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

What YOU Missed at the Louisville Manufactured Housing Show

&

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

I.

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

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

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

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

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

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

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

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

II.

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

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

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

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

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

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

III.

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

IV.

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

***
End Notes.

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

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

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

I.

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

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

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

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

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

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

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

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

II.

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

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

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

III.

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

***

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

End Notes.

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

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

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

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

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

I.

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

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

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

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

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

II.

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

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

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

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

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

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

• Better manufacturer home warranties

• More chattel (personal property) financing sources

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

• Multiple listing service(s) access

• National marketing (image improvement) efforts

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

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

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

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

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

III.

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

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

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

IV.

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

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

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

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

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

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

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

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

I.

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

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

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

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

II.

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

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

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

III.

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

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

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

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

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

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

IV.

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

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

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

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

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

V.

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

*****
End Notes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Anonymous

*****

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

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

*****

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

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

***

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

I.

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

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

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

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

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

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

***

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

II.

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

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

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

III.

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

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

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

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

14 January 2011. Last day of the Louisville MHShow.

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

End Notes.

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

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

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

Meet SOLSTICE Communities!
&
What YOU Said About ‘Housing Affordability’ Responsibility!
&
Lack of Liquidity Kills Again & Again!

I.

It’s about time! Not really; it’s about lifestyle, rebranding, and challenging an entire investment realty asset class – to ‘take to the high road’, from this day forward, toward stellar corporate image; impeccable reputation building; and superior, all around, on the job sales, leasing and resident relations performance and curb appeal!

With that said, meet SOLSTICE Communities! A dictionary definition of SOLSTICE suggests a ‘turning point’ or culmination; and that’s what SOLSTICE communities is all about; the culmination of all that’s good – to – great about the landlease (nee manufactured home) community lifestyle; and, by example, a turning point challenge to all other property portfolios of this income – producing property type!

Here’s what the totally new website, launched 1 December 2010, has to say…

“DISCOVER America’s best places to retire, at Solstice Communities! With more than 25 retirement communities across the country. Solstice offers free – spirited, vacation – style 55+ living that’s anything but retiring.”

To learn more about this rebranded, manufactured housing industry pace setter, go to solsticecommunities.com

II.

Here’s what YOU said about ‘housing affordability’ responsibility in response to last week’s blog posting at this website:

“Great blog!!!!! Thanks; I am gong to use this (housing affordability) discussion at our next sales meeting. KL

“Well crafted, and you are right. Morally, we should have stuck with the old 25% rule (i.e. No more than 25% of a homebuyer or household’s annual income to go for housing) that presaged the FHA 235 program, where it was possible to max out at 43%. Indeed, we (manufactured housing industry) are our own worst enemy!” (lightly edited. GFA) NB

“Very interesting; an obvious dichotomy (i.e. ‘subdivision into two parts’) for the (manufactured housing) sales person, Greed versus Ethics; how novel. We have seen this before in so many industries, and I am sure we will see it again. Sure is a compelling story for the ‘packaged deal’, and need for an industry wide movement to embrace a new approach to doing (manufactured housing) business!” RT. (Parenthesis added for emphasis. GFA)

“Well written article with many valid points. Unfortunately, it will again fall on deaf ears because, as you know full well, this entire (manufactured housing) industry, from day one, has been built – and is now being destroyed, by one simple Latin phrase: Caveat emptor! (‘Let the buyer beware!’) Success, in the minds of most, now depends on finding the next stupid (home) buyer and the next stupid (chattel) lender. ‘There must be some still out there!’ is their battle cry.” DR

So astute reader, is this observer’s remarks indeed ‘a bona fide reality check’ or ‘gross, unwarranted exaggeration’ about how we sell and finance new and resale homes throughout the MHIndustry today? Are YOU ready to ‘take the pledge’? To sell and finance new and resale homes at prices points truly affordable to prospective homebuyers and households, based on their annual gross income (‘AGI’) or a local housing market’s annual median income (‘AMI’)!

And with that in mind, reader commentary continues…

“As someone who really likes the ‘Ah Ha! & Uh Oh!’ formulae (For estimating maximum recommended ‘affordable’ & ‘risky’ purchase prices for new and resale, privately – owned homes of any type, sited on realty owned fee simple with home, or leased, as in a landlease community!), and given the importance of this week’s topic, there’s one more following point. One might say the reason ‘affordability’ is an issue at all, is because of the near complete lack of an exit strategy for homeowners and lenders, akin to site – built (i.e. ‘realty – secured’) housing.” Even if a homebuyer ‘overbuys’, in the latter instance, value appreciation and presence of a secondary home sales market, driven pretty much by Realtors®, one can generally exit their housing experience with a profit (notwithstanding dismal housing regional housing markets of the past few years). But what about the manufactured housing world? Reality for us; there’s no functioning secondary home sales market characterized by value appraisals based on market comparables and not replacement (book) values, availability of widespread multilisting services, existence of escrow ‘closings’, readily available third party chattel financing, nor even a cadre of trained, licensed salespersons.

