa7156@aol.com By the way, the 13th annual National Registry of Landlease Community Lenders & Loan Brokers was released as a lagniappe in the April issue of the Allen Letter professional journal. Receive a FREE copy of that seminal report and directory of 18 ‘players’ when you subscribe to the newsletter! Simply phone the number cited in this paragraph.

Home finance, home finance, home finance, and ‘rentals’ were foci of this year’s NCC Forum. Bottom line? LLCommunity owners/operators should probably not go the self – finance route, either via ‘buy here – pay here’ & or ‘captive finance’ methodologies, alone! Who to contact for information and advice? The NCC Forum was the first venue where all present loan servicers and chattel finance consultancies were identified, and are listed here in alphabetical order:

• 21st Mortgage Corporation per Matt Kerlin (800) 955-0021

• CU Factory – built Housing per Dick Ernst ((972) 503-3201

• Kenneth Rishel Consulting (217) 971-3968

• Triad Financial Services per Don Glisson (904) 223-1111

• PMH Financial per John Briggs (303) 467-8009

Did I miss anyone? If so, let me know by phone or email, and once verified, I’ll add them to the directory being prepared for the 2nd edition of the Manufactured Housing $$$ Primer.

Rentals advice? If you’d like a FREE copy of the seminal article on that subject, titled: ‘To Rent or Not to Rent!’, phone the aforementioned MHIndustry HOTLINE and request it. Tells you just about all you need to know to make an informed HOW TO decision. A Word of Caution. While ‘renting manufactured homes in LLCommunities’ was ballyhooed at the NCC Forum, be careful! A 100% ‘rental unit’ community ‘works’ in a supportive local housing market; however, mixing bona fide homeowners/site lessees with a like number of ‘apartment renters’ creates two classes of citizenry in one’s property. Not always, if ever, a happy mix. And there’s much more to this decision. That’s why you need to read ‘To Rent or Not to Rent!’ before taking the plunge.

Property classification or gradation. Now this was a surprise for the NCC Forum audience; to learn U.S. Bank – Manufactured Housing Finance, has – as it turns out – an internal ABC method of determining the quality of landlease communities in which they’re considering underwriting manufactured home loans. At present, the methodology is not available for general distribution. But all is not lost. There’re two long – established programs to access to a similar end. First, the Community Attributes Systems or CAS, formalized ‘years ago’ by an MHI task force comprised of third party chattel finance firms and LLCommunity owners/operators. Simply go to www.mhicas.org to see how your LLCommunity is described thereon. Yes; know it or not, your LLCommunity is likely listed and described. Disagree with what you see/read? Identify yourself as the property owner and effect desired changes. You owe it to yourself to do so! And then there’s the widely – used manual ‘grading system’ form, the ABClassification System, designed in 1998 by Susan McCarty and yours truly, revised in 2001 by a NCC Task Force. Also available FREE to you, by phoning the aforementioned MHIndustry HOTLINE and requesting PM form # 126. Anyone in the MHIndustry & LLCommunity business ‘still talking stars’ is woefully out of date, as the Woodall System of classifying ‘mobile home parks’ has not been updated since 1976, 35 long years ago!

‘Let’s start our own bank to finance new & resale manufactured homes!’ Once again, that now – not – so – novel thought and aspiration was voiced by more than one NCC Forum attendee. But will it go anywhere this time around? I doubt it. Why? Just look at the unfolding finance regulatory environment most of us are dealing with these days? Hopefully the time will indeed come, and leaders emerge (Heck, we can’t even get a charismatic, capable, experienced leader to step forward to lead our industry out of its’ doldrums! Huh? That’s right. Just read back through this web site’s blog archives, for a few weeks, for more on that timely and disturbing subject), that’ll make this decades – old ‘dream’ a practical reality. I doubt the time is now…. Anyone disagree? Tell me!

An interesting sidebar at this year’s NCC Forum was the distribution of an article describing the Lease Option approach to filling vacant rental homesites in landlease communities. Titled, ‘Lease Option Sales Transactions Gaining in Popularity!’ by Spencer Roane, portfolio LLCommunity owner/operator headquartered in Atlanta, GA. For a copy of this seminal article, phone (678) 428-0212 or email spencer@roane.com If YOU have successful personal experience with lease option methodology, let me know!

III.

20th annual INTERNATIONAL NETWORKING ROUNDTABLE or INR Considering renaming this year’s event as the Triple Anniversary Networking Roundtable! Why? Read on… Dates still 14 – 16 September 2011; location hopefully finalized with next week’s blog posting! In the meantime, know this: The 20th INR will be awash in celebration! How so? Besides unparalleled networking (This ‘by invitation only’ event, ensures majority of registrants are bona fide LLCommunity owners/operators & realty lenders), superb educational seminars (Nearly two dozen specially – selected presenters!), and unprecedented deal – making opportunities (‘It’s said, 50% of the next year’s LLCommunity transactions get their impetus at the annual INR!’), the INR will be celebrating its’ 20th anniversary, as well as the 70th anniversary of manufactured housing, and 15th anniversary of MHI’s National Communities Council (‘NCC’) division! How can you not want to be present for such an unparalleled networking, educational, deal making, celebratory event? Again, phone (317) 346-7156 or via gfa7156@aol.com to add your name and address to the official ‘invite’ list.

IV.

GSE Reform. ‘With the February 11 release of the Obama Administration’s white paper, ‘Reforming America’s Housing Finance Market’, it’s official – the two giant government – sponsored agencies Fannie Mae and Freddie Mac will no longer exist in their present form.’ This from the March/April 2011 issue of Multihousing Professional magazine, pp. 43 – 47.

The magazine feature goes on to briefly describe three plans for phasing out Fannie Mae & Freddie Mac, with each plan restricting federal credit to varying degrees:

• ‘One option restricts it entirely and limits government’s guarantee to the FHA, USDA – Rural Development, and VA.’

• ‘Another offers a government guarantee only in case of emergencies.’

• ‘Option Three still restricts federal credit – they didn’t define it specifically – but there very clear clues that if they were to extend federal credit to the market…it would be on defined terms.

With that said, the National Multi Housing Council (‘NMHC’) points out, “We have two incredibly successful business models out there for the multifamily books of business that Fannie and Freddie do. Fannie Mae has the delegated underwriting (‘DUS’), where their lenders are in the first loss position. They have skin in the game and it really colors the kind of underwriting they do….” And for that matter, “If you look at the multifamily books of the GSEs, they performed well, even through the crisis.” (Secretary Donovan)

Furthermore, because of demographic characteristics on the horizon (e.g. 78 million cohort of echo boomers entering the housing market), “half of all new homes built between 2005 and 2030 will have to be rental units.” Manufactured housing and landlease communities anywhere in that mix? Let’s hope and plan for it to happen!

