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

Numbers, Attitudes, Books & Errors, all ‘UP’ AT MHCongress!

Just about ‘anyone who’s anybody’ in the MH business was in Las Vegas

I.
First the numbers! According to Manufactured Housing Institute (‘MHI’) exec Thayer Long, overall attendance at the recently concluded 2010 Manufactured Housing Congress, in Las Vegas, NV. was up from 690 in 2009, to 730 last week! That’s progress; hopefully on our way back to the ‘thousands’ of a few years ago.

Just as impressive, was the jump in the number of landlease (nee manufactured home) community owners/operators participating in the Fifth Annual National Communities Council (‘NCC’) FORUM. Here, attendance rose from the 150 present last year, to 200 this time around. And no wonder; ‘everyone’ opined this year’s joint program with Urban Land Institute’s (‘ULI’) highly regarded Manufactured Housing Communities Council (‘MHCC’) was a Winner, from start to finish!

II.
Borrowed from a chapter title in Chapbook of Business and Management Wisdom, here’re ‘Scintillatingly Salient – but – Salacious’ observations gleaned from three days of ‘goings on’ at this year’s MHCongress. *1

Historic! This was first time in ULI history, for one of its’ several dozen ‘product councils’ to meet independent of the institute’s major membership meeting, this year occurring near simultaneously in Boston, MA. Why important? MHCC is widely regarded as MHIndustry’s de facto Think Tank. This joint meeting cements a key working relationship between MHI and ULI. No ‘attitude adjustment’ needed here!

The (Mobile Home) Park Girl debuted at this year’s MHCongress, offering property management services to LLCommunities in Texas. Contact Ms. Acosta via (877) 565-3444. When she gets the MHIndustry lingo right, and adds a PM credential or two to her name and firm, look for that team to be a ‘professional’ property management force to contend with in Texas and possibly elsewhere.

Spectrum Utilities Solutions recently acquired Edison Micro – Utilities, and Water Saver Systems, giving it a presence in 24 states – from New Jersey to California, offering utility submetering equipment, installation, and billing services. Contact: Fred Rice and Dave Eversole, respectively, at (614) 214-777 & 738-9996.

Dick Bessire of Bessire & Casenhiser circulated a list of ‘43 Useful Ways to Use DW-40’. Want a copy? Call (909) 594-0501. ‘Keeps flies off cows’, ‘attracts fish when sprayed on bait’, and much much more! WD-40 that is, not the list!

SUNSTONE manufactured housing consultants also debuted at this MHCongress. ‘Think’ Bob McBroom, Christopher Nortley, and Kolman Bubis. (312) 479-1200. Had planned to ‘do a story’ describing their transition from CBRichard Ellis, but we never got together….YOU can though, by phoning (312) 442-4402.

Nearly 100 copies of the just released Manufactured Housing $$$ Primer were sold, at a special show price of $20.00, at the MHCongress! The 100 page compendium contains ‘Almost everything you’ve wanted and needed to know about manufactured housing (chattel) finance but didn’t know who to ask!’ Now available to the MHIndustry and LLCommunity asset class at large, for only $29.95 (postpaid), by phoning (317) 346-7156 or via the website posting this blog: community-investor.com Contains the Official MHIndustry Lexicon (glossary), two ways to value manufactured homes, sources of MH chattel finance, finance service & consulting firms, federal programs, regulatory reform, and ‘How to sell & self – finance new & resale homes in LLCommunities’, list of all BDMs, description of Community Series Homes or ‘CSH’, and much much more!

Paul Bradley’s ROC – USA made a splash at the MHCongress! How so? A dozen members of his LLCommunity team attended FORUM & Congress seminars, networked with new and old peers at social events, manned an Information Booth on the show floor, and generally interacted with MHIndustry and LLCommunity businessmen and women – explaining their unique Business Model, converting this income – producing property type from private to cooperative ownership.*2

Susan Gargano of Creative Haven Media & Marketing, and Lauren Shippy of The DeSimone Group, both from Cherry Hill, New Jersey, were present and actively seeking creative but practical ways to assist the MHIndustry & LLCommunity asset class in a soon and joint recovery from their ‘now decade long’ economic malaise. If YOU have ideas, contact them, respectively via (609) 351-6043 & (856) 702-6007. Tell ‘em ‘George sent you!’

Lou Vela, now with iCAP Michigan, as senior director, was as busy as ever, lining up real estate mortgage clients. (248) 539-7800. Do YOU have a copy of the 12th annual ‘Lender’s Registry of Real Estate Loan Originators & Lenders’? Was enclosed as a lagniappe with the March issue of the Allen Letter professional journal. Call (317) 346-7156 to request a FREE copy. Speaking of RE lenders, Brian Mills (727) 374-6040 was present, as were the DiMarco brothers (585) 423-0230, Charlie Williams (602) 284-8772, Dan Armstrong (205) 991-6700, Lew Grace (949) 477-1545, John Jacobs (813) 829-5061, Bruce Tolchin (310) 442-8400, and Cary Monroe (813)229-5055.

The Jerry Gowans, present at the MHCongress sans wife Donna, have a new book out, Take the ‘E’ out of EGO and ‘GO’! Check it out via www.EoutofEGO.com

Did you pick up one or both the FREE books Don Westphal distributed at his booth? If not, and you’re anticipating the rejuvenation of an aging or abused LLCommunity, YOU need these useful and timely resources! Contact him via (248) 651-5518.

And, if you’re at all into social networking, either as a novice or regular, contact Suzanne S. Felber via TrailerDiva.com and request a copy of ‘A Do – it Yourself Guide to Social Media’ produced by The Home Idea Factory. Or phone (214) 941-8341.

Speaking of books. If you didn’t get a FREE copy of the fourth edition of Tony Petosa, Nick Bertino & Creighton Weber’s Manufactured Home Community Financing Handbook, go to wellsfargo.com/mhc Frankly, this real estate mortgage How To text, and survey of present day lending trends, should be on every LLCommunity owner/operators book shelf, to be read before acquiring or refinancing another property!

At CPM® candidate Candice Hocomb’s excellent seminar on ‘Managing LLCommunities in Tough Times’, there were no fewer than six Certified Property Managers® on hand to hear and give her moral support: Michael Sullivan, CPM®; Allan Alt, CPM®; Bill Cramer, CPM® & MHM; John Rogosich, CPM® & MHM; and George Allen, CPM® & MHM. Can’t even recall the last time there were that many CPMs® in one room at a manufactured housing or landlease community function!

III.
And now for some ERRORS. Here’s a general one: If you or your firm have any intention of being or becoming a significant ‘player’ on the MHIndustry and or LLCommunity business scene, it’s an obvious ERROR for YOU not to participate in the annual MHCongress. For example; ask yourself (if present at said event), ‘What print trade publications were present?’ Answer: At least three FREE and subscriber – supported business newsletters (e.g. Allen Letter professional journal @ 317/346-7156), but no trade magazine(s) whatsoever! And, ‘What online trade publications were present?’ Answer: Several, but not all! Keep that in mind when product and service vendors vie for your business. Ask them, ‘What are you doing to keep MHBusiness segments healthy and growing in today’s difficult economy?’ Special Announcement: If you’d like one of the first copies of Official Manufactured Housing PRINT MEDIA Resources, ON LINE MEDIA Resources, and SOCIAL MEDIA Resources Contact List, being readied for distribution, as a lagniappe, in an upcoming issue of the aforementioned Allen Letter professional journal; SUBSCRIBE TODAY!

Some specific ERRORS. One speaker opined, though treated this as a fact, “More LLCommunities are going into foreclosure these days than ever before!” NOT! Ask any LLCommunity (nee ‘mobile home park’) veteran who was around when the HUD Code went into effect in 1976. Not only did home shipments plunge from 575,940 in 1972 to 49,789 in 2009, but physical occupancy didn’t rise much above 50 percent ‘way back then’ until we hit our historic 95 percent high in the late 1990s, and to have now dropped off to 88.2 percent! There’s ‘no valid comparison’ between foreclosure volumes during the late 1970s with what’s happening today!

And this: “More LLCommunities are being bulldozed today than are being built!” NOT! Just read the last several annual ALLEN REPORTS. While not replicating the ‘new development’ volume of the early 1970s (again; when 575,940 homes/per year, with 80+ percent going into ‘mobile home parks’) and late 1990s, during our mini – renascence, there’ll still a healthy number of new LLCommunities being built every year, and existing properties being expanded.

And this: “Past industry standard OERs *3 no longer apply to contemporary LLCommunity operations!” NOT SO! All the ‘old OERs’ still apply; it’s simply prudent, in some instances (e.g. when dealing with older properties and deteriorating infrastructures), to add a new line item labeled ‘capital reserves’, and with a percentage allowance relative to anticipated need for near and far future on – site capital expenditures.

The BIGGEST ERRORS of all did not occur at this year’s MHCongress, but they were indeed addressed. What are they? Too high rental homesite rent rates in particular local housing markets, and the consequences thereof! First; here’re two ‘real life examples’ of too high rental homesite rates. In central Florida, a large LLCommunity charges more than $600.00/month site rent in a local housing market where 2BR2B conventional apartment units rent for $800.00/month. Using the 3:1 ratio, (Where site rents are 1/3rd apartment rents), target site rent is $260/month; so, present site rent is nearly 2 ½ times what this Rule of Thumb suggests! Result? To sustain occupancy, the owner/operator allegedly puts prospective homebuyers into resale homes for as little as $75.00, if they’ll sign a homesite lease at the above – referenced $600/month rate. And in central Indiana, a 1BR1B apartment on a golf course goes for $426/month rent, while a mile down the road, a large LLCommunity, with declining occupancy, continues to charge $446/month site rent in this local housing market where the 3:1 Ratio suggests site rent should be $300/month or less. (Based on $900/month for 2BR2B conventional apartment). Bottom line ERRORS? Giving homes away to get site rent, and leasing vacant rental homesites for nearly the same amount one can move into a 1BR1B apartment on a golf course! Those are just two of the horror (error) stories circulating these days….

So, how were these and other out of balance site rent situations addressed at this year’s FORUM and MHCongress? In a variety of ways. Some LLCommunity owners/operators actually (finally) recommended lowering rental homesite rent rates! Others decline to do so, preferring to make up for losses in physical occupancy by ‘renting’ homes on – site, and expanding existent home sales and self – finance programs. Not sure if the NCC FORUM ‘book’, containing Power Point Presentations on this topic, is available for purchase, but you might call (703) 558-0678 and ask Thayer Long if they are. And while you’re at it, find out how to become a direct member of MHI in general, the NCC in particular!

But, for the first time in many years, LLCommunity owners/operators, in general, are clamoring to learn 1) How to decide the appropriate site rent in any given local housing market (Think 3:1 Ratio described two paragraphs earlier), and 2) How to calculate ‘affordable’ and ‘risky’ price points for new and resale manufactured homes in any given local housing market. If you’d like a copy of the handout used for the 1 ½ hour class: ‘Is Your LLCommunity Really Ready to Sell & Self – finance New & Resale Homes On – site?’, phone (317) 346-7156 and request it. And, while you’re at it, consider ordering a copy of the aforementioned Manufactured Housing Finance Primer for only $29.95 (postpaid). Why? Because the seminar syllabus is part of chapter # 7, and includes several helpful forms, including the EQUALIZER, and the ‘Ah Ha! & Uh Oh!’ formulae.

IV
In closing, I owe you an update regarding remarks made at the conclusion of last week’s blog posting. Yes, some HUD Code housing manufacturers are interested in ‘finally getting together’ to talk about our industry’s Business Model and how to best weather the ‘Near Perfect Storm’ we’ve been in now for a decade. More approached me – confidentially, about this, in Las Vegas. So, if you have a real and vested (i.e. ‘skin in the game’) interest in seeing HUD Code manufactured housing survive threats of a Grand Conspiracy, and thrive, then let me know by email, phone or whatever. Just since last week’s blog posting, I’ve received several such inquiries, but need more, to decide if and when to proceed with planning a third NSAC caucus type event for this segment of the MHBusiness.*4

*****

End Notes.

1. Chapbook of Business and Management Wisdom, by George Allen, is available for $10.00, per copy, from PMN Publishing. (317) 346-7156.

2. ROC = resident – owned communities

3. OER = operating expense ratio(s)
4.
5. NSAC caucus. Two have been held to date: 2/27/08 in Tampa, FL., attended by 100+ LLCommunity owners/operators; and, 2/27/09 in Elkhart, IN., attended by 100+ HUD Code home manufacturers & LLCommunity owners/operators.

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

Welcome to a Little Bit of Manufactured Housing History!

‘How many books have been penned describing MHIndustry chattel finance?’
Answer: ‘None before today!’