Know what? There’s even more; and we’ll revisit this timely and strategic subject again next week. And guess who responded, at length, on this very topic? Grayson Schwepfinger. Yes, the manufactured housing industry pioneer quoted in the 1970s How to Sell Manufactured Housing text by Gary Pomeroy. As some of you know, particularly those who attend the annual International Networking Roundtable, ‘Schwep’ continues to be active in the manufactured housing and landlease community segments of our industry/asset class. So, don’t miss his observations about ‘whose responsibility for housing affordability’ in next week’s blog. And there’s even more, as a popular CPA portfolio owner/operator too speaks out on this subject and shares his/her methodology….

Have something YOU want to say? Respond to this blog via website or the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156.

III

Yes,’ lack of liquidity kills again – and again’! By now, you likely know “Palm Harbor Homes, Inc., announced on Monday, November 29, 2010, it and five of its’ domestic subsidiaries…filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company is taking this action to provide liquidity and partner with Fleetwood Homes, Inc., a subsidiary of Cavco Industries, Inc., through a sale process pursuant to Section 363 of the Bankruptcy Code in order to support ongoing operations.” For additional information, phone (888) 220-3896.

And yet another Special Announcement, also driven by lack of liquidity, is in the offing. If you’re reading this blog posting and are not a paid subscriber to either or both the Allen Letter professional journal and the Allen CONFIDENTIAL!, you should consider doing so in the very near future.

Why? It’s been a thinly veiled secret for years; no, make that decades, that most of the services and products created by and associated with GFA Management, Inc., dba PMN Publishing, have been subsidized by one or more major portfolio owners/operators in the landlease community (‘LLCommunity’) asset class. Apparently, that all may be about to change by the end of this month, December 2010, when the subsidy ends.

If so, our present options are pretty bleak but straight forward:

1) Immediately start charging what’s necessary to keep GFA/PMN’s routinely delivered services and products financially ‘liquid’, e.g. Significantly increase subscription rates of aforementioned monthly newsletters; and, effective immediately, charge a premium, possibly $1,000.00, for the previously ‘free’ (in this case, 2011’s 22nd annual) ALLEN REPORT (a.k.a. ‘Who’s Who Among Landlease Community Portfolio Owners/operators in North America!’) – a highly unlikely happenstance, as most portfolio folk have grown accustomed to these bargain – priced (subsidized) resources.

2) Seek and identify an immediate replacement of the financial subsidy, to the amount of at least $3,000 per month. Interested? Let me know via (317) 346-7156. Am I hopeful? No. Wishful? Yes. But tough times make for hard finds.

3) Transfer or sell some or all the present half dozen GFA/PMN profit centers to another ‘for profit’ firm, or not for profit national platform – but here, ‘time’ is now the effective barrier to this happening.

4) Once operating funds run out, simply go out of business and fully retire. The obvious shortfall to this option, where my ‘friends in the LLCommunity business’ are concerned, is the complete loss of valuable resources, opportunities and contacts (e.g. 500+/- name exclusive North American data base of portfolio LLCommunity owners/operators) cultivated over the past three decades, and more…

Bottom line? To be candid, I did not see this day coming! I’d long hoped to gradually ease our way out of the LLCommunity consulting/publishing business; watching most or all that GFA/PMN created and grew, continue as an integral part of a manufactured housing – related, not for profit national platform. While that process indeed has barely begun, it’s now unlikely the funds (subsidy) will be in place, at the first of the year, to see that proposal through to a logical, practical, and agreeable conclusion. And in the midst of the doldrums the manufactured housing industry finds itself today, launching a new business enterprise, product or service, to pick up the financial slack (e.g. REO fee management), is simply impractical at this time!

At the very least, I’d appreciate your thoughts and suggestions on this topic. 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. 35247

I.

Whose Responsibility is Housing Affordability?

Maybe the time has arrived for a ‘New Way of Thinking’ when it comes to manufactured housing sales in landlease communities & retail salescenters…

Think about it! When was the last time, or anytime for that matter, you or your salespersons sold a manufactured home, within or outside a landlease (nee manufactured home) community or retail salescenter, and had this sincere, conscientious thought:

“Can this homebuyer truly afford to buy this new or resale manufactured home?”

Even more to the point; did or do you even care, to accept any responsibility for ensuring the affordability of said home, relative to the homebuyer or household purchasing it? If you work in the manufactured housing industry, and or the landlease community (‘LLCommunity’) business, the answer is probably and understandably ‘No’. Why? Because, as some are wont to say, ‘It just generally isn’t in our DNA (i.e. business model) as housing purveyors!’ A review of manufactured housing’s sales training literature, over the past 40 years, clearly demonstrates we haven’t been taught, nor do we generally teach today, personal and corporate responsibility for ensuring our ‘affordable housing’ product evinces ‘housing affordability’! By practice, we’re taught to sell to what customers are willing to pay each month, not necessarily what they can realistically and comfortably afford.