Relative to whether Fannie and Freddie have met three affordable housing goals set for them in 1992, by the Federal Housing Enterprises Financial Safety & Soundness Act, a recent Policy Analysis published by the CATO Institute (titled: ‘Fannie Mae, Freddie Mac, & the Future of Federal Housing Finance Policy’ by David Reiss), pointed out: “Fannie & Freddie typically meet these goals, although they sometimes may use financing shenanigans (such as buying a portfolio of loans solely to meet affordable housing goals) to do so.” (And) ‘A number of studies have indicated Fannie and Freddie actually cannibalize the FHA loan market by lending to borrowers who would have otherwise received FHA mortgages.” (Finally) “the U.S. General Accounting Office has also questioned whether Fannie and Freddie, notwithstanding their affordable housing mandate, do any more than any other lenders to promote affordable housing.” Hmm. Where have we, in the manufactured housing business, encountered that latter matter before? Anyone recall our ‘duty to serve’ contretemps? (p.9)

So, how will Fannie and Freddie end up, down the line? The above referenced Policy Analysis had this to say on the matter: “Because Fannie and Freddie are poor agents of public policy and political powerhouses with unmatched influence, the two companies should be fully privatized.” – by extension, no longer Government Sponsored Enterprises or GSEs. (p.14). In any event, whatever plan for housing finance and GSE reform is agreed upon, it’ll take five to 10 years to fully implement.

V.

Grand Opening! Shiloh Estates in Indianapolis, IN. This is an early example of the turning around of a LLCommunity acquired via the foreclosure process. If interested in attending this 14 May event (10AM – 6PM), phone (317) 356-1666. Address? 7441 Chinook Circle (Washington & Shortridge Roads), Indianapolis, IN. 46219. I certainly plan to attend! GFA

***

George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156 & gfa7156@aol.com

‘Affordable Housing’, America’s Bugbear of Shelter Definition & Measures

How Do YOU Describe & Measure Affordable Housing & Housing Affordability?

First, the bugbear. Per Webster’s College Dictionary, bugbear is ‘a persistent problem or source of annoyance’. Throughout the U.S. housing market, bugbear is the absence of clear description, and resulting internecine confusion – due to lack of consensus regarding measures of affordable housing, that are ‘perennial problems and sources of annoyance’, among realty, shelter and housing finance aficionados!

Here’s a recent example from April 2010 issue of Multi-Housing News (p.11): Two companies “…have won the bid to develop the 900 – unit initial phase of Hunter’s Point South, a mixed – use affordable housing project that will leverage $2 billion in private investment. The development cost for the residences in the first phase is $360 million.” Stop! That’s $400,000.00 to develop each affordable housing unit! How so? ($360,000,000. divided by 900 units). Prompts one to speculate what the unit sale price or apartment rental rate will be for each affordable housing unit. And, affordable to whom?
Answer: Anyone who can afford a likely (un)affordable price tag or be subsidized!

At the opposite end of the affordable housing definition/description spectrum is this lightly edited gem, from the former chairman of a national realty trade body: “Affordable housing has become a politically correct euphemism for subsidized housing. While source of funding for (payment) shortfalls for an affordable housing property is not always specified, more than likely it is supplied by the taxpayer, one way or another.”

Several years ago, PMN Publishing researched, prepared and distributed the seminal booklet titled HOUSING AFFORDOGRAPHY; subtitled, ‘Study of Affordable Housing Formulae & Measures of Housing Affordability’, a.k.a.

• Housing’s ‘Anything you want it to be!’ Perennial Prevarication! Or,

• In the minds of many (then) recently displaced homeowners, ‘Housing’s dirty little secret!’

The gist of the booklet was comprised of four descriptions, and as many measures of, affordable housing perspective:

• The 30% Housing Expense Factor (‘HEF’) purist

• The Housing Opportunity Index (‘HOI’) devotee

• The Housing Wage (‘HW’) aficionado; and/or simply,

• One Who Believes, when a home buyer/mortgagor or apartment lessee commits to payments on a mortgage or lease; & a lender/mortgagee or apartment lessor underwrites a loan/mortgage or executes a lease, it’s affordable & that’s all there is to it! (Think back to the earlier $400,000.00 affordable housing example…)

The booklet, as popular and widely discussed as it was during its’ two year run in the realty and housing markets, is now out of print. But during the past year, a fifth measure has come to light, and is herewith added to the four descriptive measures:

• Income to Home Value Ratio (‘IHVR’)

A challenge to the reader. Take time to learn and understand the basics and nuances of these descriptions of affordable housing measures, and begin applying them to your workaday life and housing interests. And, as you happen upon additional descriptions and measures of affordable housing, please let us know via: GFA c/o Box # 47024, Indianapolis, IN. 46247.

I.

The 30% Housing Expense Factor or HEF

A safe, working definition. ‘Housing is affordable when no more than 30 percent of a household’s annual gross income (i.e. household can be one or more income producers living in the same singular housing unit) or AGI, is consumed by the sum total of annual PITI (Principal & Interest dollars paid on one’s home mortgage, real estate Taxes & homeowner’s Insurance premium dollars), plus annual utility expenses (water, sewer, heating fuel) for the housing unit, but not including telecommunications costs (e.g. telephone, cable TV & Internet access)’1 Note. This safe 30% HEF sometimes varies (e.g. 25%, 28%) among realty, shelter and housing finance practitioners.

An alternate, but riskier working definition, has the 30 percent HEF, of a household’s AGI, comprised of only PITI, but not including annual utility expenses & telecommunications costs. This, in effect, creates a ‘two sides of the same coin dilemma’: the safe, or more conservative, ‘loaded’ 30% HEF, described in the previous paragraph, versus a riskier ‘barebones’ 30% HEF! Can you see how the temptation to buy ‘more house than one can afford’ quickly appears, when one’s entire 30% HEF is comprised of just PITI, without including the usual household utility expenses – that still need to be paid, but outside the widely recognized 30% HEF limit? Hence, the riskier rental and or home buying perspective!

Here’s another challenge for you. From now on, when you hear or read of this ‘30% affordable housing factor’, ask yourself: ‘Are they describing or advocating the safe (i.e. ‘loaded’) 30% HEF, or the riskier (i.e. ‘barebones’) 30% HEF – & Why?’ Know what you’ll learn? The measure is rarely clarified; and when one asks, the realty, shelter or housing finance practitioner will generally not know or say. That’s one reason why ‘affordable housing’ continues to be the bugbear of the American shelter industry.