Manufactured Housing Primer debuts at the Manufactured Housing Institute’s annual Manufactured Housing Congress, this week in Las Vegas, NV. The eight chapter, 100 page, spiral bound reference resource answers ‘Almost everything you’ve wanted and needed to know about manufactured housing finance but didn’t know who to ask!’ (subtitle). The mini trade tome is comprised of writing contributions from no fewer than two dozen manufactured housing industry executives, MHRetailers, consultants, financiers, service providers, landlease (nee manufactured home) community owners/operators, and national advocacy association leaders.

Copies of the new book will be sold during the MHCongress for only $19.95 apiece; but will be available thereafter, from PMN Publishing for $24.95 post-paid. To order your copy(ies), simply phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, or email: gfa7156@aol.com Credit card orders welcome; or, mail check to PMN Publishing c/o Box # 47024, Indpls, IN. 46247.

Want a taste of this historic text, authored specifically for the HUD Code manufactured housing industry and landlease community (‘LLCommunity’) real estate asset class? Well, here’s the first chapter, penned by Dick Ernst, president of FINMARK, in Dallas, TX., and George Allen, Realtor®, CPM® Emeritus, & MHM, of Indianapolis, IN.

Chapter 1

Introduction to HUD Code Manufactured Housing Chattel (personal property) Finance in General, and within the Landlease (nee manufactured home) Community Real Estate Asset Class.

In 1994, Manufactured Housing Institute’s in–house specialist on manufactured housing finance, William J. (Joe) Owens, writing in Development, Marketing, and Operation of Manufactured Home Communities, co-authored by George Allen, David Alley, & Edward Hicks, offered this clear and helpful description of chattel (personal property) financing in the HUD Code manufactured housing arena.

Because of its’ origins in the vehicle industry, financing for manufactured housing is still largely similar to automobile financing. In other words, the home does not (generally) become a permanent improvement to the real estate on which it is located. Rather, it remains a separately titled piece of personal property. Personal property finance of manufactured homes has remained the norm through the years because, historically, the majority of manufactured home have been placed on property not owned by the homeowner, either in a landlease community, or on private land owned by someone other than the homeowner. Therefore, acquiring a real estate title to the home and land is not possible, nor is acquiring a (realty–secured) mortgage. This practice is slowly changing, with some manufactured homes being made a permanent part of the land on which they are located, and financed as real estate, just as site – built houses are. P.130

*****

Dick Ernst, president of FINMARK in Dallas, TX., has long been considered one of the mavens of manufactured housing finance; at one point in his long and distinguished career, serving as interim president of the aforementioned Manufactured Housing Institute (‘MHI’). At this point, he picks up where Joe Owens leaves off.

Rather than repeat the history of manufactured housing chattel (personal property) finance from its’ inception 60 years ago, the following remarks focus on one of the most volatile and challenging periods of our industry’s history, from 1998 through 2009. The relevance of that decade, is that it presages the explosive growth of site–built housing and the realty mortgage market between 2001 and 2007 – and its’ subsequent meltdown, bringing our national economy to its’ knees. While dollar volume of the latter’s ‘sub prime’ meltdown far exceeds what happened in manufactured housing circles, ten years earlier, the consequences for both markets have been dire.

Let’s go back to those ‘go–go days’ of the 1990s, when the HUD Code manufactured housing industry was enjoying strong growth year after year. At the time, our industry was a darling of Wall Street. Large amounts of capital were chasing pubic (housing manufacturer) companies’ stock, driving up housing prices, and giving these firms ‘play money’ with which to buy–up other firms to expand their retail distribution networks. The new buzz within the industry was ‘vertical integration’. Led by Champion Enterprises, large retail sales operations were acquired for big bucks. Other manufacturers, like Fleetwood Enterprises, and American HomeStar, tried to keep up with Champion, as they saw their retail distribution networks going to competitors.

Retail (chattel) financing was plentiful and financially attractive, because lenders were paying MHRetailers a premium for their loans, and were very aggressive with their underwriting practices. While some lenders were portfolio lenders (i.e. keeping the chattel loans on their books), the bulk of financing, at the time, came from active participation in the Asset Backed Securities Market. Lenders were originating $100’s of millions in loans, packaging them, and selling them, while retaining servicing. Green Tree Financial was the largest ‘player’ at the time, with more than 30 percent of market share. Other lenders tried to ‘out do’ them, by buying more marginal business and or paying more for the loans purchased. Beginning to see the clear similarities between that period, in manufactured housing finance history, and the more recent ‘sub prime’ meltdown with stick – built housing?

The peak of manufactured housing’s gluttony occurred in 1998, when 372,843 HUD Code homes were shipped to MHRetailers and landlease communities. Marty Lavin, a veteran manufactured housing finance consultant, determined as much as one third of the industry’s chattel loans were made to homebuyers having a FICO score of less than 600! The soon result was a default frequency of more than 30 percent on loans originated during that time. The industry ended up with a glut of repossessed homes that took three years to absorb and resell. Now the parallel is complete! Plenty of Wall Street money chasing an industry; plenty of financing with an appetite to do even more securitizations; and, home sellers and finance companies willing to put consumers into homes with loans they likely wouldn’t be able to pay.

So, what has transpired since then? The asset–backed security business continued to operate, but the cost of doing securitizations became very expensive. Green Tree reorganized under bankruptcy protection, and stopped originating new loans. Clayton Homes, one of the largest securitizers in the manufactured housing industry, ended up selling to Berkshire Hathaway. Clayton had always been one of the most disciplined lenders in the business, but they were painted with the same brush as everyone else, and the cost of securitizaitons became untenable. As an example, if Vanderbilt (Clayton’s in–house finance subsidiary) had $ 1 billion in loans to securitize, they would be required to put up as much as $200 million in additional collateral (over–collateralization) to get the deal done. It does not take a mathematician to realize this is not a workable long-term strategy. Ultimately, when the sub prime fiasco hit, the capital markets were shaken to the core and closed down the asset backed security market completely. Even today, in 2010, there is no such market for manufactured housing. As a result, many chattel lenders went out of business.

The manufactured housing industry, and chattel (personal property) financing, look nothing like they did ten years ago. The number of lenders financing ‘home only loans’, or at least the majority of such loans, can be counted on one hand. The big four: Triad Financial Services, 21st Mortgage Corporation, CU Factory Built Lending, L.P., and U.S. Bank – Mfd. Housing Finance; plus, Clayton’s in–house arm, Vanderbilt Mortgage and Finance, Inc., provide the bulk of chattel financing, along with local community banks, along with an increasing trend toward self–finance of on–site home sales transactions by landlease community owners/operators. And since the heyday in 1998, loan underwriting and credit requirements have tightened considerably, with a minimum of a 650 FICO score required of would–be homebuyers.

What can we look forward to in the future? First the challenges. Despite specific legislation, commonly referred to as ‘Duty to Serve’, requiring government sponsored enterprises (‘GSE’), like Fannie Mae (‘FNMA’) and Freddie Mac, to finance larger shares of the manufactured housing market, we’ve seen little movement in this direction. And, FHA Title 1, passed with sweeping changes that have potential to help the industry, particularly landlease communities; but, until GNMA (Ginnie Mae) lifts their 20 year moratorium on approval of new (loan) issuers, it’ll have little impact on home sales. The good news? There’s optimism GNMA will lift said moratorium, and many more lenders will come into the manufactured housing market. Even with recent changes to FHA, increasing the front end fee and higher credit scores, those are changes the industry can live with today. Furthermore, 21st Mortgage Corporation recently received a fresh commitment of capital, which should keep them among the industry leaders in chattel financing. Finally, there will be a recovery of the financial markets; and the performance of the loans originated since 2001 has been excellent, and should attract investors looking for quality and yield!

*****

Now for a change in perspective. While landlease (nee manufactured home) communities have long been known and popular, among income–producing property investors, for their ‘recession proof’ nature, low annual turn-over, and low operating expense ratios and general scarcity (i.e. relatively few developed anew since the mid–1970s), little has been written about the asset class’ unique ability to ‘add value’ by bringing investor–owned homes on-site to be used as ‘rental units’ and or ‘for sale’ as contract sale units. This dormant practice resurfaced right at the turn of this century, when physical occupancy in landlease communities plummeted (i.e. from its’ historic high of 95 percent in 1998) and hundreds of thousands of next to new repossessed manufactured homes came on the market. Savvy landlease community owners/operators, particularly property portfolio ‘players’, led the way…but first, a retrospective look at the past…

For much of manufactured housing history, landlease communities – and before that, ‘mobile home parks’, eschewed (avoided) wholesale placement of rental homes and ‘contract sale’ homes on vacant rental homesites. Why?

As profitable as such practices can be in the short term, the presence of what are often referred to as ‘park–owned homes’, whether they be rental, contract sale, or lease–to–own units, tended to affect the property owner’s disposition strategy in a negative way; specifically, reduced pre ‘closing’ value of rental homesites so encumbered, as well as replacement versus income value, when pricing the homes themselves. Would–be investors were frequently wont to say,

‘I/we don’t want the added management headaches and increased operating expenses associated with park–owned homes!” An attitude that frequently reversed after ‘closing’, when seller nunc buyer now views the same units as being potential ‘cash cows’. Believe it. Happens that way frequently.

There’s also the difficulty, even today, of getting mortgage originators and lenders to accept more than a very small percentage of ‘park–owned homes’ in new real-estate secured loan.

Much of that changed around year 2000, when the HUD Code housing chattel finance bubble burst, continuing in a deflated state to this day (2010). Now however, besides enjoying the widespread reputation for being ‘recession proof’ investment property, landlease communities (‘LLCommunities’) have the unique ability, unlike most other types of income–producing property, to ‘add value’, by siting resale and new ‘park–owned homes’ to be used as rentals or sold on contract to homebuyers/site lessees. What effects have this singular change in operational philosophy had on the asset class and manufactured housing industry? Recycling of hundreds of thousands of repossessed homes, from the chattel finance bust between 1998 and 2005; increased and more stable physical and economic occupancy levels, certainly among the 500+/- known portfolio owners/operators in North America; and the manufacturing and marketing of tens of thousands of new HUD Code homes that would not have been built and sold otherwise, especially since late 2008, throughout 2009 and 2010!

The latter point is particularly noteworthy, in that rarely before year 2005 did LLCommunity owners buy new HUD Code homes to site and sell in their properties. Why? Because these homes were going onto leased land, they tended to depreciate in value, over time, unless kept in immaculate attention by the homeowner, and were sited in an exceptionally well–located and operated LLCommunity. An exception to this observation occurs when developers operate in strong enough markets to allow them to control the dynamic interrelationships among wholesale and retail home prices, loan terms, and rent level of homesites.

Bottom line in historical dollars? Here’ two paragraphs from the 21st annual ALLEN REPORT (a.k.a. ‘Who’s Who Among Landlease Community Portfolio Owners/operators in North America!’), available from PMN Publishing via the website: community-investor.com or by phoning the MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764, or (317)346-7156.

“As was first pointed out in the 20th anniversary edition of the ALLEN REPORT, ‘Most LLCommunity portfolio owners/operators (now) market, sell, and self–fiancé new and resale manufactured and modular homes on – site.’ So much so, this year, 49 portfolio owners/operators reported 28,642 contract sale and or rental units on – site in their LLCommunities. When six firms reporting more than 1,000 contract sales apiece, were removed from the total mix, the resulting average, among remaining 43 firms, was 185 such transactions/rentals per portfolio or a total of 7,955. The six deducted firms claim an average of 3,447 contract sales per property portfolio.”

“The estimated value of above housing transactions? While impossible to estimate precisely; 27 or the 49 firms reported $221,600,000 in personal property loans carried on their or an affiliated company’s books. And given an arbitrary average new/resale home value of $30,000/unit, that total could account for 7,387 such homes (i.e. $221,600,000 divided by $30,000/home), relatively close to the 7,955 units reported in the previous paragraph (43 firms @ 185 homes apiece). Is it possible there’s nearly a billion dollars in self–financed chattel loans on homes presently sited in all 49 reporting LLCommunity portfolios? Yes, at 28,642 homes, if $30,000/unit. Certainly ‘begs the question’ relative to number of contract sales/mortgages among all 500+/- known portfolio ‘players’, beyond the 49 of 125 reported in this year’s ALLEN REPORT. A simple extrapolation of this data suggests between $2 ¾ and $3 ½ billion dollars among portfolio owners/operators alone.”

Keep in mind, it’s estimated the 500+/- portfolio owners/operators control maybe 15-25% of the national inventory of LLCommunities. But since their property size of this year’s ALLEN REPORT respondents averages 234 rental homesites per location, the remaining 75–85% of the national inventory are generally smaller properties, ranging in size from 100 rental homesites down to only three or four apiece, in the dozen or so states where this property type is even regulated. Point? The majority of non–portfolio LLCommunity owners/operators tend to be Mom & Pop–sized investments, often passively managed, and sans the resources and experience to create a new profit center to engage in self–finance of the ‘captive finance’ or ‘buy here–pay here’ methodology.