Gary W. Pomeroy, back in the 1970s, then VP of Marketing for Golden West Homes, and chairman of the Western Manufactured Housing Institute’s marketing committee, authored the 200 page textbook titled: How to Successfully Sell New and Resale Manufactured Homes. Early on in this classic text, Pomeroy describes the importance of qualifying one’s prospect: “If your prospect has the need for housing, if he has the income to enable him to purchase housing, and if there is a degree of urgency…he is someone you should spend time with.” P.22 (emphasis added. GFA)

A couple pages later, the author described how to ‘set the banker up as the source for qualification’ by saying: “Mr. Jones…the prices of our homes run from $15,000 to $35,000, (Reader; remember, this is 40 years ago!) and our lender tells us a person should have a gross income between ______ and ______ per month, with a minimum down payment of between ______ and ______, depending upon the price of the home he purchases.” P.25. Notice the not so subtle focus ‘depending on the price of the home he purchases’, NOT ‘…depending on how much prospective homebuyer can realistically afford to pay on his or her mortgage each month.’ Does this focus on home price absolve the housing salesperson, and salescenter for that matter, of personal and corporate responsibility for ensuring our affordable housing product is ‘just that’ for the variety of homebuyers we serve? I don’t think so! But the real issue is; ‘What do you think?’ And, if that wasn’t enough to consider, know there’s ‘something missing’ from the quoted material. See if you can spot it when rereading the paragraph, and the next few to follow.

A couple pages later, Gary Pomeroy introduces Grayson Schwepfinger and ‘his ‘use of a rather unique system of qualifying the customer’, characterized by ‘locking all the homes on a sales center…forcing prospects to come to the office’, where they are pre – qualified, by Urgency, Income & Need, before seeing homes. P.26. How so? Schwep’s methodology isn’t described, but we’ll revisit Grayson later, when we take a look at contemporary 21st century sales training literature….

I became a Redman Homes, Inc., MHRetailer, on – site in my first owned LLCommunity in the early 1980s. Still have the Retail Sales Training Program used by that firm, to teach me the ropes of manufactured housing sales. Here’s what they said about how “Qualifying the customer is a necessary and productive part of the selling process. If customers are properly qualified, they are more likely to buy the house that is right for them. If they do, they will be happy, satisfied customers who will generate a lot of referral business. You need to know what the customer is looking for in a home, and their financial limitations, so you know what you have to work with.” P.7 Fair enough, and a good start. So, what’s next?

“There are two approaches to qualifying a customer – the qualifying interview, and the rapid qualification. Most sales centers have a prospect interview form they use with their customers.” OK, but why no sample Interview Form included with this program guide? And the ‘rapid qualification’ approach? A series of questions: “Do you work nearby?”, “Do you live near here?” “How soon are you going to need your new home?” “Are you married, do you have any children?” Give me an idea of what type of home you are looking for, and what kind of monthly investment you are interested in making (i.e. monthly loan payment amount)?” & “Do you have any idea of what you are going to invest initially (i.e. down payment)?” p.9 No dollar guidelines or formula offered here, just that bugaboo emphasis on ‘what customers are willing to pay each month, not what they can comfortably and realistically afford.’ And know that ‘something missing’, mentioned earlier, is absent here too. Spotted it yet?

During the 1990s, as I traveled from one end of the country to the other, working as a freelance management consultant, serving LLCommunity owners/operators and MHRetail salescenters, picked up the Selling and Training Techniques manual prepared and used by franchiser A-1 Homes, out of Texas (in the MHBusiness since 1969). Their approach to Qualification? Three parameters: 1) Determine if customers live in a mobile home (Their term, not mine; and in 1990s, ‘that’ should ‘tell you something’ about their mindset) or have any other potential trade – in, through tactful and complimentary inquiries., 2) Maximum monthly investment customer will accept based on income, 3) Specific floor plan desired and any unusual requirements, such as space for a piano or a family heirloom.” Once again, no dollar guidelines or formulae offered for qualifying prospects, and continued emphasis on ‘maximum’ monthly mortgage payment, with no mention of ‘affordability’. And yes, once again, there’s ‘something missing’, from this 1990s training material, just as during the 1970s and 1980s.

Champion Home Builders Company, of the late 1980s & early 1990s, (cum Champion Enterprises, now Champion Homes) took a different approach to qualifying homebuying customers. In Joe Morris’ Sales Success School, the author defined USP (‘Unique Selling Proposition’) as being “A real or percieved (sic) consumer benefit in a product or service that distinguishes that product or service from the same class of competitive products or services.” P.L1-9. Whew! Did you get that? I barely did. Anyway, a few pages later, an effort is made to ‘splain’ why PRICE isn’t a USP, by pointing out: “At every income level, there is affordable housing” & “the affordable tag has no sales appeal – people buy affordable things but in response to some other appeal” P. L1-12). OK. But where are the guidelines or formulae one might use to calculate affordability per homebuying prospect? None are given! Though, a few pages later (P. L2-4) the manual describes USPs for three distinct manufactured housing markets: singles, young marrieds, seniors (empty nesters); and once again, implying differences in ability to qualify to purchase new and resale homes, but sans any practical aids. Yes, ‘something missing’ from this training exercise as well…

Know what? Doesn’t get any easier, or to the point, quoting contemporary authors/trainers who straddle the fence between site – built housing and various types of factory – built housing. In Jerry Rouleau’s The Complete Guide to Selling New Homes, on page # 91 three of five Finance Qualifying questions are these: “3) How much of your cash savings will you put into the building project?, 4) Gross Income? (Combined total yearly income), & 5) What are you looking to spend per month for mortgage payments?” Point? Once again, as in the previous several examples, the ‘affordable housing’ or ‘housing affordability’ question or determination is left to the homebuyer, with little to no guidance from the home seller. But, to Rouleau’s credit, on the next page (# 92), he does provide a Rule of Thumb, for calculating one’s Mortgage Limit – presumably, for a ‘house and realty combination’: “Take the combined gross annual income (i.e. homebuyer or household) and multiply by 2.5. This will help you establish a rough mortgage limit. When interest rates are around 6%, you can calculate the mortgage limit at 3 times gross income. If interest rates go up to 12% you have to use a number 2 times gross income.” P.92. We’ll return to the results of this Rule of Thumb shortly. In the meantime, and for one last time, have you spotted the ‘something missing’ from this recitation too?