II.

The Housing Opportunity Index or HOI.

‘Housing Opportunity Index (‘HOI’), formerly known as the Housing Affordability Index or HAI. This oft quoted index links a lender and trade advocacy group, e.g. National Association of Home Builders or NAHB/Wells Fargo HOI, also National Association of Realtors or NAR/Wells Fargo HOI. Here’s how HOI is described on NAHB’s website:

In the U.S., an HOI is calculated quarterly by the NAHB, comparing
the Average Median Income (‘AMI’) in a locality with the median
home price. The index is stated as a percent of the population, with said
AMI, able to afford the median – priced house. For example, in
year 2000, a HOI of 81% of AMI households in Indianapolis (with an
AMI of $57,700 at the time) would be able to afford the median – priced
home of $122,000). In comparison, San Francisco, with an AMI of
$74,900 and median house price of $464,000 had a HOI of 10.3%.’2

Two important cautions. ‘NAHB assumes households can afford to spend 28 percent of their AGI on housing’ (Recall 30% HEF measure described earlier), but does NOT, in anything this realty writer has read, specify whether composition of the 28% HEF is ‘loaded’ or ‘barebones’ – hence the ‘first problem’ with the HOI: Does the unspecified HEF nuance favor the safer or riskier perspective?. A second possible flaw? To ‘work (these) numbers’, one needs to know the total number of homes sold in the targeted local housing market during the studied year, to calculate the percentage of citizenry ‘able to afford the median – priced home…’ This detail is rarely, if ever, provided. Case in point? This (April 2011) press release published in RISMedia’s REAL ESTATE magazine (p.7.):

Nationwide housing affordability, during the fourth quarter of 2010, rose to its’
highest level in 20 years…according to NAHB/Wells Fargo HOI data. The HOI
indicated 73.9% of all new and existing homes sold in the fourth quarter of 2010
were affordable to families earning the national median income of $64,400.”

See? Which HEF perspective is favored or built into the HOI; the safer or riskier perspective; and, how many homes ‘sold’ across the U.S., to compute the 73.9% HOI?
In this writer’s opinion, the HOI measure of housing affordability, as interesting and helpful as it may be, remains flawed as long as it’s a proprietary affordable housing measure sans HEF explanation and total home sale disclosure.

III.

The Housing Wage or HW

‘Housing Wage (‘HW”) methodology comes at affordable housing and housing affordability differently. Instead of first estimating value of a home or lease, then calculating how much AGI is required to afford same; HW methodology calculates the amount a person working fulltime must earn to afford, for example, a two – bedroom apartment, in a given local housing market, without paying more than 30% of AGI in rent.’ 3

An example: If a 2BR2B apartment rents for $900/month and represents
30% HEF (usually ‘barebones’), mathematical extrapolation calculates
AGI to be $36,000., which,, when divided by 12 months, and in turn, 172 work
hours/month (40 hrs. X 4.3 weeks/month) = $17.44/hour is the HW required to
afford this 2BR2B apartment in this local housing market. But note, utility
expenses, unless included in the monthly rent rate, will still need to be paid.

Furthermore, it’s common to see results of HW analysis expressed in terms of ‘How many times the minimum wage’, the wage or salary – earner must make to afford, for example, a two – bedroom apartment. In the above example this would be, using 2009 Federal Minimum Wage of $7.25/hour, a factor of 2.4. Therefore, in this local housing market, one must earn 2.4 times minimum wage, in this instance, of $7.25 = $17.40/hour, to afford the aforementioned $900.00/month 2BR2B apartment.

IV.

Workforce Housing or WFH

Workforce Housing (‘WFH’) is generally defined as being homes and apartments for nurses, firefighters, policemen and teachers making between 60 and 120% of a local housing market’s (i.e. usually affluent communities where they work) Area Median Income or AMI. How to calculate this range in workforce housing salaries and wages?

1. Go to zipskinny.com to ascertain the AMI for the targeted local housing market.
2. Calculate the 60 & 120% range figures.
3. Multiply the two ’60 & 120% dollar range figures’ by 30% HEF.
4. Divide these two totals by 12 months, to estimate monthly rent or mortgage payment required of this targeted workforce, to be able to afford to live in said local housing market.

For example. Given $63,800 AMI X 60% = $38,280; and $63,800 AMI X 120% = $76,560, or a wage/salary range of $38,280 to $76,560/year for workforce to be able to buy or rent affordable housing in this local housing market. Again, 30% HEF is usually calculated from the ‘barebones’ perspective, encouraging the tendency to ‘buy more house or rent more apartment’ than might be prudent, as utility expenses will still (maybe not, in the case of apartments) need to be paid ‘outside’ the 30% HEF allowance.

What HW does, is demonstrate to targeted workforce, their municipal employers, land planners, and local zoning boards, what salaries/wages need to be, to enable nurses, firefighters, policemen and teachers to live in the local housing markets where they work!

V.

The Income to Home Value Ratio or IHVR..

Simply, this ratio achieves traction when a housing market’s median home value (e.g. US in 2010 = $172,134) is divided by its’ AMI (e.g. US in 2010 = $63,800) for same time period, in same housing market; in this case, resulting in a 2.7 IHVR.

In other words, households earning the U.S. AMI of $63,800 would have to purchase a home costing nearly three times their AGI, to own a median U.S. home valued at $172,134. Sound extravagant? Not when considering some local housing markets are still at 7 IHVR, requiring households to spend more than seven times their AGI to own a median priced home in their local housing market.

VI.

One Who Simply Believes that…

“Ownership housing is affordable if the price is right.” Shelterforce, Fall 2007.

Summary. “…the perspectives on affordable housing and housing affordability are as broad and imprecise as the perspectives and measures described in this brief review. In the final analysis, if there is no consensus or agreement, on a common definition or description of affordable housing and housing affordability, let alone practical and easy – to – use formulae, relative to the subject; then there’ll be few Ah Ha! home buying and renting experiences; and the final ‘One Who simply Believes…’ perspective, will remain as appropriate as any other definition and measure of this too variegated subject!” 4

VII.

What say YOU?

Is there a practical, affordable housing definition and or description, as well as additional measures thereof, with which you’re familiar, that has not been covered in the previous paragraphs? If so, please communicate it/them to us, for possible inclusion in a new edition of HOUSING AFFORDOGRAPHY, at some point in the future. Use either the postal mailing address provided earlier in this bugbear expose’, or via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156.