All this brings us to today, 2010 and beyond. What’s the year ahead hold for:

• HUD code manufactured housing production and shipment?
• Manufactured housing chattel (personal property) finance?
• Landlease community operations

Your guess is as good as the folk contributing their knowledge and experience to this primer. And helping you prepare for this vague future is part of the purpose of this book. Our intent is to equip the reader with enough knowledge about various aspects of chattel (personal property) finance, and various segments of the industry/asset class, to effect considered decisions about these matters going forward.

Good Reading, Good Luck, and hopefully, a very Good Future!

*****

What else is covered in the following seven chapters? Valuation of manufactured housing; sources of chattel (personal property) finance, finance service & consulting firms, federal programs, regulatory reform, LLCommunity – related matters, and resources not specifically described in previous segments of the primer. Another historic aspect of the primer is that, at the end of chapter # 1, it features the first Official Lexicon (a.k.a. Glossary) of MHIndustry & LLCommunity trade terms ever published. The Lexicon alone, is worth the price of the primer!

Hope you decide YOU want to read the entire work. This is a limited print run of 500 copies; so, when they’re gone, that’ll be all that’s available, for the time being. Don’t be without your handy, helpful Manufactured Housing Primer. Buy one or more at the MHCongress; use the ordering contacts listed earlier herein; and or phone (317) 346-7156. Leave a message if necessary….

*****

So, what else is going – on, in and around the MHIndustry & LLCommunity asset class these days? A lot! Not the least of which, is significant reorganization taking place within HUD, relative to the department’s manufactured housing regulatory responsibilities. You owe it to yourself to stay abreast of these, and other timely developments, re: FHA Title I, and implementation of the S.A.F.E. Act, to name a couple. Do so, by becoming a dues – paying direct member of the Manufactured Housing Institute via (703) 558-0678 (Thayer Long); and, asking to be put on MHARR’s email newsletter distribution list, by phoning (202) 783-4087 (Danny Ghorbani).

Better yet, become a paid subscriber to the Allen Letter professional journal, also available from PMN Publishing, for $134.95/year (12 monthly issues)! And, if you’re ‘the top executive’ with any factory – built housing – related firm, or LLCommunity property portfolio, join your peers in reading the Allen CONFIDENTIAL! business newsletter (a.k.a. TAC!) the first of each month ($950.00/year, or only $750.00/year if an Allen Letter subscriber). The ‘insider’ and oft confidential trade and national news featured in each issue of TAC!, if ever learned at all by other trade publications, will generally not appear until 30 – 60 days later. This is probably one reason why no TAC! subscribers to date, after 10+ years of publication, have experienced business failure! They oft know, before their competitors, what’s happened, happening, and about to happen; so can make appropriate strategic business planning decisions in a timely and forthright fashion. Maybe these two monthly print publications are what you’ve been needing to help YOU make right business decisions during the months ahead….

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

SAVE YOURSELF; NO ONE ELSE WILL!

– a simple but serious Four Step Plan for owners/operators of landlease (nee manufactured home) communities during these economically trying times –

It occurred to me, while Mystery Shopping landlease communities (‘LLCommunities’), engaging in some expert witness introspection, and attending a Super Symposium & Showcase of Homes, we – as owners/operators, continue to be our own worst enemies, when it comes to managing, selling, installing & financing new and resale homes within our valuable income – producing properties!

That’s right; no, I mean, that’s ‘wrong’ – that in property after property, homebuyers/site lessees see evidence of unprofessional property management (‘PM’); experience lackadaisical selling & leasing by phone and during interviews; suffer homes poorly sited and installed; and, probably worst of all, endure sub prime chattel (personal property) financing procedures, or lack thereof, that’ll might (Think impending S.A.F.E. Act implementation) get note holders in trouble!

So, what’s one to do about ‘poor rules enforcement, lax curb appeal, & lousy resident relations’ indicators; consultants who increasingly default to their firm’s website rather than sell; homes twisting and turning on insecure foundations; and, ‘buy here – pay here’ loans that’re unintentionally non – compliant with state and federal regulations?

Here’re four places to start the corrective process through education:

I.

Ensure every on – site property manager (a.k.a. administrator, caretaker, resident manager) is provided an opportunity to receive professional property management training & certification, preferably outside the company. Why? First; training is an educational and sharing experience; second, certification is the reward for, and indicator of superior PM performance! Furthermore, it’s unlikely a firm’s homegrown program was prepared and articulated by a Certified Property Manager ® member of the Institute of Real Estate Management (‘IREM’). Why is this important? During 30 years of experience and observation in this business, the best LLCommunity PMs almost always are professional CPMs®. So, why settle for less, when training your best?

What’re the professional property management training and certification alternatives available to LLCommunity owners/operators today?

At the entry level, whether a new or experienced on – site manager, or new owner of a LLCommunity, is the Manufactured Housing Manager (‘MHM’) one day PM program, available in classroom format (hosted by state MHAssociations & LLCommunity portfolio firms) or correspondence course. Contact PMN Publishing for details, via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. There’re 1,000+/- MHMs to date, all trained by a veteran LLCommunity owner and CPM®

At the intermediate level, is the Manufactured Housing Education Institute’s (‘MHEI’) nearly 20 year old Accredited Community Manager ® (‘ACM’®) program. This is a three course program (two days each session), culminating in preparation of a property management Plan. Classes are usually held annually in Michigan and Florida. For more information, contact Manufactured Housing Institute via (703) 558-0678. There are approximately 200 ACM®s in place today.

And then there’s the Certified Property Manager® member of IREM program, that serves as a quasi – ‘graduate degree’ in professional property management. CPMs® are trained in all types of income – producing property, and to date, 250+/- CPMs®, nationwide, claim affinity with the LLCommunity real estate asset class. For information, contact IREM® via (312) 329-6000.

II.

Real estate licensure. Few three word combinations stimulate more fear, prejudice, and distinction, in the minds of HUD Code manufactured housing aficionados and LLCommunity ‘players’. Why? Some ‘fear’ the day when, as marketers, sellers and installers of (factory – built) housing, on building sites conveyed fee simple and or into LLCommunities, they’ll have to become educated and licensed as real estate salespersons and brokers, to perform their presently uneducated and unlicensed realty – related jobs.

Then there’s the prejudice. Rarely, if ever, have real estate licensees given more than minimum lip service to the HUD Code manufactured housing type of factory – built housing. And only since the recent U.S. Supreme Court’s decision, allowing MHIndustry access to local realty board multilisting services, has the industry begun to enjoy a viable means of establishing a working, ongoing secondary market for its’ unique type housing.

But there are enlightened MHIndustry and LLCommunity professionals – I can think of at least a dozen; who know firsthand, the value, benefits and distinction of achieving real estate licensure – from training, networking, and access perspectives – to maintain active real estate brokerage licenses, and in some cases become Realtor® members of the National Association of Realtors (‘NAR’)..

So, what to do? Contact your state’s real estate licensing board and request guidance relative to licensure in your state. Then take the appropriate classes (They’re not easy!), pass the necessary tests, and become licensed. Frankly, you’ll be surprised how much you’ll learn about the profession (i.e. real estate) with whom you’ve rubbed shoulders over the years, but never really understood before. And, be assured, you’ll walk away from the experience with concepts and ideas, you wouldn’t have otherwise learned, to apply to your own organization.

III.

Installation of HUD Code manufactured homes. Why take your state’s official or sanctioned manufactured housing installer class? Ask yourself: ‘Who does the homeowner and lawyer call first, and whose money is most at risk, when something appears to go wrong with the installation of a new or resale manufactured home?’ YOU, as LLCommunity owner/operator! So, why not mitigate potential financial loss by being better prepared. There’s that old Seven ‘P’ Rule again: ‘Proper Prior Planning (i.e. Preparedness!) Prevents Pitifully Poor Performance! For information, call (302)645-5552 or MHRConsuolting@juno.com, or your state manufactured housing association executive. You’ll be very glad you did!

IV.

Captive finance and ‘buy here – sell here’. Which of these is your preferred process for providing self – finance (a.k.a. owner – assisted financing) on – site in your LLCommunity, when marketing and selling new and resale homes? By way of refresher, here’re the definitions of both concepts:

‘Buy here – pay here’, has been around MHIndustry circles since the 1970s; and occurs, when the same business entity that sells a new or resale manufactured home also effects and services the chattel loan on said home. While a simple approach, it also carries the potential of opening home seller/financier to otherwise avoidable finance – related liabilities, and complicates licensing under the S.A.F.E. Act.

Captive finance, also a lending process, occurs when home selling business entity forms a separate, but related, finance entity; removing finance – related liabilities from the selling party, and makes S.A.F.E. Act licensure less complicated. Captive finance also eliminates public disclosures of information by the selling entity, facilitates raising funds, and enhances liquidity.

Related to both previous descriptions, is the concept of ‘third party servicing’. Some LLCommunity owners/operators chose to use an independent third party to perform all or some of the duties associated with a captive finance operation; and or, for that matter, the ‘buy here – pay here’ scenario as well.

So, which is your preferred and or actual business model? Do you know where to go for training and assistance with each? First, obtain a copy of the Manufactured Housing $$$ Primer, published by PMN Publishing. Use contact information provided with the aforementioned MHM professional property management and certification description, or among the salmagundi ‘news items’ at the end of this blog posting. Another good reason to obtain this new, valuable resource, is it’ll help you decide how to best ‘value’ homes in your LLCommunity, when readying for sale and or finance. There’re chapters on that subject, as well as ‘captive finance’ and ‘buy here – sell here’ business models.

If interested in ‘captive finance’ training, consider attending a two day seminar facilitated by Precision Capital Finance. For information, phone (217) 971-3968 or Jim Keller, MHM: jkeller@captivefinance.net Next scheduled program will be in Dallas, TX on 18 & 19 May 2010.

If ‘buy here – pay here’ is preferred business model, contact ManageAmerica for information on their broad array of services on this timely and critical subject, as well as revenue management, integrated utility billing, and property management tools. Phone (760) 770-6500 or via sales@manageamerica.com

That pretty well covers the Four Step Plan promised in this weekly blog. Don’t hesitate to contact me, via this website, or phone: (317) 346-7156, if you have questions and comments to share.

FINI

Now for some SALMAGUNDI new: ’a little of this and a little of that’ These are some of the exciting and interesting initiatives afoot in the MHIndustry & LLCommunity asset class these days:

ANNOUNCEMENT! Manufactured Housing $$$ Primer will be available for purchase! The 100+ page, spiral bound book is the first ever written about chattel (personal property) finance as it pertains to the HUD Code manufactured housing industry. Contains the writings of no fewer than two dozen industry and asset class executives and consultants. Available from PMN Publishing via phone, at: (317) 346-7156. Price is only $19.95 plus shipping & handling, for a total of $24.95. Every HUD Code home manufacturer and retailer, along with LLCommunity owners/operators will want this handy ‘reader friendly’ resource close at hand during these trying economic times!

HAVE YOU HEARD THE WHISPERINGS? I’ve received confidential requests, from HUD Code home manufacturers on both sides the infamous MHARR/MHI fence, to plan and host a third NSAC caucus – like meeting later this year. *1 What’s on their minds? A desire (need?) to convene, then examine our industry’s present business model(s); also discuss and decide what needs to be made anew, renewed, or tweaked, to better face an uncertain future! One recurring theme goes like this: ‘Let’s seize what’s become the ‘low income (subsidized) housing = affordable housing’ societal nor; and through united effort, a clear redefinition of ‘affordable housing’, followed by a national media branding campaign, return homebuyers’ perception to where it was during 1970s & 1980s: ‘affordable housing = manufactured housing‘!’ If the idea of a third NSAC caucus excites you, let me know via the MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764. Personally, I think MHFinanciers and LLCommunity owners/operators should be involved in this historic, high level strategic planning session….

TONI GUMP, publisher of the California – based Upwardly Mobile magazine, told this industry observer there’d be no more print copies of her popular publication; all is going online. So, strongly recommend you visit umhmag.com

INTERNATIONAL NETWORKING ROUNDTABLE. Am in the midst of compiling the annual ’24 speakers and topics’ list for this Fall’s stellar event (15 – 17 September). Do you personally have, or want to hear, compelling subject? Let me know ASAP @ (317) 346-7156. Remember, this is the sole annual, international event designed primarily for LLCommunity owners/operators, and HUD Code home manufacturers of late, so don’t be left out. As this is a ‘by invitation only event’ ensure your name is on the mailing list!

End Notes.

1. NSCA caucus. ‘National State of the Asst Class’ caucus. Two to date; first in Tampa, FL @ 2/27/08 for LLCommunity owners/operators; second in Elkhart, IN. @ 2/27/09 for HUD Code manufacturers & LLCommunity folk.