Give up? Well, here’s that something that’s been missing! Not once, in any of the preceding tutorials, regarding the sale and financing of ‘mobile homes’, HUD Code manufactured homes, has mention been made regarding anticipated monthly homesite rent amount(s), characteristic homes sited in LLCommunities! Obviously, from the historic through to contemporary training and methodology, emphasis is generally on 1) home only, and 2) designed to relieve the homebuyer of whatever cash he/she thinks they can part with each month to buy, and pay a mortgage on said home – irregardless of other recurring household expenses for taxes, insurance, and utilities – even that phantom factor, ‘homesite rent’, literally throwing any idea or concept of housing affordability right out the window. Moving right along…

Said we’d return to Grayson Schwepfinger. In his Selling for Success Seminar material, dated year 2000, he presages the case I’ve been building in previous paragraphs: “There is no place they (homebuyers) can go for information on how to intelligently invest in a manufactured home! If you wanted information on how to invest in a manufactured home, where would you go? There aren’t any books, seminars, audio or video tapes that will tell you how to intelligently invest in one of our homes. All the internet gives them is prices.” (pages not numbered)

While Grayson’s point is on target (i.e. Nowhere to go for help!), he isn’t entirely correct. There are indeed books ‘out and about’ that purport to teach ‘How to Buy a Manufactured Home’, but they’re either universally incomplete, per content of previous paragraphs (Oft produced by MHIndustry advocacy bodies, etc.) or by self – proclaimed manufactured housing experts with axes to grind. A few such titles include:

Kevin Burnside in his Buying a Manufactured Home (168 pages, 1999), opines “The one constant…dealers want maximum profit from you.” And, “Your pocketbook is their target.” Pages # 15 & 31.

Steven Taylor, writing in MANUFACTURED HOMES, The Buyer’s Guide (144 pages, 2004) suggests, “For the best possible deal, time your shopping for the home either at the end of the month or…last two weeks of December….” P. # 99.

Wes Johnson’s does no one any favors in The Manufactured Home Buyer’s Handbook (226 pages, 2005), when he hyperbolizes: “The manufactured housing industry…feeds a negative stereotype of itself because of tactics its’ salespeople employ. Take every trick a used car salesperson ever had and multiply the total exponentially.”

Yikes! If this tripe commentary is even half true, there’s a lot the manufactured housing industry needs to do internally before ‘going national’, or even regional, with a brand promotion and or image – improvement campaign. But in the meantime, where do the previous dozen paragraphs take us? Right back to the title and subtitle of this week’s blog posting!

Whose Responsibility is Housing Affordability?

Maybe the time has arrived for a New Way of Thinking when it comes to manufactured housing sales in landlease communities retail salescenters

What do YOU think? What are YOU going to do about it, in and around your sphere of business and trade association influence? In the meantime, allow me to share at least one hopeful and helpful development along the line of calculating housing affordability, based on proven affordability parameters, designed to estimate maximum recommended ‘affordable’ and ‘risky’ purchase prices for new and resale, privately – owned homes of any type, sited on realty owned fee simple with home, or leased, as in a landlease community!

For results – comparison purposes, and hearkening back to Jerry Rouleau’s Rule of Thumb, given $36,000 as Annual Gross Income (‘AGI’) or Area Median Income (‘AMI’) per local housing market identified by postal zip code, here’re ‘his results’ first, then those from the new methodology, a.k.a. ‘Ah Ha! & Uh Oh! Formulae.

J. Rouleau’s Rule of Thumb:

AGI X 2.5; or $36,000 X 2.5 = $90,000 max mortgage @ stick – built home & real estate

AGI X 3 when 6% interest, or $36,000 X 3 = $108,000. -do-

AGI X 2 when 12% interest, or $36,000 X 2 = $72,000. -do-

The relatively new, though increasingly popular ‘Ah Ha! & Uh Oh! Formulae:

AGI or AMI X 30% expense factor & $333/month rent & 9.5%, 20 yr. loan = $41,000 for ‘affordable’ home purchase sited in a LLCommunity!

AGI or AMI X 30%, with TI/util pd separate, & $333/month rent & 9.5%, 20yr. loan = $68,000 for ‘risky’ home purchase sited in a LLCommunity!

AGI or AMI X 30% expense factor & 6.5%, 20 yr. loan = $101,000 max mortgage for ‘affordable’ home and land purchase! Pretty close to Rouleau’s $108,000, with mortgage term at 6%. (For estimated value of home alone, back out land cost)

AGI or AMI X 30%, with TI/util pd separate, & 6.5%, 20yr. loan = $134,000 max mortgage for ‘risky’ home and land purchase! (For estimated value of home alone, back out land cost)

I hope you see the differences, at a couple levels. First, leaving the home payment decision up to the homebuyer is frequently going to trump affordability. Consumers are rarely schooled in the concept, let alone methodology about how to measure and achieve it, to their ultimate benefit. And Yes, that’s what we rely on lenders to do for us; and today, they’re covering that responsibility well. But it wasn’t but a couple years ago, when many banking institutions transitioned from prudent lending to predatory lending, clearly demonstrating their commitment to ‘affordability’ was in turn trumped by their desire to fatten the bottom profit line. So, hope you too ‘see the light’ relative to protecting your homebuyers, sometimes from themselves. And don’t forget, those folk buying new or resale homes in, or going into LLCommunities, must figure in the appropriate homesite rental amount, right along with calculating their maximum monthly mortgage (PITI) payment!