*****
Another subject altogether: ‘Update to Rankings in the 22nd annual ALLEN REPORT’

Turn to page # 18 in your copy of the 22nd annual ALLEN REPORT. Soon after the compilation of ‘# rental homesites owned/fee – managed’ data was complete, and landlease (nee manufactured home) community portfolio owners/operators ranked, American Land Lease in FL. (a.k.a. Green Courte Partners in IL.), listed as #9 on this year’s list, acquired six LLCommunities, containing 1,850 rental homesites, from CRF Communities (#24). Had this acquisition consummated a month earlier, and these two new totals been included in the above – referenced compilation, American Land Lease would likely have been ranked as #7 in the 22nd annual ALLEN REPORT.

Turn to page # 19 in your copy of the 22nd annual ALLEN REPORT. A month after publication of this year’s ALLEN REPORT, we learned there had been a significant reporting error in the property portfolio numbers for J & H Asset Property Management, in CA. Their correct portfolio numbers are 69 LLCommunities and 10,520 rental homesites fee – managed. This correction constructively moves them up in ranking from #70 to #14; an adjustment that’ll be effected in the next edition of the ALLEN REPORT.

Do YOU have your copy of the 22nd annual ALLEN REPORT? Well, our inventory is down to the last few dozen copies of this seminal statistical compendium. And we’re making this very special offer through to the end of May 2011:

For a total of $250.00, we’ll send you the 22nd annual ALLEN REPORT (cover price is $450.00), a one year paid subscription to the Allen Letter professional journal (12 monthly issues, usually for $134.95), and – as long as they last – a copy of the Manufactured Housing $$$ Primer, the first and only book ever published on the subject of chattel (personal property) finance as it applies to the manufactured housing industry (usually $29.95 postpaid). And postage/handling charges are included in the aforementioned $250.00. This Special Offer is not available on our website, but must be ordered by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, or (317) 346-7156.
*****
End Notes:

1. HOUSING AFFORDOGRAPHY, George Allen, PMN Publishing, Indianapolis, IN., June 2008., p. 13
2. Ibid., p.19 (revised)
3. Ibid., p.23 (revised)
4. Ibid., p.31 (revised)

Your Response to ‘CONSPIRACY THEORISTS, GATHER YE ROUND!’

&

State of the Manufactured Housing Industry & Landlease Communities….

I.

Your response to ‘Conspiracy Theorists, Gather Ye Round!’ last week was overwhelmingly positive. The sole area of disagreement related to my contra view of our industry’s largest advocacy body’s desire to

“Eliminate unrealistic methods for appraisal (of) manufactured housing. Site – built oriented appraisal requirements have little applicability to manufactured housing and ultimately penalize manufactured homeowners.”

And those few rejoinders came entirely from chattel finance lenders and service firms. Hmm. Such single source response prompts one to ponder, ‘Why?’ There’ll be more views and verbiage on this controversial topic in a future blog posting. Want to input?

On the other hand, here’re remarks from blog floggers (readers) supportive of conspiracy perspectives offered:

• “GOOD JOB! Needed to be said. But will anyone listen? Now that’d be a FIRST, sadly enough. Will our ‘mystery leader’ step up? Keep up the good fight.” JK

• “KUDOS! This takes courage. I’d love to be part of such a conclave, should it occur. Please keep me posted, and best wishes in this effort.” TK

• “Let me tell you…nicely written. Am ready to step up and speak my mind. I’d love to take this job on, but my resources are limited. Let me know more.” JD

• “Good post George. You’ll get flack over some of those comments. Trouble with conference participation, is those who should participate, won’t do so.” SR

• “Here, Here, George! Well crafted and said, sir.” N

So, where do we go from here? That’s up to YOU, and the unnamed ‘charismatic, respected, well known, successful businessman or woman’ to whom last week’s blog post was directed. I know more than one individual, meeting that leadership description, read last week’s blog posting. So now we wait…Perhaps YOU need to encourage them to step forward.

Did YOU, as a member of the Manufactured Housing Institute, contact Thayer Long, or the institute’s chairman, Joe Stegmeyer? If not; why not? Furthermore, did YOU, as a member of the Manufactured Housing Association for Regulatory Reform, contact Danny Ghorbani, or the association’s new chairman, John Bostick? If not; why not? I can do no more, for YOU and our industry and realty asset class, than identify the collective, critical, and timely challenges and opportunities in play, then suggest corrective measures and alternative. It’s up to YOU to initiate and support appropriate action. If YOU have done so, good for YOU! If not; for the third time, why not? Or are YOU content, to simply sit back and continue to complain about how difficult and unfair the present national business climate is for our type factory – built housing? If so, shame – shame on YOU!

II.

State of the Manufactured Housing Industry & Landlease Community Asset Class

a.k.a.

‘An Industry in Search of the Wisdom of Solomon & Needing the Courage of a David!’

Let’s begin with HUD Code housing shipments for the past three years. All right there, at only 50,000+/- per year! That’s down down down, from the 372,843 renascence high in 1998. Year 2011? Just another 50,000+/- shipment year, unless there’re new sources of third party chattel finance.

Did you know? Clayton Homes has garnered a 48 percent national housing market share, where HUD Code manufactured homes are concerned. And that Cavco recently bought Palm Harbor out of bankruptcy, just as it did Fleetwood a year earlier.

Trends. More new homes being sold into landlease (nee manufactured home) communities. Why? Fewer ‘repos’ & ‘resale’ homes available for purchase and installation on – site; so, some LLCommunity portfolio owners/operators now routinely buy several new HUD Code homes at a time, at a discount, to market and sell on – site ‘at cost’ or various profit margins, depending on the nature of the local housing market in which the property is located. Homes designed for LLCommunity in – fill are now known as Community Series Homes or CSH – often singlesection, with front load porches, or small multisection homes. And CSH models are marketed to income – producing property owners, by Business Development Managers (‘BDM’) employed by the HUD Code home manufacturers.