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

Official MHIndustry Briefing format @ April 2010

Have you wondered what Wall Street analysts, investment bankers, and major real estate investment portfolio managers pay thousands of dollars to hear and learn? Well here’s one example that’s used frequently and updated monthly…

An Overall Perspective of the MHIndustry as a ‘double dual industry & realty asset class’

HUD Code manufactured housing is one key type of factory – built housing, characterized by federal regulatory oversight via a preemptive, performance – based national building code. First half the ‘double dual’ characterization = housing design and manufacturing; then, housing distribution per towed steel chassis, with marketing thru ‘company stores’ and a declining number of independent MHRetailers. Today however, an increasing number of landlease (nee manufactured home) communities, throughout the U.S. regularly market, sell and often self – finance new and resale homes on – site! Housing market share, measured by annual shipment volume (e.g. only 49,789 new HUD Code homes shipped during 2009), not sales volume! Clayton Homes = 46%+/- of national HUD Code market share. Trends? Consolidation (e.g. Fleetwood acquired by Cavco; Champion acquired out of bankruptcy by three creditor investors) of housing manufacturers. Production/shipments continue to trend downwards, and will continue to do so sans reliable, continuing source(s) of chattel (personal property) financing for new and resale home transactions! At present rate of annual decline in shipments, it’s estimated only 250 homes will be ‘shipped’ during year 2020.

The second half the ‘double dual industry & realty asset class. The landlease (nee manufactured home) community, a.k.a. ‘LLCommunity’ income – producing property type, historically sited ‘mobile homes’ (pre – 1976 vintage) and manufactured homes (post – 1976) Today? Add modular homes, ‘park models’, RVs for a season, and stick – built homes constructed to look like manufactured homes (in Florida), to the historic mix, hence recent evolution in trade terminology. National inventory = estimated 50,000+/- such properties; 85% of which = fewer than 100 rental homesites piece in size. 500+/- portfolio owners/operators of LLCommunities (i.e. minimum portfolio size threshold = five properties and or 500 rental homesites). See additional stats in 21st annual ALLEN REPORT available via this website: www.community-investor.com

Examples of recent ground – breaking joint initiatives and efforts between HUD Code home manufacturers and LLCommunity owners/operators: nearly three dozen business Development Managers (‘BDMs’) appointed a year ago to increase manufacturers’ market share of new homes going into this property type (some factories now have 50% of production headed into LLCommunities); recognition of special design, size and features for LLCommunity – sited homes = Community Series Homes or CSH; and, regular scheduling of Super Symposiums & Showcases of Homes, in IN, OH, IL, GA & NY, with dual goals of teaching LLCommunity folk’ how to market, sell and self – finance new and resale homes on – site’, and exhibit CSH product for purchase consideration. Symposiums also replace regional shows (e.g. Louisville, KY.), which have been canceled of late.

SPECIFIC PERSPECTIVES

Manufactured housing valuation. Historically, and for the present – per GSE preference, ‘book valuation’ (replacement method) still very much in play. Book value adjusted per condition of housing unit being valued, and location of home. Valuation by ‘market comps’ is preferred method by MHIndustry and LLCommunity businessmen and women desiring to move beyond near automatic depreciation of MHousing values per ‘book valuation’ method. Datacomp in MI sets the pace and standard(s) in this effort. Difficulty of conversion from ‘book value’ to ‘comp value’ also hinderd by local housing market practices and prejudices, oft instigated and perpetuated by real estate sales licensees and brokers; and sad to say, some folk within the manufactured housing industry.

Current Market Trends. Local housing market trends are ‘all over the place’ per climate (e.g. Sunbelt vs. non – Sunbelt), economy ($ available for home purchases and lending), employment increasing or decreasing, & active workforce or retirees, etc.); competition (e.g. site – built housing repossessions & presence/lack of multifamily rental or apartment communities, etc.) NATIONAL. Relative to HUD Code home manufacturers: beyond above – referenced consolidation, 80/20 mix of singlesection vs. multisection homes swinging again, in part due to $ available for housing purchases and increased interest in siting new homes in LLCommunities. (This did not happen prior to five years ago!). Relative to LLCommunities: consolidation here too (e.g. 25 portfolio ‘players’ 21 years ago; 500+/- today, including three REITs), as well as a near perpetual ‘seller’s market’ due to scarcity of product (new properties not being developed due to NIMBY, LULU, & BANANA*1); ‘recession proof’ nature of the property type (explain); very low annual turnover rates for homes and homeowner/lessees; lowest operating expense ratios (‘OERs’); more opportunities for AITR (‘alternative income to rent’) than any other realty asset class; and, innate ability to ‘add value’ by marketing, selling, and self – financing new and resale homes on – site…from a few million $$$ in 1999 to $3 ½+/- billion, among 500+/- major ‘players’ alone, by end of year 2009. Downside? Due to too high rents (first with REITs, then greedy private operators), some large LLCommunities are now in foreclosure or forbearance. Occupancy trend? Down slightly, but not nearly as bad as would have been the case without on – site home sales. In fact, national physical occupancy among portfolio LLCommunities is higher, for the first time in memory, than percentage experienced by conventional apartment communities during 2009

Impact of subprime collapse and housing crisis on the manufactured housing industry. To answer this, be aware MHIndustry continues to endure its’ subprime lending collapse and housing crisis, that began eight years earlier than site – built housing, from when 372,843 new manufactured homes were shipped in 1989 – down to only 49,789 last year! Impact of contemporary subprime and housing crisis among stick – built homes, on MHIndustry? Varies from local housing market to market. Yes, some folk with bruised credit have ‘returned’ to HUD code housing (After all, site – built housing boom stole half our traditional market of the ‘newly wed & nearly dead’), but there’re still 1,000,000+/- repossessed site – built homes to be resold as bargains (competing with non – repo, new MHomes) before we’ll see any groundswell of new homebuyers. AND, since MHIndustry lost its’ access to third party chattel (personal property) financing post 2000, our ability to loan to 600 FICA score borrowers is sorely limited – except for on – site sale and self – financing of new and resale homes in LLCommunities! Bottom line? Minimum impact at this time. And there is one major bugaboo on the asset class’ horizon: the unknown impact of the federal S.A.F.E. Act once implemented on a state by state basis. At present, this legislation has the potential to put most on – site, self – finance operations out of business…

Here ends the Official MHIndustry Briefing format ‘exercised for hire’ several times each month. If you’d like to comment about it, offer suggestions, etc., do so via this website or phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

SPECIAL ANNOUNCEMENT. Manufactured Housing $$$ Primer being printed and bound as this blog is posted! The 100 page guide contains original work prepared by two dozen MHIndustry experts. This is the first such text ever published on the complicated subject of chattel (personal property) finance, as it applies to HUD Code manufactured housing. This is a limited print run, so if seriously interested in owning a copy of this historic and helpful publication, respond directly to this Blog or via (317) 346-7156. Some copies will be available for purchase (Price indeterminate, but likely $19.95+/-) at the Manufactured Housing Congress in Las Vegas @ April 13 – 15, 2010. Call (703) 558-0678 to register for this important industry event!

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

‘Get Ready, Get Set, LEAP!’

A salmagundi of advice, observations, and opportunities to help you Learn, Earn And Prosper, during these difficult times for manufactured housing!*1

First, for the landlease (nee manufactured home) community owner/operator.

1. Mind your own business like never before! And remember this about your personal and business character: Malcolm Forbes, had a net worth of about $250 million, when asked how he decided where to invest his own fortune, said: “I bet on the jockey, never the horse…I don’t need to know what industry the company is in, or what its’ financials are. All I need to know is what kind of person the CEO is!”*2 “…the character of an organization is established by the character of the people who work there. And that character is determined by the integrity of the leader.’ Rosen & Brown, in Leading People, 1996.

2. Don’t be greedy! Apply the Minnesota/Kentucky Rule of Thumb!*3 In the landlease community (‘LLCommunity’) business environment, ‘Total monthly PITI & rent payment, for a new or resale home transaction and homesite lease combined, must be $50.00/month less than monthly rent for a large conventional apartment unit in the same local housing market, or you’ll lost the deal every time!’*4

3. If personal or corporate funds are available, self – finance new and resale home transactions on – site, forming a separate business entity for this purpose (i.e. ‘captive finance’); or hire a capable, experienced, motivated third party financial services firm to underwrite and service these chattel (personal property) loans! To this end, reserve your copy of the Manufactured Housing $$$ Primer scheduled for release April 13th at the National Communities Council (‘NCC’) FORUM in Las Vegas. How? Call (317) 346-7156 or email: gfa7156@aol.com Price? Indeterminate, as the guidebook is being edited as this blog is being posted.

4. Speaking of ‘captives’. NOW is finally the time to seriously consider joining with approximately two dozen other LLCommunity owners/operators, to form a ‘captive insurance’ firm during 2010, emulating what our campground and RV park peers did so successfully decades ago! For more information, contact Jay Zandman @ (800) 211-0468 x 117. I plan to participate! GFA

Next up; is manufactured housing industry ‘an either or’ proposition or a singular entity?

‘Up & Down’, ‘Left & Right’, ‘Port & Starboard’, Manufacturer & Distributor’, ‘Housing Production & Post Production’. Specifically, Housing Production = HUD code home manufacturers & OEM suppliers; while Post Production (nee ‘the aftermarket’) = lenders, MHRetailers & LLCommunity folk!*5 Does our Business Model really pencil down to being a simple couplet, comprised of one or the other perspective, relative to HUD code manufactured housing; or, are we inextricably bound up ‘in this together’? That’s the first pivotal question being asked, with increasing frequency today, from different corners of this industry and its’ unique realty asset class.

A second question being asked of and from both perspectives: ‘Are we satisfied with the advocacy efforts and trade representation in place inside the Washington beltway at this time?’ Are you?

Now, neither question is particularly new. What’s novel, is the patent recognition the ‘industry’ per se, may have passed the point of (near) ‘no return’. Specifically; did you see, as I did, there were No HUD Code manufacturer ads, of any size whatsoever, in the February issue of The Journal? And after a 50 year run, no Midwest Manufactured Housing Show in Louisville, KY? And the 50+ year old Manufactured Home Merchandiser folded during 2009. For a complete and sobering list of the many HUD Code manufacturers who exited during 2009, read The Grissim Report.

In the meantime, the realty asset class, though some are paying the price for past greed continues to profit from intrinsic benefits of scarcity (few new LLCommunities being developed); being ‘recession proof’; ‘adding value’ via home sales and finance; and, enjoying the fruit of generally low annual turnover of homes and residents, as well as lowest OER among all income – producing property types.*6

How’re answers to the leadership – focused questions going to pan out? For sure, we’ll have to wait and see. In the meantime, MHARR rails against federal regulators (e.g. ‘Further Evidence of HUD Program Mismanagement’, per email correspondence on 3/19/2010). The very same day, MHI’s weekly email report contained little more than pabulum. Just know there’re contingency plans in place, to ensure continuation of political advocacy, regulatory defense, and trade representation – with a minimum of interruption, should a worst case scenario present itself.

And finally; while it’s not really for me to announce; the MHRetailer, some say MHIdea, rejuvenation initiative appears to be dead for now. In last week’s blog posting I apologized for not announcing Big News, stymied by an unexpected power failure in central Indiana. Well, guess what? Still no Big News – of a positive nature, this week either. The truth is, No News. A half dozen and more, really concerned independent MHRetailers and affiliated parties, were ‘standing by’ in the hopes a charismatic leader of financial means, would step up to the plate, and unite disparate ‘players’ throughout this segment of the industry. It simply didn’t happen. However, if the content of this paragraph lights your ire fire, and you decide to get actively and intimately involved; let me know, and I’ll put you in touch with the aforementioned core of seriously concerned independent MHRetailers and affiliated parties.

The week or two ahead. If planning to be in central Massachusetts on Friday, March 26th, consider joining LLCommunity peers at the day long Manufactured Housing Manager (‘MHM’) professional property management training and certification class there. Call Mary McBrady @ (508) 460-9523 ASAP. And early the next week, if you have any excuse to be in Albany, New York, attend the New York Housing Association’s Super Symposium & Showcase of Homes! To date, more than 100 registered to attend this combination of sales and finance seminars and home tours. For information, contact Nancy Geer @ (800) 721-HOME or info@nyhousing.org

Have you been following the ‘Best of MHARR & MHI’ column in the Allen Letter professional journal, penned by ghost writer M.H. Ronin (last name means ‘a covet operations specialist with no governmental ties’)? To subscribe, access the website bearing this blog: www.community-investor.com

*****
End Notes.

1. salmagundi. ‘a little of this, a little of that’
2. Material quoted from Boa, Buzzell & Perkins’ Handbook to Leadership, Trinity House Publishers, GA, (800) 372-9632.
3. Minnesota/Kentucky Rule of Thumb. Moniker recognizes a wise pricing perspective recognized and espoused by two veteran LLCommunity portfolio owners/operators who independently arrived at the same conclusion; a.k.a. the Schraeder/Smith Rule
4. PITI = principal, interest, taxes, insurance
5. MHRetailers = official abbreviation for manufactured housing (nee street) retailers; and OEM = original equipment manufacturers (e.g. appliances, etc.)
6. OER = operating expense ratio(s). For FREE copy of Official Industry Standard Chart of Accounts and accompanying OERs for the LLCommunity asset class, phone the MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764.