I truly hope there’re blog floggers (readers) ‘out there’ who are already looking out for the affordable housing interests of their prospective homebuyers! If so, would you please share your business model and methodologies with me; to in turn, present in future blog postings like this one? Thank You. GFA

If you’d like a free copy of the aforementioned ‘Ah Ha! & Uh Oh! Formulae worksheet, simply respond via this blog, website, email: gfa7156@aol.co, or the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. And Yes, continue to send your observations, critique, suggestions for improving this weekly blog posting.

II.

FLASH NEWS. A possible investment opportunity for an experienced LLCommunity developer/investor.

If you’re familiar with what’s happening about 100 miles North of Las Vegas, NV., relative to what’s locally referred to as the SWIP Utility Corridor (bringing long term electrical power to CA from ID, Canada, and elsewhere), then the following opportunity to develop raw land into much – needed rental housing (i.e. LLCommunity &/or RV Parks) will interest you.

“The Caliente City Council has approved a parcel split of the 30.98 acre parcel fronting HWY 93 into two parcels. 16.24 acres zoned Highway Commercial on the HWY 93 frontage, and 14.54 acres zoned Recreational Vehicle Estates, with a Conditional Use Permit for 123 Mobile/RV Estate lots on the southern portion.”

The two parcels can be purchased separately, if someone wants to build the Mobile/RV Estate lots. The lots will be permitted as manufactured housing rental homesites. The RV Estates ordinance allows each site two RV/Mobile hookups, so that during the SWIP construction, the crews can occupy both (total of 246 RV spaces). The Recreational Vehicle Estates zoning allows the sites to continue as RV rental sites and allows long – term stays to continue. The sites can be marketed as manufactured home rental sites, where the home will hook up to one pedestal, and the second pedestal can be used for guests in RVs. Manufactured home marketing and sales can start immediately.

For information, contact Jan Cole via jancole@land-water.com or 6772 Running Colors Ave., Las Vegas, NV. 89131 or phone (702) 270-9194

***

George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class

A Sense of Personal Legacy…

doesn’t usually blossom overnight, unless you expect to die tomorrow.
And, one’s sense of corporate legacy, is another matter altogether….

A sense of personal legacy, if it emerges at all during a lifetime, is generally a multistep process, materializing with little, much or no fanfare at all, as one….

1. Learns the basics of life and values during one’s youthful years, through family, education, and variety of experiences, especially from one’s mistakes and successes.

2. Gradually, and generally quietly, identifies one’s personal life focus and career path; all the while learning and maturing in a variety of ways, along the way.

3. Cultivates and nurtures his/her personal life (e.g. spiritual perspective or not, political preference or not, family situation or not, amateur sports or not) and career path (e.g. employment or entrepreneurship, corporate religion perspective, local or national politics, amateur or professional sports, active or reserve military, teaching or academic pursuits, or variety of creative outlets, to name just a few possibilities), continue to learn, decide, and mature along the way.

4. At some point in time, during middle age for some, before or after for others, one realizes ‘You are your legacy!’ to those with whom one interacts personally and corporately; and or influences, by one’s chosen career path or paths – whether sequential or concurrent.

5. ‘The Question’, if and when asked, may be – and oft is, ‘What will be my legacy in years to come? And will it be manifested within or through…’

• Interpersonal relationships nurtured, damaged, repaired, and otherwise?

• The family or families begun and nurtured; and or whose members are now out in society on their own?

• Books authored, poems penned, and art created?

• Edifices designed and built; machinery and devices conceived and patented; formulae and methods originated, perfected, and protected?

• Informal and formal recognition by one’s peers?

• Philanthropic giving reflective of one’s interests and passion?

• College or university scholarships and academic chairs funded?

Corporate legacy? May, or may not be, an extension of one’s personal legacy, if and when one is closely identified, positively or negatively, with a particular familial, societal, political, military, religious, sport, organization, or business entity.

So, where are YOU on this lifelong personal and corporate legacy journey? Too young to care? Too busy to notice yet? Just becoming aware? Deciding now? Or; sad to say, maybe too late….

At this point, you’re likely asking yourself, ‘What makes legacy the lively topic for this week’s blog posting?’ Here’re several recent and pending happenstances that should get all of us to thinking.

First; there’re plenty of business pioneers who’ve shaped industries during their careers. But know what? Within the manufactured housing industry and landlease (nee manufactured home) community real estate asset class, these folk have rarely penned autobiographies, nor have biographies been authored about them. In the first instance, there’re but two such autobiographies: John Crean’s The Wheel & I, describing how he founded and grew Fleetwood Enterprises; now, Champion’s Fleetwood Homes. And there’s Jim Clayton’s First a Dream, chronicling his life and work story – with notable differences, in content, between the first and second editions.