Finance. The ‘Big Four + One’ group of chattel lenders is still active in the MHIndustry, but not originating and underwriting many chattel loans on new and resale manufactured homes. These firms are 21st Mortgage Corporation, Triad Financial Services, CU Factory – built Housing, U.S. Bank – Manufactured Housing Finance; and, Vanderbilt Mortgage and Finance, Inc., Clayton Homes’ in – house lender.*1

Then there’s the landlease community real estate asset class. While reasons very, for the segue from ‘manufactured home’ to ‘landlease’ community trade terminology, it won’t hurt to review the matter here. Unlike years between 1976 and roughly 2006, when this income – producing property type only sited ‘mobile homes’ (pre – 1976 vintage) and ‘manufactured homes’ (post – 1976 vintage); contemporary LLCommunities, depending on the nature of local housing markets, now also site modular homes; ‘park model’ RVs, a.k.a. ‘granny flats’; transient ‘RVs for a season’; even stick – built homes constructed on – site (in Florida) to look like HUD Code manufactured homes. It simply makes sense to apply a label that better describes the presence of as many as six different types of housing to be found on – site; hence landlease community, or LLCommunity, for short.

Some salient ‘stats’ from the 22nd annual ALLEN REPORT*2:

• There’re approximately 50,000+/- landlease communities in the U.S., and 500+/- portfolio owners/operators (i.e. each owns and or fee manages a minimum of five such properties or 500+ rental homesites)

• Average LLCommunity portfolio size during 2010 = 24 LLCommunities

• Average property size during 2010 = 222 rental homesites

• Most LLCommunity owners/operators are domiciled in CA, MI, IL, & FL.

• National Average Physical Occupancy during 2010 = 89.2 percent.

• National Average Operating Expense Ratio during 2010 = 41.8 percent, compared to the Allen Model @ 40 percent OER.

• Estimated value of self – finance ‘contract sale’ paper held among 500+/- portfolio owners/operators during 2009 = $3 ½ billion; 2010 = $5 ¼ billion; and estimate for 2011 = $5 ½ + billion.

• No new construction of LLCommunities reported during 2010.

• Professional property management in LLCommunities: 13 Certified Property Managers® reported, as well as 37 Accredited Community Managers®, and 171 Manufactured Housing Managers. Are all your property managers certified?

Trends. Consolidation of LLCommunities into portfolios slowed to a crawl during 2010, given the difficulty in obtaining realty financing, but likely to resume during 2011. Read the 13th National Lenders’ Registry for details, and a list of 18 realty loan originators.*3 Maybe see self – finance (i.e. ‘buy here – pay here’ & ‘captive finance’ methodologies) slow during 2011, as more portfolio owners/operators switch to carefully crafted Lease Option programs on – site. Look for one or two new REITs (real estate investment trusts) to be formed, as they initiate IPOs (initial public offerings – of stock) during late 2011 and early 2012. At least for the time being, ‘park closures’ are not the hot item they were, mainly due to constraints on development financing. More and more ROCs (resident – owned communities) are appearing outside Florida and New England.

A ‘Hot Button’ Trend. Watch as more and more LLCommunities drop any mention of ‘manufactured’ from print and online advertising of homes and properties! At least one HUD Code home manufacturer, Skyline Corporation, has done likewise. Some LLCommunity portfolios are even rebranding, introducing new contemporary housing – like websites! One wag has already identified this evolving (‘Nix manufactured from housing’) phenomenon, as the default National Image Improvement Campaign the manufactured housing industry wasn’t able plan, fund, and effect during the past several years.

Announcements. Have you met Lisa Brechtel yet? She’s the new MHI executive who heads the National Communities Council (‘NCC’) division. Her direct phone number is (703) 558-0666. If you haven’t done so already, contact her for information about attending the annual NCC Forum on 26 April, and the Manufactured Housing Congress on 27 & 28 April, both in Las Vegas.

In case you weren’t aware, the seminar ‘How To Estimate Affordable & Risky Price Points on New & Resale Manufactured Homes In & Outside Landlease Communities’, that was so popular at the Super Symposium II in Albany, NY., last month, will be repeated on Thursday, April 28th, at the MHCongress in Las Vegas. If YOU market and sell new & resale homes, and don’t know how to use AMI (Area Median Income per postal zip code) and or AGI (Annual Gross Income of a homebuying individual or household) to estimate ‘affordable’ &/or ‘risky’ price points (Really need to know both, to help customer make up their mind!) in any local housing market in the U.S., YOU owe it to yourself to be present for this rare opportunity to learn How To Do So, and receive the FREE ‘Ah Ha! & Uh Oh! Formulae Worksheet’! To register, phone Lisa Brechtel @ (703) 558-0666.

Some thoughts on the future of HUD Code manufactured housing and the landlease community real estate asset class.

For many, active in the MHIndustry & LLCommunity asset class, Randy Rowe’s Five Point Plan to facilitate a shipment rebound, anytime in the near future, will require:

• Better manufacturer home warranties, customer service, and responsibility for home installation..

• More chattel financing sources than we have at this time

• Ensure economic security of homebuyers/site lessees

• Multiple listing services and other features of a secondary market for manufactured home sales

• A national marketing (image improvement) program of some sort

Randy introduced this Five Step Plan at the 19th International Networking Roundtable in Phoenix, during Fall 2010; and, David Lentz of American Land Lease, presented it at Super Symposium II in Albany, New York, earlier this month. FYI: This year’s Roundtable is tentatively scheduled for 14 – 16 September. *4

So, where does all this leave us today? A lot depends on your reaction and response to the Great and Greater Conspiracy challenges described in last week’s blog posting. Perhaps YOU should go back and read it again, to be inspired and motivated to do your part in returning the HUD Code manufactured housing industry to good economic health!

As opined at the beginning of this State of the MHIndustry & LLCommunity asset class, we are indeed an ‘Industry in Search of the Wisdom of Solomon & Needing the Courage of a David!’ What we await now, is for one or more industry leaders, replete with Solomonesque Wisdom & Davidic Courage, to step forward and free us from the bondage of ‘This is the way we’ve always designed, built, shipped, then sold, and sometimes serviced, manufactured homes’, to renewed Free Enterprise Success as builders of the most affordable, energy efficient, quality sufficient homes in the U.S.!

***

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

End Notes.

1. This information taken from the Manufactured Housing $$$ Primer, available from PMN Publishing for $29.95 postpaid. Phone (317) 346-7156.
2. 22nd annual ALLEN REPORT available for $250.00 (includes a one year subscription to the Allen Letter professional journal) by phoning: see # 1 above.
3. 13th National Lenders Registry (realty & chattel) available FREE by phoning #1.
4. For an invitation to attend this annual seminal event for LLCommunity folk, see # 1 above

CONSPIRACY THEORISTS, GATHER YE AROUND!