George Allen, Realtor®, CPM®, MHM. c/o Box # 47024, Indianapolis, IN. 46247

NEXUS is US!

Some sense ‘Change is in the wind’; not the President Obama type, but pro & con initiatives & measures affecting every segment of HUD Code manufactured housing & the landlease community real estate asset class!

NEXUS is US!? Dictionaries list three definitions for this word, each characterizing one or another aspect of our unique, American born, ‘double dual industry’.*1 Nexus is ‘a means of connection, link or tie’; also, a ‘connected series or group’; and, ‘the core or center’. If you’re an entrepreneur businessman or woman with sole proprietorship, partnership, or corporate stake in HUD Code manufactured housing, and or ‘re salaried executives and employees of these businesses, partnerships, and firms! Bottom line? We’re in this predicament of historic proportions, together; and as ‘the nexus’ of manufactured housing & landlease communities (‘LLCommunities’), we must steer ourselves clear of this Near Perfect Storm, or as some opine, Grand
C o n s p i r a c y; or perish! But, how to do so?

Since we continue to await word, plans, and action from elected and salaried leaders of our two national advocacy bodies, within the Washington, DC beltway, we must, by default, rely on grassroots initiatives, and rumors of political and regulatory measures, for hope, if not faith, a new or revised Business Model is in the offing. A Business Model that’ll 1) attract favorable and consumer – favored transaction financing for our type factory – built housing, oft sited in professionally – managed, multifamily rental communities; and, 2) consequently, ‘Save Our Industry!’*2 In the meantime, we wait….

So, what is today’s ‘warp and woof’ of inter – segment threads connecting grassroots initiatives and rumors cum reality of political and regulatory measures?

Any talk of a new or revised Business Model, for this industry and asset class, will be for naught if the HUD Code manufactured housing industry doesn’t, once and for all, decry its’ recent past mantra: ‘Bigger Boxes = Bigger Bucks!’ Then, publicly and forthrightly, seize the initiative and proffer a workable definition and description of ‘affordable housing’ &/or ‘housing affordability’, applied to those features (e.g. low cost per square foot, transportability, energy efficiency, and more) characterizing contemporary HUD Code manufactured housing! *3

Next? Manufacturers of HUD Code manufactured homes. As has been pointed out in The Grissim Report, many many HUD Code housing firms went out of business during year 2009; or have been changed, maybe forever, by dint of merger and absorption (a.k.a. consolidation); and in some cases even new ownership, e.g. Fleetwood Enterprises now Fleetwood Homes, owned by CAVCO; & Champion Enterprises, acquired out of bankruptcy by three investors.*4 Only one mega firm remains intact, controlling 48+/- percent of the national market share of this unique type factory – built housing. So, how will all this pencil – out during the months ahead? Depends on several factors: availability of chattel (personal property) financing – or some other novel approach to this business perpetuation necessity; states implementation of the federal S.A.F.E. Act (i.e. Safe And Fair Enforcement of Mortgage Licensing); and, what restraint of trade measures one or another agency or department of the federal government applies, or does not apply, to the ongoing consolidation among HUD Code housing manufacturers.

Manufactured housing (nee street) retailers, whether independent or company stores. Had hoped to have Big News for you today, in this arena. However, due to a local power failure in central Indiana last Friday, I was unable to effect the telephone call many hope will spark a phoenix – like rejuvenation of the housing ‘distribution’ segment of our ‘double dual industry’. In the meantime, the in – house marketing of new Community Series Homes (‘CSH’), via Business Development Managers (‘BDM’), existent at several dozen HUD Code home manufacturing firms, is generally proceeding according to plan, with some plants – we’re told, shipping as much as 50 percent of their new home production into LLCommunities!*5 And frankly, as far as can be ascertained, ‘company MHRetailer stores’ are doing as well or poorly as their manufacturer bosses allow. It’s the plight of the 10 percent remainder of independent MHRetailers (as compared to the number selling Land & Home packages in year 2000) that’s motivated the birth of MHIDEA, to rally and organize these MHBusinessmen and women throughout the U.S.*6 Let’s hope some exciting Big News will headline next week’s Blog posting here at community-investor.com/blog! Where’s MHI’s National Retailers Council division in this mix? At present, they aren’t. All the initiatives cited earlier in this paragraph, e.g. CSH, BDM, & MHIdea, have been grassroots in nature. Hopefully MHI’s NRC division will climb aboard the MHIDEA bandwagon, if and when it pulls out of the barn to begin its’ work rejuvenating the distribution segment of the MHIndustry, and supplementing the marketing of new homes into LLCommunities!

Landlease community owners/operators. Much has been penned of late, about what is generally the healthiest of all MHIndustry segments. You’ve heard or read the drill. Today, nearly all owners/operators, certainly property portfolio ‘players’, actively market, sell, and frequently self – finance new and resale homes on – site! The Success Formula? Used to be simply, ‘Maximum Income + Minimum Expenses = Max ROI! Now there’s this corollary: ‘Recession proof property + Ability to add value = More than Survival; and if not greedy, Financial Success!*7 Sure, there’re properties (often larger ones) going back to lenders these days, either in forbearance (think ‘tied up in CMBSs’), or foreclosure, as REO (‘real estate owned) assets.*8 But there’s usually a sorry story behind those reversions, and much of the time it has to do with raising rental homesite rents to much higher than justified levels in the local housing market. *9 Besides the self – help measure(s) described in this paragraph, probably the best things the 50,000+/- property strong asset class has going for it, are MHI’s National Communities Council (‘NCC’) division, and the Urban Land Institute’s Manufactured Housing Communities Council (‘MHCC’) de facto Think Tank for both the HUD Code Manufactured Housing Industry & the LLCommunity asset class. And in the case of MHI’s NCC division, the sooner it hires a capable, asset class – experienced, highly motivated executive to devote 100 percent of his/her time to growing membership, and providing valuable services, to property owners/operators, the brighter our collective future will be!

And there’s more. Not even talked about in this blog, is the present need for MHIndustry & LLCommunity elected and salaried leaders to come together to parse some pretty serious questions. On the manufactured housing side; how much longer is it going to take for MHI to get off its’ duff and establish/nurture a viable secondary market facilitating the sale of resale homes? This means some difficult decision – making relative to how manufactured homes are valued for marketing and sale (e.g. ‘book value’ vs. ‘comp value’); encourage multilist use (Made easier, of late, by U.S. Supreme Court’s direction to National Association of Realtors® to open MLS to our brand of housing); as well as use of escrow accounts and realty – type ‘closings’ when consummating deals; and, probably most controversial of all, require home sales staffs to be licensed real estate salespersons and brokers, in states where they operate! Did I just hear a primal scream out there? I truly hope so….

It’s also high time to address the oft extreme disconnect between the 1) well – designed, attractive and professionally – managed, family and 55+ LLCommunities, and the 2) often old and functionally obsolete, unattractive, and poorly managed (if managed at all), multifamily hovels perennially giving our contemporary, quality, attractive, ‘green’, energy efficient, non – subsidized, transportable, factory – built housing a bad bad name, and ugly ugly social image in most local housing markets, on TV, in novels, and on Broadway! Are you on board to address the issues just described in these two paragraphs?

As a related aside; the serious questions described in the previous two paragraphs demonstrate why Manufactured Housing Association for Regulatory Reform (‘MHARR’) has not been, is not, nor will ever be – sans a major change to its’ restricted membership base (i.e. Non – manufacturers need not apply!), in a leadership position to Save Our Industry! Until, as MHARR puts it, aftermarket issues – like the ones just described, are resolved and corrected, manufactured home owners are handicapped when ‘buying up’ into a new home (i.e. One more new home shipment for a HUD Code manufacturer!), since their present dwelling has likely depreciated in value; and, why should lenders extend favorable chattel financing terms on home deals to be sited in substandard properties, poorly managed by passive investors, and subject to landlord whims? Keeping federal regulators at bay, protecting the intrinsic affordability of our unique brand of factory – built housing, is simply one, albeit important, part of our overall challenge!

Well, that does it for this week. Hopefully one or more of these revelations, and restatements of hard truths, has motivated you to become part of the solution to Save Our Industry! and not continue to sit back on your haunches as part of the problem. Don’t forget; if a business owner and or executive active in any segment of this ‘double dual industry’, NEXUS is US! So, as such, respond directly to this Blog with our ideas, comments and suggestions via one or another of the contacts listed in the End Notes to follow!

Next step? While we collectively continue to await ‘words, plan and action’ from MHARR & or MHI, perhaps we should begin talking now, about a third National State of the Asset Class (‘NSAC’) caucus.*10 What say You; at the Nexus?!

***
End Notes.

1. ‘double dual industry’ refers to HUD Code manufactured housing’s distinct ‘manufacturing’ and ‘distribution’ systems; and, landlease community raw land ‘development’ and ‘investment/property management’ perspectives.

2. Manufactured Housing Association for Regulatory Reform (‘MHARR’) @ (202) 783-4087: Danny Ghorbani; and, Manufactured Housing Institute (‘MHI’) @ (703) 558-0678: Thayer Long. Are you a direct member? If not; join today!

3. Much of this work has already been published in HOUSING AFFORDOGRAPHY, ‘Study of Affordable Housing Formulae & Measures of Housing Affordability’, PMN Publishing, IN, 2008; to wit: Housing Expense Factor, Housing Opportunity Index; Housing Wage; and other parameters.

4. The Grissim Report. (360) 683-1458 & http://grissimreport.com

5. If you’d like a FREE list of the 33+/- BDMs presently marketing HUD Code homes, in behalf of their firms, to LLCommunity owners/operators nationwide, call the MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764 and request it. And while phoning, ask for Don Westphal’s seminal article describing the nature of CSH!

6. For more information, go to MHIdea.org (apology for incorrect web address cited in last week’s blog posting).

7. ROI: ‘Return On & Of Investment.

8. Commercial Mortgage – Backed Securities

9. For a Do It Yourself forms designed to calculate the appropriate rental homesite rent in any local housing market, using AMI (Average Median Income) and or AGR (Average Gross Income of an individual or household); as well as the ‘affordable’ and ‘risky’ price points on any new or resale manufactured home in or outside a LLCommunity, phone (317) 346-7156, and request FREE copies of the EQUALIZER worksheet, and the new ‘Ah Ha! & Uh Oh!’ multipurpose form.

10. Brief description and history of the National State of the Asset Class (‘NSAC’) caucus. An informal grassroots movement comprised initially of landlease community owners/operators; but now, also HUD Code housing manufacturers, who gather when there’re enough significant national issues afoot to warrant a one or two day caucus attracting seriously interested and already successful businessmen and women. First caucus was held 2/27/08 in Tampa, FL., and agreed on Five Action Areas (For a list of these foci, read 21st annual ALLEN REPORT, p. 6.). Second caucus, titled: an Historic SUMMIT Meeting, between LLCommunity owners/operators & HUD Code home manufacturers, was held 2/27/09 at the RV/MH Heritage Foundation Hall of Fame, Museum & Library facility in Elkhart, IN. That’s where those two major segments of the industry relearned, after a nearly 30 year hiatus, to work together to ‘sell new manufactured homes into landlease communities’! Can you imagine what might occur if we gathered, once again, to address the issues, questions, and challenges described in this blog posting?

*****

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

The New Old Model for Manufactured Housing Finance!

“In 1999, only a few of the 500+/- portfolio owners/operators of landlease (nee manufactured home) communities engaged in on – site marketing, sales and self – finance of resale manufactured homes. Virtually no one sold & self – financed new manufactured homes on – site. However, ten years later – by end of 2009, most did so,
to the tune of $ 3 ½ +/- billion dollars – in contract sale ‘paper’ carried by these owners/operators!” To learn why, read the 21st annual ALLEN REPORT (a.k.a. ‘Who’s Who Among Landlease Community Portfolio Owners/operators Throughout North America!’). *1

In the meantime, how ‘bout manufactured housing chattel (personal property) finance of new and resale home transactions outside landlease communities? If you truly don’t know, ‘it’s nigh nonexistent TODAY (March 2010)’, except from what’s generally referred to as The Big Four, along with some lenders in various local housing markets. *2

So, what is this New Old Model for Manufactured Housing Finance? *3

L(.)(.)K L(.)(.)K L(.)(.)K L(.)(.)K L(.)(.)K L(.)(.)K

The 20 year (i.e. 1979 to 1999 +/- ) business model, of relying on outside lenders to handle all or most landlease community manufactured housing financing, is long gone! This reality was confirmed during an October 2009 meeting, in San Francisco, CA., of the industry and asset class’ de facto Think Tank, Urban Land Institute’s (‘ULI’) Manufactured Housing Communities Council (‘MHCC’). At that time, a 13 point ‘Baker’s Dozen’ of focus areas was identified and articulated per how LLCommunities looked ten years ago (1999), today (2009), and possibly ten years hence (2019). One focus area had to do with chattel (personal property) finance of new and resale home transactions on – site. Their prediction for this focus area in 2019? ‘Chattel $ on – site via (local) lenders and (excess) cash flow’ only! The other dozen focus areas? Read the aforementioned 21st annual ALLEN REPORT.