To the best of my knowledge, there’ve been but two biographies describing the successful business careers of landlease community developers/owners/operators. The first, a biography titled A Danish American (long out of print), written by Kris Jensen, Jr., describing his immigrant father’s life and work. I recently wrote Kris Jensen, III., suggesting the time might be write to pen a Part II, telling ‘the middle generation of the story’, as Kris III now runs Connecticut – domiciled Jensen Communities. And then there’s the recently released Trailer Park Twins, profiling the colorful and successful business careers of identical twins, Darrell and (the late) Harrell Cohron, of Indianapolis, IN.

So, is there a book in you; or should one be penned, describing your life and work? I’d be pleased to assist, if you contact me for advice. In the meantime, suggest you go to a local bookstore and buy a copy of Dan Poynter’s Self – Publishing Manual, to learn how to organize material, prepare a working outline and author the book; then how to self – publish it. I buy the latest edition of Dan’s book each time I begin the process of writing another nonfiction book. Note that none of the aforementioned four books were published by traditional acquisitions publishers. This observation brings us to the second major step in this creative process, marketing your book! For that purpose, you want to obtain a copy of John Kremer’s 1001 Ways to Market Your Book. Seriously.

Additional opportunities for legacy preservation, where MHIndustry and LLCommunity asset class are concerned, can be found with the RV/MH Heritage Foundation’s prestigious Hall of Fame. “…the first Hall of Fame Awards Banquet (occurred) August 21, 1972, at the (now defunct) RV/MH Midwest Show at South Bend, Indiana, (during which) 14 industry pioneers were inducted. Hall of Fame awards have been made each year since, except 1976, when the organization was inactive.” Since 1972, hundreds of worthy men and women, from these two industries, have been inducted into this Elkhart, IN., domiciled repository of history (library) and artifacts (museum). To learn how to recommend someone for induction into the RV/MH Heritage Foundation’s prestigious Hall of Fame, phone either (800) 378-8694 or (574) 293-2344.

The RV/MH Heritage Foundation beginning its’ final phase of construction, recently announced the availability of naming rights for the Elkhart facility’s Grand Hall ($1,000,000.), Manufactured Housing Hall ($1,000,000.) with shared naming rights, Outdoor Show Area ($1,000,000. per year for three years), complex naming rights for roadway/streets/boulevard ($100,000.), five lakes on premises ($50,000. each), large paving bricks engraved @ $500 apiece, or small paving bricks engraved @ $250. each. Frankly, this is a near once in a lifetime, incredible opportunity, to ensure either your legacy in the MHIndustry and or LLCommunity asset class continues on into perpetuity – or a unique and lasting way for you to commemorate the lifework and memory of others worthy of such honor. Interested? Again, phone either of the numbers cited in the previous paragraph.

Hope you allow the content of this week’s blog posting to inspire you to pause and look at your personal and career legacy, and how you’d like to be remembered during years to come. A few possible alternatives have been described. Now it’s up to you to decide, and take appropriate action. If I can be of assistance to you, in some way to this end, reach me via the MHIndustry HOTLINE: (877) MFD – HSNG or 633- 4764.

*****
End Notes.

1. How to Find, Buy, Manage, & Sell a Manufactured Home Community, George Allen, J. Wiley & Sons, NY., 1996. Appendix B., page # 292. This book available for purchase from PMN Publishing. (317) 346-7156.

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

READ it HERE the FIRST Time; LATER, maybe ELSEWHERE!

Another Seller – Finance Option; Pithy Blog Responses; Next to New ‘repos for sale’; Saber Rattling again, or finally Throwing Down the Gauntlet?!

I.

From a veteran MHIndustry exec: “Just printed a few of your recent blog postings to read before the _____game. I’m working on a speech for an upcoming association meeting and want to be certain I have fresh information, so I turned to your blog!” RR

“Well written blog posting. I am concerned, however; people reading your Summary of intra – industry squabbling might misinterpret. Those issues have no traction in a united industry association. But if MHIndustry segments go their own way, watch out!” KR

“I’ve decided to get off the sidelines and re – assert myself nationally. Only a few years before I retire, and I want to retire from a prosperous industry.” XX (Who doesn’t?!)

“Interesting stuff. Is anybody listening; or are they ignoring the fact their cheese has moved? This is a great break out opportunity (‘The CAMPAIGN’) for our industry.” NB

Regarding HUD Code housing manufacturers taking 100% responsibility for installation of their product: “We did this on all our product, as part of the price a homebuyer paid for our new homes. My nose got bloodied on the financials the first year, but in the eight years following, we had to defend only ONE consumer lawsuit; and our service costs, as a percent of sales, dropped by 80%! It works!” XX

“This paradigm change is needed for all home manufacturers, if we expect the public to regain confidence in us & buy our homes, assuming the financing is there to pay for it.”