Great & Greater Conspiracies; State of MHIndustry & LLCommunity Asset Class

Let’s get something straight, right up front! Portions of what I pen here will anger a few individuals, but confirm the beliefs of many others. And it’s this type industry news reporting & opinion sharing, that’s prompted a scant number of salaried corporate & trade association executives – but interestingly – not sole proprietors & business owners, to get upset & holler, ‘Harm to the industry!’ Well, I think not. After 60 years of manufactured housing industry history; during 30 of which, I’ve been invested in as a landlease community owner & industry consultant, it’s high time we revisit our roots as affordable housing, seek new ways to rejuvenate our housing product, the way we market it, how we treat our customers, & much more! Frankly; if I don’t speak out, I seriously doubt anyone else will, and our industry will continue to suffer on, maybe even die, in silence! GFA

I.

The Great Conspiracy isn’t a conspiracy at all! It’s the well known but embarrassing phenomenon of self – immolation (Webster: as in ‘killing oneself – or industry – as a sacrificial victim’). In the case of manufactured housing, this self – defeating state of affairs is characterized by ‘resistance to change’ (e.g. Like automobile plants, we count our ‘shipments’, not homes ‘sold’, & cling to vestigial trade lingo like it’s Biblical writ); greed (e.g. Think, ‘Bigger boxes = bigger bucks!’); and, frequent lack of product (installation) responsibility (warranty) once the house leaves the factory (e.g. Remember ‘DAR’? It’s the industry’s continuing mantra, in some circles, as in ‘Drop (that house) And Run!’). And there’s more. How ‘bout cyclic short term abuses of chattel and realty finance sources, followed by reaping self – sacrificial long term consequences of going without (e.g. Only 50,000+/- new HUD Code homes ‘shipped’ during years 2008, 2009 & 2010)? Of course, there’s also the perennial, not – so – private, lobbying – defeating, internecine squabbling between our national advocacy trade bodies inside the Washington, DC beltway. Will it ever end? Plus, landlease (nee manufactured home) communities are not without blame! Too many still deserve to be viewed as nothing more than ‘trailer parks’, awash with negative societal mores and perpetuating a very poor public image of an otherwise desirable, affordable lifestyle. And in the same breath, do we dare mention the nefarious (in some eyes) or business risk – mitigating (in other eyes) practice of ‘churning’ our (property owner) self – financed homeowner/rental homesite lessees? And the list goes on….

Is there a solution? I believe there is. But we need a charismatic, respected, well known, successful businessman or woman leader, to step forth and publicly announce, ‘The HUD Code manufactured housing industry is at an impasse! And if we’re to move forward together, and profitably, during the next decade, we’ve simply got to Get Our Act Together, the sooner the better!’ Building on that proverbial line in the sand, this leader (We do have at least one, that I can know of, in this industry – but will he/she heed this call?) and cohorts, might consider following the twice set precedent of 2/27/2008 in Tampa, FL., & 2/27/2009 in Elkhart, IN., at two National State of the Asset Class (‘NSAC’) caucuses, by now calling for a two day Open Strategic Planning Meeting of businessmen and women ‘with skin in the game (of their respective companies and associations)’, committed to participate in this historic event at their own expense! Maybe require advance preparation on the part of everyone attending. For example; early on, submit a short (500 words or less) letter, describing ‘why’ they’re participating, and ‘what’ they’d like to see accomplished. Once responses have been collected, prepare and distribute a preliminary packet of information, containing industry benchmark statistics and brief summary of aforesaid input. Furthermore, such an event – to be effective – must be a joint effort between members of the Manufactured Housing Association for Regulatory Reform (‘MHARR’) & Manufactured Housing Institute (‘MHI’), Open to non – member business owners who wish to attend! Ultimately, however, proceedings should be planned and guided, under the authority of an independent third party strategic planning meeting specialist, for event results to be accepted industry wide.

Are YOU one of the charismatic, respected, well known, successful businessmen and women leaders about whom I write and challenge in the foregoing paragraphs? Probably. This particular blog posting is being sent to those who fit the multifaceted description. Now ‘the ball is in your court’. Your response?

The Greater Conspiracy is more difficult to pin down with specifics. In a big nutshell, it’s generally described (Have no doubts about the fact the Greater Conspiracy exists, as it’s a matter of discussion, within industry gatherings, from coast to coast, or I wouldn’t be wasting blog space here!) as quiet collusion among some industry executives (i.e. Grass maybe perceived as being greener on the other side of the ____ fence); our competitors for national housing share (i.e. Not enough business to keep stick builders & factory – built aficionados employed over the long haul!); even regulators of our unique housing product type (i.e. We didn’t ask for this added work in the first place!). Some of the symptoms are difficult to pigeonhole, as to whether part of the aforementioned Great Conspiracy or a Greater Conspiracy. So, let’s begin with one recent example.

When MHIndustry & LLCommunity businessmen and women converged on Washington, DC. recently, they were given prepared ‘talking points’ to use when meeting with their respective members of Congress, relative to changing pending Dodd-Frank legislation. One recommendation read:

“Eliminate unrealistic methods for appraisal (of) manufactured housing. Site – built oriented appraisal requirements have little applicability to manufactured housing and ultimately penalize manufactured homeowners.”

Who suggested that wording? NOTHING COULD BE FURTHER FROM THE TRUTH.

It’s the continued use of traditional ‘(depreciating) book value’ methodology that seriously harms manufactured home owners when selling their homes! Site – built housing’s ‘market comparable’ appraisal methods are clearly applicable to manufactured housing, especially those sited on realty owned fee simple! So, who’s at fault here, for perpetuating this just quoted mistruth? ‘The industry’ – who penned it (i.e. As another apt example of self – immolation, per the Great Conspiracy just described), and or the ‘GSE’s’ (Government Sponsored Enterprises) who, year after year, opt for ‘the easy way out’, by endorsing ‘depreciating book valuation’ methodology to estimate the value of HUD Code manufactured housing – as part of this Greater Conspiracy, to eventually do away with our industry?

Furthermore, and in other arenas, who are/were major dissenters, when (past) attempts were effected to improve design and serviceability of HUD Code manufactured homes? Think’ removal of frames’ from beneath HUD Code homes, as but one example. Then there’re site – builder trade associations, afraid of lower – priced, factory – built competition taking (more) work from their carpenters. And who, until a recent U.S. Supreme Court decision declared ‘black balling’ of HUD Code manufactured housing from (home sale) multi – list systems across the country as being illegal, has effectively derailed the creation and nurturing of a functional secondary market for the listing and resale of manufactured housing product? It’s one more reason we see so few licensed real estate salespersons and brokers pursuing listings within and outside landlease communities.