Despite what you just read, know there’re several quiet but concerted efforts afoot in Washington, DC., to improve the chattel finance climate relative to HUD Code manufactured housing and the landlease community asset class. First; contact the Manufactured Housing Institute (‘MHI’) to learn of their initiatives: (703) 558-0678, Thayer Long; then the Manufactured Housing Association for Regulatory Reform (‘MHARR’) @ (202) 783-4087, Danny Ghorbani. Second; know there’s ‘a consortium of major LLCommunity (portfolio) owners working hard to get FHA, Fannie & Ginnie Mae to increase their support for consumer financing to the MHIndustry’, in part, by broadening lending standards to ensure low – cost financing is readily available to worthy consumers who meet down payment and income standards. And third; there’s now a fledgling body of independent MHRetailers intent on rejuvenating their heretofore dying segment of the industry; visit MHIdea.com. Fourthly; there’s a printed work being prepared, hopefully in time for sale and distribution at MHI’s annual Manufactured Housing Congress in mid – April in Las Vegas, NV., tentatively titled: The MH $$$ Primer, ‘All You Ever Wanted to Know About Manufactured Housing Finance But Didn’t Know Who to Ask!’ Will also be available via this website hosting the Official MHIndustry & LLCommunity Blog. But even with all that said…

Today, many LLCommunity owners/operators continue to engage in what some psychologists call ‘magical thinking’; believing the manufactured housing industry’s decade long doldrums (i.e. 1999 to 2009) will magically end (somehow), and past normalcy will return! Another reality that flies in the face of such wishful thinking, is that even if a revised FHA Title I program emerges, it’ll enable third party chattel lenders (.e.g The Big Four) to service only a small percentage of would be homebuyers who should be our customers. This because of tightened qualifying requirements for would – be borrowers, and so many borrowers with already bruised credit incurred during recent and continuing times of economic stress.

Bottom line? LLCommunity owners/operators, not presently engaged in self – finance of homes sales transactions on – site, are going to have to get over lingering fears of this new old business model, and get actively into the fray, or remain on the sidelines unable to facilitate filling vacant rental homesites with new or resale homes, to ‘keep the site rent meter running’.

As was pointed out earlier, most property portfolio owners/operators now self – finance, and many (most) have built loan portfolios of significant size, some valued at millions of dollars apiece. Unfortunately, some, if not many, have patterned present day policies and procedures (i.e. business model) on ways lending was effected during the 1960s and 1970s; meaning, most of these loan portfolios have little liquidity, as they are of questionable legality, noncompliant with contemporary lending regulations, and often not properly underwritten. This reality is oft compounded by the presence of rental units, rent – to – own and lease – to – own homes, as well as retail installment sales contracts, effectively tying subject homes to the LLCommunity proper, consequently lowering the overall investment value of the income – producing property!

The alternative to the ‘old business model’ per se? Create a captive finance company, as automobile manufacturers did decades ago, and as others have done in other business types. *4

A captive finance company is different from the heretofore described ‘buy here – pay here’ (process), since finance actions are effected by a separate legal entity functioning apart from the MHRetail or landlease community operation. This approach limits liability, is easier to keep legal, simplifies compliance simpler, and is often less costly. So, where’s a captive finance company to get its’ funds to loan on housing transactions?

Some LLCommunity owners/operators borrow money against their assets, even their income – producing property(ies), to fund home loans, or make loans out of the property’s excess cash flow. Real estate mortgagees (i.e. lenders) worry such practices dilute the overall value of the realty asset, and favor situations where homeowners/borrowers/site renters are committed, at least in part, to a separate finance company; not a scenario where site rent, and home payments are all rolled up into one interrelated financial package.

The aforementioned alternative is to establish an independent, but related finance (captive) company that raises its’ own capital and operates in a professional manner. Since the subject company makes the loan, there is no need for a ‘buy here – pay here’ presence in the LLCommunity, and therefore, nothing to ‘disclose’. Because the firm is indeed separate, it will normally operate on its own merits, meaning it will professionally underwrite its’ loans, and carefully observe the legalities and compliance issues, as well as strive to make a genuine profit.

So, if a LLCommunity owner/operator, where does this presentation of our industry and asset class’ new old model for manufactured housing finance leave you? If this author/blogger can be of assistance, in any way, don’t hesitate to respond to the blog proper, via our website: community-investor.com, or phone (317) 346-7156.

*****

NEXT WEEK. No promises; but unless something of greater importance or timeliness intervenes, watch this blog for a probable call for a third National State of the Asset Class (‘NSAC’) caucus sometime during 2010, or early 2011 if we can afford to wait that long.

This NSAC suggestion was proffered at the conclusion of a recent FOCUS Group gathering of LLCommunity owners from six states, meeting in Ruskin, FL. The first NSAC caucus convened in Tampa, FL. @ 2/27/08; a second, titled: an Historic SUMMIT Meeting, between HUD Code manufacturers and LLCommunity owners/operators occurred 2/27/09. This one? To accomplish something many have talked about ‘for years’, but have never had to brass to address collectively, i.e.

• Decide on our own (i.e. MHIndustry & LLCommunity segments),once and for all, a workable definition of ‘affordable housing’ &/or ‘housing affordability’, then apply appropriate descriptive terms and characteristics to those types of HUD Code manufactured housing design/production/distribution, applicable and marketable as such! It is past time for our industry to finally seize the high ground of ‘affordable housing’ via marketing and image improvement, and DELIVER!

• Again, once and for all, aggressively address the oft extreme disconnect between the 1) well – designed, attractive and professionally managed, family and 55+ LLCommunities, & the 2) often old and functionally obsolete, unattractive and poorly managed, multifamily hovels perennially giving our contemporary, quality, attractive, ‘green’, energy efficient, non – subsidized, transportable type factory – built housing a bad name & social image in most local housing markets!

• Decide now (2010) is time to establish and nurture a viable secondary market for the sale of resale homes, relative to valuation, multilist access, and transactions effected by licensed/certified realty professionals, using escrow accounts and realty – type ‘closings’!

Any of these areas ‘hot buttons’ for you, pro or con? I surely hope so; and if so, let me know! That way you won’t be left out when a third NSAC caucus is scheduled. Otherwise, you have only yourself to blame for not being involved in the now national effort to Save Our Industry! If you don’t know about this growing initiative and movement, scroll back through the blog archive at this website (community-investor.com) to ‘ManuFractured Housing C o n s p i r a c y or near Perfect Storm Sequel’ and previous blog postings. And if you’re reading this, thinking one or another national MH trade or advocacy bodies will (eventually) ‘take the lead’ in addressing the three pivotal matters, and more, just described, then you’ll likely wait too long. Remember; at the rate of decline in HUD Code housing shipments experienced during 2009, by year 2020 – only ten years hence, total shipments that year will number 225! Can we afford to wait any longer to address this industry’s core challenges? I think not, and hope you agree!

Respond directly via this blog posting, email: gfa7156@aol.com, or the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Better yet, let the elected and salaried leaders at MHI and MHARR know your opinions and feelings on these matters pro and con!

*****
End Notes.

1. To obtain a copy of the ALLEN REPORT, phone the MHIndustry HOTLINE: (877) MFD – HSNG or 633-4764. Available for $250.00 per report, or ‘free’ with $134.95 subscription to the new Allen Letter professional journal (12 issues).

2. The Big Four: 21st Mortgage Corporation: Tim Williams @ (800) 955-0021; Triad Financial Services, Inc.: Don Glisson, Jr. @ (904) 223-1111; C U Factory Built Lending, LP: John Harcher @ (216) 533-4797; & U.S. Bank – Manufactured Housing finance: Scott MacFarlane @ (501) 978-1020.

3. The following paragraphs were prepared from material supplied by Kenneth Rishel of Precision Capital Funding @ (217) 971-3968

4. Next Captive Finance workshop is scheduled for Dallas, TX, on 11 & 12 May. For information: kennethrishel@capativefinance.net

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

ManuFractured Housing C o n s p i r a c y or Near Perfect Storm Sequel…

‘Hey, shoulda, woulda, coulda, folk, it’s high time to stop making excuses ‘bout your facilitating our industry’s soon demise, & support some practical enabling solutions’

Here’re responses to last week’s blog posting: ‘ManuFractured Housing, circa 2020 or before, by dint of a Grand C o n s p i r a c y or Near Perfect Storm?’, from:

“Well crafted and follows the logical path to (manufactured housing) destruction. REAL housing builders sell and construct in accords with their buyers needs and desires, not to their own dreams of bigger baths and kitchens, greeny things, and fancier ‘stuff’. Monuments are for looking, not living. We need a low priced product for landlease (nee manufactured home) communities and scattered site purchases, along with competitively – priced components, to help site builders do more for less!” NB (lightly edited. GFA)

to

“Don’t blame the manufactured housing industry’s decline on a c o n s p i r a c y; blame it on apathy and greed! And this isn’t gong to change until our industry is imbued with some really serious, professional, responsible entrepreneurs able to effect a social cultural environment where our homes and residents are no longer considered inferior” EH

So, is it too late to ‘Save Our Industry!’? Maybe not, if heretofore ‘shoulda, woulda, coulda’ folk get up off their individual and corporate duffs to expose, neutralize, and effectively counter manufractured housing’s grand c o n s p i r a c y ; or if you prefer, salt the storm clouds of this ‘near perfect storm’, by doing the following and much much more…*1

Blogger’s Note. If you’re new to this blog dialog, and are already lost regarding the
c o n s p i r a c y and storm talk of which we speak here, relative to the HUD Code manufactured housing industry, STOP now and read last week’s blog posting identified in the opening sentence of this posting! Go to community-investor.com/blog

Following suggestions, prescriptions, strategies, and courses of action have been articulated and recommended by manufactured housing businessmen and women caring greatly about the present & future prospects of this industry & these respective segments:
Housing manufacturing/distribution, OEM and aftermarket suppliers, chattel and real estate mortgage lenders and brokers, MHRetailers, service firms, landlease community owners/operators, and state manufactured housing trade and advocacy associations.

MANUFACTURERS and LANDLEASE COMMUNITY owners/operators together.

This from a veteran industry observer (not me): “I understand manufacturer resentment (towards bureaucrats) and their need to combat it through the MHARR, but they need to understand the future of the industry is 10 times bigger than just fighting bureaucracy! *2 They need to join forces with landlease community owners/operators, MHRetailers, and lenders, to strategically create a new brand for manufactured housing – just like Starbucks is doing.” *3

We started down this cooperative path during 2008, when Steve Quick, BDM & ‘MHIndustry’s Person of the Year 2010’, of Fleetwood Homes, brought representatives from these two segments together for several in – plant FOCUS Groups, where home design, features and pricing were openly discussed. Then, on 27 February 2009, 100+/- HUD Code home manufacturers and landlease community owners/operators gathered at the RV/MH Heritage Foundation facilities in Elkhart, IN., for an Historic SUMMIT Meeting, and decided to ‘move ahead together’. An enduring result of that summit was the naming of nearly three dozen Business Development Mangers (‘BDM’), manufacturer marketing executives, who immediately started building their firms’ market share of new homes being shipped into landlease communities for marketing, selling, and when appropriate, self – financing. Today, several factories ship at least 50 percent of their production into this renewed and cooperative market! For a free, comprehensive, and up – to – date contact list of all BDMs, phone (317) 346-7156.

Next significant and somewhat parallel development, relative to this key inter – segment cooperation occurred as several Midwestern states (IN, OH & IL) planned and hosted day long Super Symposiums, where BDMs and landlease community folk gathered for home sales and finance seminars. Jim Keller, veteran manufactured housing specialist with Indiana’s IMHA/RVIC, was the first to plan and host these events during 2009. When new HUD Code homes, specially designed for in – community placement, were added to the mix at the 18th annual International Networking Roundtable in Chicago, and at a similar GMHA – hosted event in Forsythe, GA., during the Fall 2009, the program morphed into a ‘Super Symposium & Showcase of Homes!’ Next such event is scheduled for 30 & 31 March 2010, in Albany, NY. Interested? Phone Nancy Geer at (518) 867-3242. Be there! I will be! Has your state gotten onto this promotional bandwagon? Perhaps you should more than suggest they do so, the sooner the better!

A third manifestation of manufacturer and landlease community cooperation occurred, again during the aforementioned International Networking Roundtable, during a wide ranging discussion of what specially – designed homes, for landlease community placement should look like and contain, by way of specifications and features. Consultant Don Westphal suggested manufacturers and landlease community owners/operators henceforth refer to this variety of specialized product (e.g. singlesection and multisection models), collectively, as Community Series Homes or CSH, a new trade term that has stuck. In fact, when one contacts any of the aforementioned 30+ BDMs, and mentions Community Series Homes, he/she knows exactly what you’re looking for in a new HUD Code manufactured home! For more information on CSH read the January 2010 issue of the Allen Letter professional journal (317) 346-7156, or phone Don Westphal @ (248) 651-5518 and ask him how this differs from the Community Series Home of the 1990s.