And this quoted from the Wall Street Journal during first week of November, in an article titled: ‘Mobile Home Makers Try to Stitch Together a Rebound’. “Don Glisson, CEO of Triad Financial Services, Inc., which finances manufactured home sales, says ‘…the industry could use an image – building national advertising campaign, (Think’ The CAMPAIGN’, described in previous three blog postings at this website! GFA) but ‘nobody wants to pony up the money because times are so tough.’ “

Furthermore, “A bigger disadvantage may be financing costs. Most manufactured homes are financed with personal property loans, meaning the loan is secured only by the home and not the land, which is often leased from the operator of a (landlease) housing community. Rates on such loans, which are considered riskier, are around 7% to 11%, compared with less than 5% for conventional (real estate – secured) home loans.” WSJ

“Although 2008 housing legislation required government – backed mortgage companies Fannie Mae and Freddie Mac, to support financing for manufactured homes, the regulator of Fannie and Freddie, the Federal Housing Finance Agency, recently decided such loans should be funded only when backed by land as well as by homes. Most buyers of manufactured homes (these days) either don’t own the land or don’t want to mortgage it. Unless the financing disadvantage is eliminated or reduced, ‘the manufactured home industry seems destined to struggle and dwindle’, Mr. Buffett said in his annual letter to shareholders earlier this year.” WSJ

So, faithful blog flogger (As in ‘promoter or publicist’), what’s on your mind these days?
The MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or via gfa7156@aol.com

II.

Atlanta, Georgia – based LLCommunity owner/operator Spencer Roane, offers this sage and timely, albeit lightly edited advice regarding ‘Lease – Option Financing and the S.A.F.E. Act’. *1 (Review with Counsel before Implementing!)

Some in the manufactured housing industry suggest community owners who engage in lease – option financing of manufactured homes, should switch to retail installment contracts and get licensed under the S.A.F.E. Act; or, deal with a lender who isolates the property owner/operator from said act. Well, here’s another increasingly popular perspective, which LLCommunity folk should review with their legal counsel.

Unlike a lease – purchase, which obligates the (home) buyer and seller to consummate the sale, the lease – option alternative is simply a lease with an option purchased by the tenant/lessee, to buy the home for a specified amount at a specified time in the future. Both parties agree the purchase amount, at the time the option might be exercised, is simply a one’s opinion of what the fair market value of the home will be at that time. For example, the lessee might lease the manufactured home for $300 per month for eight years, and agree to pay $1,000 for the option to purchase the home after five years, for $10,000; or, upon expiration of the lease, for only $3,000. And, continuing with this example; if the lessee exercises said option, at the end of the lease, the property owner might choose to finance the purchase amount, for $250 per month, over the next 12 months.

Most agree the S.A.F.E. Act applies to ‘mortgages’, and mortgages are defined as a transaction where the lender/seller holds a security interest in the property, e.g. home. Leasing/renting does not involve a security interest. Hence, one might argue, no mortgage is created by the lease portion of the lease – option transaction, therefore the S.A.F.E. Act does not apply!

What about the part of the above – described transaction, involving the property owner choosing to finance the purchase of the manufactured home after the option is exercised? If the property owners had no security interest in the home during that latter part of the transaction, one might further argue no mortgage is created, and again, the S.A.F.E. does not apply. Why would a property owner finance the home without holding a security interest in it; i.e. deliver title to the buyer and only hold a unsecured promissory note? Why not? The property owner might choose to do so, because the lessee has now established an excellent (rental) payment history. The home isn’t likely to be relocated, as the cost of moving is usually much higher than the value of the home. Even if the home is moved, the buyer is still obligated under the promissory note.

Another argument suggesting the S.A.F.E. Act wasn’t intended to address lease – option transactions, has to do with a primary goal of the S.A.F.E. Act: prevent the predatory lending practice of arbitrarily taking a borrower’s home without a judicial hearing (non – judicial foreclosure). Breaking a lease, however, always involves a hearing before a judicial authority. Hence, one can argue regulatory authorities are much less concerned about a landlord taking advantage of a tenant/lessee, than an unscrupulous lender taking advantage of an unsuspecting borrower.

A caution. Some ‘lenders’ claim their loan program allows LLCommunity owners to employ retail installment contracts, and not be subject to the S.A.F.E. Act. Perhaps. But in some cases, the lender is loaning the property owner’s funds, dollars specifically earmarked to finance on – site home sales. Well, if the LLCommunity owner/operator provides specific instructions to the lender regarding buyer qualifications and terms of financing, the property owner is, in effect, controlling the transaction. Might such transactions be considered a sham or a ruse by regulatory authorities?

Another concern with third party lenders, is cost and servicing effectiveness. In this day and age of rock – bottom interest rates, and record low manufactured housing shipments and sales, can loan transactions absorb 15 – 20 percent per year servicing fees? Can collections representatives, several states away, be more effective ‘over the phone’, than on – site community management personnel? If local personnel are already handling on – site rent collections and are involved in even a part of finance collections, why not do it all? And if third party servicing is ‘sold’ as a means of avoiding S.A.F.E. Act compliance, might regulatory authorities view this as yet another ruse?

Finally; one additional argument which may tip the scales in favor of lease – option transactions, is the recent focus of various regulatory authorities on sloppy foreclosure practices and paperwork. Hardly a day goes by we don’t read of another lender who thought its’ attorneys, agents, and staff were handling foreclosures correctly, only to find one detail or another (e.g. not reading legal documents before signing) was mishandled, putting the entire foreclosure process in jeopardy.

A nuance of the S.A.F.E. Act, is that it involves Federal ‘guidelines’ enforced by specific state legislation. Hence, there are wide variations in enforcement, from state to state. And even when S.A.F.E. Act licenses might not be required, other state licenses might be . So, community owners interested in lease – option transactions, in about a dozen states, are currently seeking legal counsel to ensure (their) compliance with applicable lending laws. Some are even sharing the cost of research and of drafting state – specific lease – option contracts. If you’re interested in participating in this cooperative effort, contact the web site posting this blog for appropriate contact information.