Know the clearest indicator of a Greater Conspiracy? In my opinion, it’s HUD’s abject failure to fully and properly implement key reform provisions of the Manufactured Housing Improvement Act of 2000 (‘MHIA@2000’)! Here we are, nearly 11 ½ years after passage of the Act, and HUD has all but neutered the federal regulation, without complying with relevant provisions within the Act; has diminished and ignored the enhanced federal preemption of MHIA@2000; has failed to appoint a non – career program administrator, per HUDs whim; has utilized the same federal contractor (Albeit under different entity names), for more than three decades (i.e. Talk about job security, at our industry’s expense!); and, has re – codified two new MHIA@2000 programs – installation and dispute resolution – in the process, rendering them non – preemptive, and outside the authority of MHIA@2000’s Manufactured Housing Consensus Committee (‘MHCC’). Are you angry yet?

What to do about the Greater Conspiracy? Frankly, I don’t think there’s much we can do at this point in time, except…. If we have folk within our industry, who have divided loyalties to our competitors and regulators, then they need to be confronted. But beyond that, the immediate, timely and strategic challenge, as described earlier, is to call for a national meeting of truly concerned businessmen and women, willing to invest their personal and corporate resources to be an integral part of a national plan to rejuvenate, and reposition – if necessary, HUD Code manufactured housing! Are YOU one of those (hopefully) many individuals? If so, here’re several things you can do TODAY:

• Make your views, on this matter, & personal availability known, to Joe Stegmeyer, chairman of MHI, via Thayer Long @ (703) 558-0678.

• Make your views, on this matter, & personal availability known, to John Bostick, chairman of MHARR, via Danny Ghorbani @ (202) 783-4087.

• Make your views, on this matter, & personal availability known, to me, via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or gfa7156@aol.com

• Or, if you’d prefer to make your views known directly to either of the above board chairmen, let me know….

Continue to faithfully read this weekly blog posting for progress in combating the Great & Greater Conspiracies affecting the HUD Code manufactured housing industry.

DISCLAIMER. I am not one of the charismatic, respected, well known, successful business leaders of which I write in the previous paragraphs!

As I’ve said time and again, of late, I’m attempting to retire, but would be pleased to see the manufactured housing industry and landlease community real estate asset class rejuvenated, and at least on its’ way back, to a new renascence, like we enjoyed in 1998; but this time, without abusing our customers and financial resources. GFA

II.

I know I promised a State of the MHIndustry & LLCommunity Asset Class this week. Well, it’s prepared, but requires the entire blog space; so once again, will not be included here. Perhaps I’ll have to effect a special posting somewhere along the line.

III.

If you’re reading this blog posting every week, but are not yet a paid subscriber of the Allen Letter professional journal, please consider doing so now. What are you missing? April’s issue is headlined by ‘Something Old, Something New, Something Borrowed, Something Blue’ – describing four measures for successfully filling vacant rental homesites in landlease communities! For the first time, there’s (national) political commentary for your reading curiosity. Also, the only MH & LLCommunity ‘stock watch’ published anywhere in the industry/asset class, along with major rate indices for LLCommunity loans. And you’ve just gotta see Troy & Cheryl Brost’s ‘love letter’ to their friends in the MHIndustry. Let me ask you this: ‘Where else in the MHIndustry & LLCommunity asset class will you find 1) 13th annual National Registry of LLCommunity & Chattel Lenders; 2) 12th annual ‘Who Ya Gonna Call During 2011?’ list of freelance consultants; and 3) First published definitive description of Lease – Options, in the LLCommunity? Answer? Nowhere! And did I mention book reviews of LLCommunity owner Chuck Irion’s Roadkill Cooking for Campers and Autograph Hell; plus, Glen Beck’s The Overton Window (Read this and you’ll not look at national events & trends the same, ever again.). To subscribe, phone (317) 346-7156 or via this website.

***

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

Pithy SALMAGUNDI or just some more POTPOURRI?

Piggish?, Half Loaf trumps No Loaf, ‘MHParty of the Year!’, More on Rebranding, Super Symposium II Precis’, & Era Ends as Greentree is Sold!

I.

What a week it was! Nearly 150 convened and confabulated in Albany, NY., at Nancy Geer’s Superb Super Symposium II – including REIT firm, UMH Properties’ corporate staff and regional property managers, especially Eugene & Sam Landy, & Christine Lindsey, MHM. Know what? This was also, the only manufactured housing/landlease community gathering to date, during which industry/asset class’ chattel (personal property) freelance finance/service experts, Dick Ernst (972/503-3201) & Ken Rishel (217/971-3968 enjoyed ample time and audience to fully ‘splain’ in vogue ‘buy here – pay here’ & ‘captive finance’ self-finance methodologies, from their perspectives! And now,’ Lease – Option’ appears on the scene. Too bad YOU missed it.

Icing on this cake, was meeting and listening to new National Communities Council (‘NCC’) exec Lisa Brechtel, describe the focus and scope of her work, in our behalf, in Washington, DC: (703) 558-0666. Other notables present at this educational soiree’? Terry Decio of Skyline Corp., David Lentz of American Land Lease, Dr. David Funk of Cornell University, Kian Wagner of Green Courte Partners, Jim Freyer of Haylor, Freyer & Coon, Robin Pfeil of Triton Valley Estates, and the DeMarco Brothers of Security Mortgage. If you’d like a FREE copy of the material I presented at this event, including the ‘Ah Ha! & Uh Oh!’ worksheet – for calculating ‘affordable’ & ‘risky’ price points of new & resale homes sited in & outside LLCommunities, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, and request it.

II.

If you’re a bona fide real estate investor, do you agree or disagree with this ‘one of six’ recommendations for making the most of the recession, recently published in the March/April 2011 issue of URBAN LAND magazine: “Be realistic about the hurdle rate. Writing in January 2010 for National Real Estate Investor, Ethan Penner, executive managing director & president of CBRE Capital Partners, noted, “The desire to get a real estate return in the high teens or 20 percent is piggish.” Penner’s thesis (suggests) an appropriate return expectation for real estate should be around 10 percent.” True or false? Whadaya think? Wonder if he owns investment real estate (i.e. ‘has any real skin in the game’, as they say) or simply sells it; and such a statement helps keep client expectations in check. I’ve long been taught ‘Profit is the reward for taking risk.’ So, it stands to reason, willingness to take big risk opens the door to big profits, just as taking big risks leaves one vulnerable to big failure as well. Any commentary out there?

III.