And, it appears there’s a fourth manifestation of manufacturer and landlease community cooperation in the works: in – house manufacturer programs featuring floor plan and retail (chattel/personal property) financing, for either favored landlease communities (e.g. property portfolios buying multiple homes at a time), and or long time, valued customers. Actually this is not such a new concept, just not widely known or publicized. During the next few weeks, as details of these manufacturing/financing – and sometimes, ‘captive insurance’ programs (e.g. in TX & IN, for starters), are documented, they’ll be shared in this blog column! So, continue to visit community-investor.com/blog every Monday to learn more and more….

LANDLEASE (nee manufactured home) COMMUNITIES on their own…

Marketing, selling and self – financing new and resale home transactions on – site? Then, by all means, take the time to do it right at each of the three stages of the process! Don’t even start marketing new or resale residences until calculating the affordable ‘price point’ for your local housing market, defined by postal zip code (Using the Area Median Income or AMI, available at zipskinny.com), and or Annual Household Income (‘AHI’) of prospective homebuyers, either individuals or households, who walk in the door of your on – site Information Center! Don’t know how to do this? Visit the Manufactured Housing Institute’s website for the National Communities Council (‘NCC’) division: mhcommunities.org and read ‘Setting Right Site Rent & Housing Price Points’ in the Community Connections newsletter featured there. Or, telephone Thayer Long at (703) 558-0678 for assistance in accessing this very helpful ‘How To’ piece. Same about rental homesite rates! Rent rate must be in sync with the local housing market, usually 1/3rd the amount charged for largest conventional apartment unit available in same local housing market, or face being ‘priced (rent wise) out of the market’, or, just as bad, force prospective homebuyers to buy less house than otherwise possible. For ‘free’ copies of two recently updated, enabling do – it – yourself forms, ‘The EQUALIZER Formula’ & the ‘Ah Ha! & Uh Oh! Worksheet!’, telephone (317) 346-7156.

NOT interested in marketing, selling and or self – financing new and resale homes on – site in your landlease community? Then relearn the fine, but since year 2000, ‘lost art’, so to speak, of ‘Caring and Feeding MHRetailers!’ Seriously. Prior to year 2000, or thereabouts, when third party chattel (personal property) home financing ‘went away’, thanks to widespread abuse during the previous decade, landlease (nee manufactured home) community owners/operators routinely – if they really cared about achieving and maintaining high physical occupancy on – site, visited all local, reputable, MHRetailers (nee street or boulevard dealers), each month, with one agenda in mind: ‘Be the first, and hopefully only, landlease community a MHRetailer would have in mind whenever he/she sold a new or resale manufactured home!’ How was that accomplished? Well, just showing up and being friendly, was usually a major jump on one’s competition. But, add to that:

• Leave a supply of well – designed and attractive business cards in a highly visible location within the retail sales center! Really skilled property managers always sought to make their card a ‘keeper’, by putting a sketch map on the back if property was off the beaten path; a list of five to 10 reasons to move into their particular property, even a mini – coupon offering ‘One Month Free Rent – once home is installed on – site and skirted.’ – with an expiration date. Get the idea?

• Leave a supply of well – designed and attractive tri fold brochures in a highly visible location within the retail sales center! Use two or more photos of really nice homes on – site (Oft times, Home of the Month contest winners who’ve granted permission to showcase their home!), along with a sketch map on how to access the property, a list of reasons for considering said community, any move – in incentives presently in place, and certainly all appropriate contact information – particularly a website address if available.

• Prepare a photo collage on 2’X3’ or larger, heavy gauge cardboard or thin plywood. Here the property can really shine! Use 5X7, even 8X10 color photos (Again, taken of Home of the Month contest winners!). Mention any move – in features. Maybe even add a pocket, of some kind, to hold a supply of tri fold brochures. Of course, before going to all that expense, secure MHRetailers permission to put this in a high traffic area at the salescenter. While maybe best to mount this on a wall, using a small easel just inside the salescenter door works well too. Also decide which MHRetailers to do this with; one or all, if interested?

• Occasionally obtain ‘premium gifts’ bearing the property’s name, logo, and some contact information, for distribution to local MHRetailers. Possibilities include: coffee mugs with trigger handle, plastic pencil holders and matching tablet holder (good combination if you own/manage two properties needing homes on vacant sites), paperweights, and a personal favorite: either leather or vinyl covered 8 ½ X 11 tablet holder with inside pockets – and property’s logo embossed on outside or inside front cover. As MHRetailer is demonstrating product, carrying ‘your’ notebook, what will likely be the first landlease community he/she thinks of when a customer indicates they’re ready to buy? The one embossed on the nice notebook, holding some of your business cards and or tri fold brochures on the inside. Best of all; this really works!

• Invite MHRetailers, one at a time, to visit the subject landlease community! Drive them around the property, pointing out all its’ positive features. Take them to lunch; advance your business relationship! And, when needing outside judges to select Home of the Month Contest winners, invite these same MHRetailers to return and do this honor…after using editor of local newspaper and mayor of the town.

• Yes, and there’s even more a conscientious landlease community owner/operator can do to ingratiate (or, in one significant way, alienate) oneself with local housing market retailers. In the first instance, make referrals to MHRetail salescenters whenever possible; clearly know which way the ‘supply and demand’ wind is blowing, relative to whether local practice smiles or frowns upon ‘bird dog fees’ between parties – and specifically who said fees should be paid to when earned. And in the latter instance (alienation), while it probably goes without saying, Know that if the LLCommunity Routinely Markets & Sells New Homes On – site, There Generally Won’t be Much in the Way of Move – ins Coming From Local MHRetailers! This stems from their fear of losing qualified customers to the community, when referred prospective homebuyers visit on – site to select a rental homesite.

INDEPENDENT MHRetailers

There’re approximately 10 percent remaining independent MHRetailers from HUD Code manufactured housing’s last heyday, a too short – lived renascence, occurring roughly between 1994 and 1998 or 2000. At the time, many independent MHRetailers were acquired by mega – manufacturers, in a mad grab for market share and self – preservation. Many or most of the absorbed salescenters are shuttered today; and some of the firms that exercised the ill – advised acquisition strategy are in bankruptcy, or now part of other manufacturers. Many MHRetailers answered the siren song, to become general contractors, and compete for market share with site – built housing developers, believing the ‘bigger box = bigger bucks’ land – and – home mantra was the sure route to financial success. And today, while many of these salescenters too are shuttered, other MHRetailers have adjusted to changing market and financial conditions and survived. A major difference, between now and back then? While every local housing market is different, in a number of ways, there’s really only a modicum of MHRetailers routinely chasing after landlease community placements; in part, because so many properties – particularly those in portfolios, are marketing, selling and self – financing new and resale home transactions on – site; and frankly, many MHRetailers are still enamored with the land – and – home business and or have forgotten how to engage in landlease community infill.

What to do about this near – survival state of affairs? Well, the company stores (i.e. MHRetailers owned and or closely affiliated with one or two of the remaining major HUD Code home manufacturers) will likely survive, given their symbiotic relationship with manufacturers. But what about everyone else?

While there’s been a National Retailers Council (‘NRC’) in place, with the Manufactured Housing Institute (‘MHI’), for nearly as long as the aforementioned NCC, until the NRC became a full – fledged division within the institute, it was unable to join direct dues paying members. While that’s changed, and the council cum division is growing in membership size, albeit slowly; now a new and separate initiative is afoot, proposing a more aggressive stance, representing independent MHRetailers, more so than ‘company stores’. For more about this ‘alliance of smaller HUD code home manufacturers, independent MHRetailers, and the suppliers who serve them’, visit MHIdea.org/What Now. Add to this mix, some cutting edge chattel finance thinking by a third party finance firm, along with specialized seminar offerings teaching attendees how to raise housing finance funds from private investors, how to prepare for impending finance regulatory restraints; and the seeds of a MHIndustry rallying opportunity are present!

FINANCE.

OK, almost everything that precedes this paragraph is for naught, without reliable, affordable, continuing sources of funds for chattel (personal property) finance for new and resale manufactured housing transactions. At this writing, FHA Title I remains a ‘pipe dream’ smoked by GSE’s reluctant to connect with our unique brand of factory – built housing. Just about ‘the only game in town’ is the self – finance reality, a.k.a. ‘captive finance’, engaged in these past ten years by landlease community owners/operators using excess cash flow from their properties, growing – among the 500+/- portfolio ‘players’ alone, from a few million dollars in ‘carried paper ’in year 2009, to more than 3 ½ billion dollars by the end of 2009. *4 And there’s now also the new opportunity, hinted at in the previous paragraph, to learn How To raise investment funds to finance home sales transactions in the MHRetail salescenter and or landlease community business environments.

*****
Next week’s blog posting (#76), will feature ‘A non – FHA Title I Model for Manufactured Home Finance’, along with practical suggestions for national initiatives to Save Our Industry from the Grand C o n s p I r a c y or Near Perfect Storm! A couple salient hints: In part, these suggestions will involve, once and for all, getting a firm handle on the slippery concept of ‘affordable housing’ & ‘housing affordability’, ideally leading to a true and timely Ah Ha! epiphany we should and can parlay as ‘the compelling reason prospective homebuyers should look to HUD Code manufactured housing first’! And, to grow ‘that brand excitement’ it’ll be absolutely necessary to finally have a working secondary market in place wherein present manufactured home owners can effectively market their homes when preparing to buy new! What’s that secondary market to look like? Well, guess you’ll have to read blog posting # 76, or one to follow!

Just in case you don’t yet realize it; those of us who work fulltime, especially those who own manufactured housing – related businesses and income – producing properties, are living in truly exciting and challenging times! There’s nothing ‘fun’ about what we’re going through right now. But unless you’re ready to ‘throw in the towel’, and I – for one, hope you are not, it’s by thinking, sharing, working together via this Official MHIndustry & LLCommunity weekly blog, the monthly Allen Letter professional journal, the Allen CONFIDENTIAL! business newsletter; along with communication media from MHI, emails from MHARR, Dick Moore’s INDUSTRY PERSPECTIVE, and other on and offline avenues, that we’ll be able to work together towards the common goal to Save Our Industry!

Caution! Be aware of new names, and heretofore unknown entities, suggesting their ‘fresh blood’ and claimed expertise, are the answer to manufactured housing’s woes. We’ve all heard that siren song before; but where are those distracting sea nymphs today? Yes, there is indeed, good, new, even valuable information, products and services available to us today; simply, use wisdom when sorting out and evaluating golden opportunities, ability, experience and motivation – from dross, on the part of those offering answers….

Do continue to voice responses to these blog postings, making helpful suggestions, sharing good ideas, and generally keeping me informed, the way you have been doing to date – and we’ll be a long way towards that highly worthwhile, self – preserving end: Save Our Industry! As many of your peers have already done, once and for all, separate yourself from the ‘shoulda , woulda, coulda’ crowd!

End Notes.

1. ‘shoulda, woulda, coulda’? ‘We ‘shoulda’ done something ‘bout HUD Code manufactured housing’s problems before this; and we ‘woulda’, if we’d had united national leadership and employed sufficient resources, so we ‘coulda’ fought cost – adding regulatory encroachment, & design/build affordable, quality, energy efficient, green, non – subsidized, transportable housing for our traditional clientele, versus. competing for market share with expensive site – built housing!

2. Manufactured Housing Association for Regulatory Reform

3. Quoted from blog # 70: ‘Stealth Starbucks & ManuFractured Housing!’ During mid – 2009 “…Starbucks tried to avoid being judged by its’ own label by opening its’ first unbranded coffee shop. The ‘stealth Starbucks’, as the distinct Seattle outlet immediately became known, is decorated with ‘one of a kind’ fixtures and, unlike regular Starbucks shops, customers are invited to bring in their own music for the stereo system, and their own pet social causes for the message board. The only hint of branding is the fine print on the backs of menus. ‘Inspired By Starbucks.’ After spending two decades trying to blast its’ logo onto every conceivable surface, Starbucks was now trying to escape from its’ own brand!” This passage in turn quoted from ‘No Logo (the book) at 10’, in Baffler magazine.

4. Source: 21st annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Landlease Community Portfolio Owners/operators Throughout North America!’ Published in January 2010 issue of new Allen Letter professional journal. Available for $250.00 per copy, or ‘free’ with a $134.95 annual subscription to the newsletter. Telephone MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764 to subscribe.

ManuFractured Housing, circa 2020 or before,

by dint of a Grand C o n s p i r a c y or Near Perfect Storm?