Announcement! On a semi – related matter; need late model repo manufactured homes to fill vacant rental homesites? Go to repogallery.com or phone (586) 337-5373 (Citizens Bank of Michigan) for dozens of possibilities.

III

There’s a not – so – new, but increasingly visible game in town these days…

“Nationwide, residents of manufactured homes have historically faced issues of predatory lending and constrained financing options. However, evidence suggests well – built, energy – efficient HUD Code homes, properly sited on ‘owned land’ or in a resident – owned community, and financed fairly, can appreciate in value and represent an attractive, affordable asset – building housing option.”

If that paragraph, quoted from ‘News & Updates from CFED’ grabbed your attention, you’ll likely want to participate in CFED’s Manufactured Housing Webinar Series: ‘Promoting Quality Affordable Housing’ on Wednesday, November 17th, from 2 – 3 PM EST. For information, go to cfed.org/knowledge_center/events/ or phone (202) 408-9788 or 207-0149. Panelists? Several; but MHIndustry & LLCommunity aficionados will recognize Stephen Wheeler, managing director at Housing Advisory Services.

IV.

Landlease Community Development Opportunity in Fast Growing Energy Boom Area of Northwest North Dakota!

Don Westphal has taken a proposed 260 rental homesite manufactured home community through the local approval process, and his client seeks a development partner, or someone to take complete control of this timely project. Located on US highway 2, West of Stanley, ND, the Montrail County board has enthusiastically supported the much – needed landlease community project, and the city of Stanley has agreed to supply water to the project. Engineering for the project would be completed during the Winter months, in anticipation of a Spring ground breaking and occupancy in – fill during late 2011. Contact Don at don@dcwestphal.com for details.

V.

‘Same ol Saber Rattling of the Past, or a Throwing Down of the Gauntlet?’

This industry observer does not plan to become involved in what appears to be an evolving matter at this time; but if you read the MHIndustry’s tealeaves of sorts, i.e. press releases, weekly reports, and the like, emanating from our industry’s national advocacy bodies, you’ve observed increasingly pointed and strident, and at times defensive, postures and tone of late…

Well, just this past week (11/9/2010), per board fiat: “…MHARR’s new approach and direction will be designed to uncover, expose and address all the matters that have contributed to a seemingly endless decline (in MH shipments), which has had a devastating impact on the industry’s small businesses, and the mostly lower and moderate – income American consumers of affordable housing.”

And the ‘movement to contact’, as we’re wont to say in the Marines, has begun. Suggest YOU take a gander at MHMSM.com newsletter feature by Eric Miller.

V

Beech Street Capital Expands into Landlease Community Lending!

Damon Reed and Dan Armstrong have joined Beech Street Capital, and will lead the company’s expansion into landlease (nee manufactured home) community lending! The veteran loan originators will be based in the Birmingham, Alabama production office, and will be responsible for originating LLCommunity loans on a nationwide basis! Reach Damon via (205) 991-6700X 8191 and Dan via (205) 991-6700 X 8192

VI

GFA Management, Inc., dba PMN Publishing ‘Searches for a New Platform’

Allen Letter professional journal subscribers were surprised to learn, in November’s issue of the monthly LLCommunity newsletter, of GFA Management, Inc., dba PMN Publishing’s now public search for a new, permanent, not – for – profit or for – profit platform. This action is intended to ensure continuation of the annual ALLEN Report, International Networking Roundtables, popular Manufactured Housing Manager (‘MHM’) professional property management training and certification program, two business newsletters, many books, and dozens of standard forms, into the future.

Since the first of November, three interested parties have visited Indianapolis, IN., to discuss this rare opportunity, and one has expressed interest via correspondence.

For the record; the ideal platform for these work products (i.e. more than a half dozen ‘profit centers’) at play here, is an existent or new not – for – profit national trade body with strong ties to investment real estate and or manufactured housing. Since this focus limits the number of capable successors or partners, the opportunity was made public, in the hopes another entity or person, with known passion for the asset class, will step forward, in either a not – for – profit or for – profit mode, to continue the many valuable products and services designed solely for landlease community owners/operators nationwide. The ideal or WIN – WIN combination, whether not – for – profit or for – profit based, will be a national platform balancing a desire for legacy recognition, on one hand; with, compensation that’ll guarantee said LLCommunity products and services are taken seriously, on the other hand. And frankly, there is no personal or corporate deadline in effect here! Barring an acceptable, mutually beneficial transition, life and work will likely continue unchanged beyond year 2011. Interested in discussing this matter further, simply phone (317) 346-7156. GFA

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End Note.

1. Spencer Roane has been a landlease (nee manufactured home) community owner/operator for 26 years, and engages in lease – option ‘financing’ to sell manufactured homes in properties he owns and manages. He obtained the mortgage loan originator (MLO) license and mortgage broker (MB) licenses required by the S.A.F.E. Act, but was advised by legal counsel, the Act does not apply to his lease – option financing. He serves on the Georgia Manufactured Housing Association (GMHA) board of directors and is a direct member of the Manufactured Housing Institute’s (MHI) National Communities Council (NCC) division. Spencer can be reached via spencer@roane.com or (678) 428-0212.

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