Consider marking 1 August 2011 on your MHIndustry & LLCommunity asset class planning calendar. Why? There’re whisperings of a ‘MHParty of the Year!’ that day in Elkhart, IN., at or near the RV/MH Heritage Foundation’s Hall of Fame, Museum, and Library. Details likely to follow during weeks ahead. And, if you’ve never visited the excellent facility, then this could be a double – barrel treat!

IV.

‘Half a loaf is better than no loaf!’ That’s the reaction evoked by the following quote, again – from March/April 2011 issue of URBAN LAND magazine, describing ‘affordable housing’:

“Housing is considered affordable if 30 percent or less of a household’s income is dedicated to paying the rent or a mortgage.” Cited in ‘Affordable Housing’s New Profile’, p.116.

First off; ‘Thank You’, Dan Withee & Ricky de la Rosa, co-authors of this piece, for describing up front, the perspective from which you write!’ The Housing Expense Factor or HEF, is one of four measures of housing affordability documented in HOUSING AFFORDOGRAPHY, published in June 2008.*1 BUT, here’s ‘the other half that loaf’: What’s included in the referenced mortgage payment? Barebones, being just principle & interest (‘PI’); or Loaded, including principle, interest, taxes, insurance, and household utility, but not telecommunications expenses? Which is it? Makes a whale of a difference to the mortgagor & mortgagee, as to ‘how much house is purchased’ & ‘how much risk is incurred’. For example, a barebones HEF = more house & more risk, while a loaded HEF = less house & less risk; hence, more affordable! Why? Taxes, insurance, and household utility bills still have to be paid; and it’s easier to do, when they’re included within the HEF; more difficult when paid outside the HEF!

Perhaps the day will come when international and national real estate – related trade bodies like ULI, NAR, NAHB, MBA, and others, will finally and once and for all, identify which of the four measures of housing affordability they ascribe to, then explain the ‘dollars, cents & percentage’ parameters being used to ‘make their case’, relative to the ‘affordable housing’ perspective they’re espousing in trade publication features and books. When that day finally (if ever) arrives, we – the affordable housing practitioners & providers – will have been given ‘the entire loaf’ with which to plan and work, not half a loaf or less, as is the sad case today!

V.

Rebranding? You bet! In landlease (nee manufactured home) community circles, think ‘the original Hometown America’ of a decade ago, and American Land Lease’s new Solstice (adult living) & Clearview (family living) brands of today. Then there’s Chuck Fanaro’s iconic SaddleBrook Farms outside Chicago; Rob Tunnell’s luxurious Baywood in Delaware; Doug Daniel’s showcase communities in Springfield, IL.; Troy and Cheryl Brost’s beautiful SongBrook in Eugene; even Skyline Corporation’s intentional segue away from ‘manufactured housing’ to ‘factory – built housing’ terminology, in all its’ advertising! Yes, there’s a new wave a – building & a – flowing, from coast to coast. Are YOU an integral part of it yet? Send me your examples and observed evidences of rebranding throughout the MHIndustry & LLCommunity asset class! Mail to GFA c/o Box # 47024, Indpls, IN. 46247 or via gfa7156@aol.com

It was suggested privately, during last week’s Super Symposium II; that at MHI’s annual meeting this Fall in Phoenix, salaried and elected leaders of this body politic, should trek into the desert, dig a deep hole, and drop in a plaque with the words ‘manufactured housing’ printed on it. When the hole is covered over, return from the desert, carrying a similarly – sized plaque, with the word ‘housing’ or words ‘factory – built housing’ printed on it, symbolically marking the end of manufactured housing as our industry’s everyday, much – abused moniker, rebranding as factory – built housing going forward! What do YOU think of the idea? Tell Thayer Long @ (703) 558-0678.

VI.

Loan servicer Green Tree to be sold! According to the StarTribune, ‘Walter Investment Management Corp., announced it has reached a deal to acquire Green Tree for $1.065 billion. The once – troubled Green Tree started out servicing loans on manufactured housing, but that sector now makes up just 36 percent of its’ business. The firm has a $37 billion portfolio composed of 745,000 residential home improvement and home equity loans, manufactured housing loans, and consumer installment loans.” This marks the closing of one sorry chapter in manufactured housing history.

VII.

State of the MHIndustry & LLCommunity Asset Class. Just occurred to me, you probably haven’t had anyone describe the present state of our industry and income – producing property type, to you, this year. While I’ve run out of space to do the subject justice in this week’s blog posting, perhaps I’ll share it with you next Sunday – assuming, of course, there’s not some ‘breaking news’ I need to get to you in lieu of such an overview. Here’re some tantalizing tidbits contained therein: new home shipment volume for 2010; Clayton Homes’ approximate national market share; average property portfolio size during 2010; national average physical occupancy & OER during 2010; and, Randy Rowe’s Five Point Plan to Save the MHIndustry! This latter ‘plan’ was first espoused at the 19th annual International Networking Roundtable during Fall 2010, but was renewed, with vigor, by David Lentz, during his presentation at the aforementioned Super Symposium II in Albany this past week. So ‘the plan’ is alive and well to many of us!

VIII.

A minor but important shift in trade terminology. Increasingly, I see association execs, trade publications, and property owners/operators adopting and using the’ landlease community’ label for our unique real estate asset class. That’s great! But there’s a minor tweak yet to be made, and it’s this: ‘landlease community’, when the two words land & lease are combined, rightly narrows the focus relative to this homeowner/site lessee lifestyle. However, when the two words remain separated, as in ‘land lease community’, we run the very real risk of being ‘cornfused’ with other types of ‘land leased realty’. Do we want that? I think not. Landlease Community has given us a needed and timely panacea to recreate, to rebrand ourselves, featuring superb curb appeal, resident – friendly environs, and intrinsic home value. Let others continue to operate using lesser, vestigial word descriptions. Just let’s not confuse ourselves, and our residents, as to the ‘really right label’ for this new multifamily rental property reality! Agreed?

***
End Note.

1. Measures of housing affordability: Housing Expense Factor (‘HEF’), Housing Opportunity Index (‘HOI’), Housing Wage (‘HW’), & ‘One Who Believes’…

SPECIAL ANNOUNCEMENT. Copies of the 22nd annual ALLEN REPORT continue to be available for purchase. The $450.00 cover price has been discounted to $250.00. And as an added bonus, if you purchase the report, for this latter amount, we’ll include a complementary annual subscription to the Allen Letter professional journal, a savings of $134.95. As the number of print MHPublications has dwindled, the newsletter’s subscriber base has continued to grow month after month. To place your order, phone, (317) 346-7156, or the aforementioned MHIndustry HOTLINE.

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