…oft whispered but rarely penned, till now…

OK, here it is! The grand c o n s p i r a c y or, if you prefer, ‘near perfect storm’, to regulatorily and financially ease HUD Code manufactured housing out of existence, out of the factory – built housing milieu altogether! This is not a novel intrigue or surprise economic event for the manufactured housing industry. Nor should said
c o n s p i r a c y, if indeed that’s what it is, be taken lightly because it’s been hinted at before. As’ The Near Perfect Storm Manifesto’ theorized recently; housing shipment – wise, we’re rapidly winding down to ‘zero HUD Code manufactured homes before the end of the present decade’! More on this dismal prediction later.

Disclaimer. This grand c o n s p i r a c y or ‘near perfect storm’ divulgence
was researched and penned using written and verbal communications with numerous and various manufactured housing industry business leaders and successful entrepreneurs. Intentionally, no interviews were conducted on
this timely and sensitive subject, with any elected or salaried leaders of the Manufactured Housing Association for Regulatory Reform (‘MHARR’) or Manufactured Housing Institute (‘MHI’)! GFA

From an historical perspective, manufactured housing’s grand
c o n s p i r a c y has been whispered since the late 1970s, coinciding with implementation of HUD’s infamous national, federally preemptive, performance – based building code circa 1976. Upon entering the manufactured housing business in 1978, it was ‘splained’ to me, that left unchallenged and unchecked, HUD’s design demands would price this affordable housing product right out of existence! Well, that didn’t happen. If anything, manufactured housing industry aficionados managed, to their credit, to make ‘lemonade out of a (regulatory) lemon’, by taking national housing market advantage of the federally preemptive nature of their unique factory – built housing product, to Sell More Homes! One might also view this beneficial switcheroo as the industry’s first inaccurate weather warning of an impending storm.

Next indicator of a grand c o n s p i r a c y, or ‘storm warning’? This from an industry veteran who participated in an early futile attempt to achieve housing equality: “You’re right about the c o n s p i r a c y; we learned it for sure when we lost ‘frame removal’ in the early nineties. Not sure we can stop it (c o n s p i r a c y), unless we’re an economic power to deal with – which we are not. So, probably the ax (sic) will fall, unless we move ourselves first, and become a part of traditionally supplied housing.” NB. The ‘frame removal’ defeat, along with the Hiler Amendment (The industry’s first legislative initiative to modernize the HUD Code) falling to internal political skullduggery, were motivating precursors to drafting and enacting federal legislation: the Manufactured Housing Improvement Act of 2000, a.k.a. ‘MHIA@2000’, designed and intended to give HUD Code manufactured housing a level playing field with traditional, site – built housing. More too on ‘MHIA@2000’, later.

Then there’ve been these perennial questions: Which has served manufactured housing better or worse; the watchdog (Some opine ‘junkyard dog’) tactics of ‘manufacturer only’ focused MHARR & its’ lone executive over several decades; or, repeated and ongoing attempts at regulatory – related consensus – building by MHI, representing all segments of the industry (Referred to, by MHARR, as ‘the aftermarket’) & its’ four different executives during the same period of time? And what overt and covert roles have either or both advocacy bodies played, and or continue to play, relating to grand c o n s p i r a c y maneuvering or stormy weather making? *1

Finally. Manufactured housing shipments, during the period 1978 thru 1998, remained stagnant at about 250,000 homes per year, never again coming close to the 575,940 shipped during pre – HUD Code 1972. And it wasn’t long after HUD Code housing’s mini – renasance in 1998, when 372,843 new homes were shipped, that chattel (personal property) financing all but disappeared, and grand c o n s p i r a c y talk resumed as ominous storm clouds gathered, all the while we worked (reselling) our way through hundreds of thousands of repossessed manufactured homes.

The first time manufactured housing c o n s p i r a c y appeared in print, that I’m aware of, occurred a couple years ago when Tennessee MHRetailer and landlease (nee manufactured home) community owner Dick Moore, in his business newsletter INDUSTRY PERSPECTIVES, floated the alleged connivance on everyone’s mind. And guess what? Besides relief that someone finally said and penned the ‘C’ word, there was near immediate response from one MHIndustry leader (manufacturer), intent on disabusing Dick of any possibility of such a radical notion! And frankly, he might have been successful to that end, if it didn’t turn out his overture was followed by not one, but two additional personal assurances from other executives within the same large firm. Hmm. The c o n s p i r a c y plot appeared to be thickening…

Be that as it may, what are indeed key factors apparently contributing to manufactured housing’s grand c o n s p i r a c y or ‘near perfect storm’ talk today? Not in any priority order, here’re some obvious and obscure indicators:

• Department of Housing & Urban Development (‘HUD’) now headed by a political appointee tapped from the real estate mortgage (Think conventional single and multihousing finance here versus chattel or personal property variety) side of the national housing scene. And HUD continues to stonewall, after ten years, Congress’ intent, in the ‘MHIA @ 2000’, to have a non – career appointee head the Manufactured Housing Consensus Committee (‘MHCC’), not a career bureaucrat! Now, for the first time in its’ history, the MHCC is devoid technical expertise from the aforementioned MHARR or MHI trade bodies! And there’s more that could be said of HUD’s role in this sorry scene….*2

• Trend analysis of the 39.2 percent decline in new home shipments, from 2008 thru 2009, when applied to years remaining until 2020, demonstrates only 215 HUD Code homes will be shipped that year! If so, the manufractured housing industry will be dead! Or, a similar declining trend analysis, among years 2007, 2008 & 2009, demonstrates, by year 2020, we’ll be shipping only 3,000 new homes. At that level, the manufractured housing industry might as well be dead! Get the point?

• There’re three laws ‘on the books’ that aren’t presently functioning as intended. One has to ask ‘Why’? Why no full implementation of MHIA@ 2000? Why no progress on Duty to Serve (private financing)! And why the perennial delaying tactics, effectively neutering FHA Title I, now a.k.a. ‘The $$$ Promise that isn’t & likely never will be!’ Grand c o n s p i r a c y anyone? Or, just another indicator of a ‘near perfect storm’?

• Then there’s the nearly 50 percent national manufactured housing market share; increased national political influence per presidential election of 2008; an effective cornering of remaining chattel (personal property) finance market; and, recent foray into realty mortgage (Think landlease, nee manufactured home, communities!) financing – all by one extended family of firms! The seminal question that begs asking: ‘Is all this Good or Terminal for the HUD Code manufactured housing industry as we have known it till today?’ *3

• Add to this, curious but quiet corporate memberships and past employment relationships, among various national homebuilder, real estate, and manufactured housing advocacy bodies, and one wonders where personal and business loyalty might end, before career legerdemain and or political skullduggery begins…

With all that said, what’re possible or probable consequences of manufactured housing’s grand c o n s p i r a c y or ‘near perfect storm’? Clear and murky at the same time; depending on how this potentially nefarious cabal or severe weather event plays out by year 2020 or before!

• HUD has long given the impression there’re other (public) housing avenues it’d prefer to focus on, than continue being the sole federal regulatory agency overseeing an entire business model. Ask yourself, ‘When was the first (and last) time you saw, heard or read of HUD overtly promoting manufactured housing as this nation’s unique homegrown brand of truly affordable, quality, energy efficient, green, transportable, non – subsidized housing?’ Possible end game here? ‘Ah, sweet relief for HUD!’ – and this aftermath of the Law of Unintended Consequences: ‘HUD – related bureaucrats face unemployment when manufactured housing factories close!’

• Certain homebuilder groups have long been a nemesis to factory – built housing, particularly when it comes to protecting highly paid union carpenters from market incursions by inexpensive industrialized housing and housing components. Balderdash you say? Don’t forget the lost off – frame battle of the early 90s cited earlier. The end game here? ‘Ah, no more ‘affordable’ manufactured housing competition. Let housing costs rise again, again, and again!’

• Realty specialists. Hey, I’m in the real estate business and know firsthand how little love is lost between that business model and affordable housing providers; those who deign to help common folk become homebuyers of inexpensive (up to 50% less cost per square foot than new conventional stick – built housing, not including land cost), attractive, comfortable, energy efficient, often factory – built housing! And since the U.S. Supreme Court recently opened the door to manufactured housing marketing access to local realty board Multilisting Services; well, here’s this end game: ‘Ah, there goes the competition on two fronts!’, when HUD Code manufractured housing disappears by Year 2020!

Any idea how ‘what’s left of the manufractured housing industry’ will look post grand
c o n s p i r a c y or after the ‘near perfect storm’ passes? Easy to envision four or more possibilities:

• Like the automobile industry at the turn of the 20th Century, further consolidation among today’s remaining home manufacturers will segue from several ‘dozen’ to maybe a few; specifically, one very large firm and a dozen regional, privately – owned, solid enterprises. They’ll continue to ‘ship’ (Don’t look for even these survivors to ‘keep score’ by tallying ‘home sales’) say, 40,000+/- HUD Code homes per year post 2020.

• Wholesale switch from HUD Code manufractured homes to modular homes

• Enter some sort of hybrid home; borrowing features from the HUD Code housing product, mating same with characteristics of other types of factory – built housing, as local or national building codes allow or demand. But no more HUD Code manufractured housing market stigma!

• And this, not – so – novel suggestion, by another 30 year industry veteran intent on surviving the grand c o n s p i r a c y or ‘near perfect storm’: “Assume the manufractured housing industry settles into two manufacturing segments, driven by available financing. Primarily, multisection product for land and home installation (conventional realty financing); and, singlesection product for siting in landlease communities, i.e. filling vacant rental homesites and upgrading older homes, using chattel (personal property) financing.” SR. (Lightly edited. GFA) But ‘Ah, there’s that perennial bugaboo: financing by type, availability, and volume.’

Any other positive hopes or thoughts for the future that have potential to Save Our Industry!? Sure. But you’ll have to read next week’s blog to learn what they are….

Well, there you have it. This is how manufactured housing’s grand
c o n s p i r a c y, or, if you prefer, ‘near perfect storm’ is viewed by numerous Free Enterprise businessmen and women from grassroots housing markets across this nation, active in all segments of the manufactured housing industry and landlease community real estate asset class. What can you do to comment on this sad state of affairs; maybe proffer an idea or two to ultimately ‘Save Our Industry!’ (‘SOI’)? We’d like to know! Respond to this blog via email, or phone the MHIndustry HOTLINE: (877) MFD – HSNG or 633-4764 or (317) 346-7156.

End Notes.

1. One industry observer opines: ‘Unfortunately, MHARR manufacturers care more about combating bureaucratic BS than saving the industry; (thus preventing) an entire industry (from) addressing its’ strategic future, because they cannot get past their anti – HUD/bureaucrat resentment.’
‘
2. An industry observer, describing the department, suggests: Under performing bureaucrats are shipped to the MH office, the equivalent of HUD Siberia. If you were a power hungry bureaucrat in the department, would you want to be assigned to regulating house trailers? That’s how they see it. They do not believe in the real potential of manufactured housing’ (As quality, affordable, green, energy efficient, non – subsidized, transportable shelter alternative for American home buying citizens!).

3. A contrarian view or simple fact? ‘This firm’s execs go to work everyday, driven to beat the competition, and they are winning. This (firm) understands the retail customer, (while most) manufacturers do not. Manufacturers are competent at counting nails per home, not satisfaction per home.’

Important Reminder. This weekly Official MHIndustry & LLCommunity blog posting just tells only part of what you need to know to achieve a level of success during these difficult economic and business times. If not already a paid subscriber to the new Allen Letter professional journal, access the contacts listed in the previous paragraph today! With your $134.95 annual subscription, you’ll receive a Free copy of the 21st ALLEN REPORT (a.k.a. ‘Who’s Who Among Landlease Community Portfolio Owners/operators Throughout North America!’) – which alone sells for $250.00. March 2010 issue of the Allen Letter professional journal will include the ‘12th annual National Registry of Lenders and Brokers Specializing in the Origination of Acquisition & Refinance Landlease Community Realty Mortgages!’ April issue will include the ‘11th annual ‘Who Ya Gonna Call in 2010?’ directory of several dozen freelance consultants working nationwide in manufactured housing and the landlease community real estate asset class. No other manufactured housing industry trade publication provides more actionable, accurate, and timely business information, by writers active in the industry and LLCommunity asset class, than the new Allen Letter professional journal!

Postscript. If you plan to be in Massachusetts on March 25th, or Springfield, IL., on April 29th, join me at a no – host networking dinner, along with a dozen or more individuals registered to participate in the Manufactured Housing Manager professional property management training and certification class the next day. Not only will there be superb interpersonal networking opportunities at both evening events, but an Open Discussion of manufactured housing’s grand c o n s p i r a c y or ‘near perfect storm’! Don’t miss this firsthand opportunity to make your views and ideas known about this important period of our industry and asset class history! For details, phone (317) 346-7156. And, if you plan to attend the networking dinner, consider staying over and participating in the MHM class the next day? Only costs $250.00 per candidate. FYI! Additional no – host networking & Open Discussion dinner meetings are being planned in Florida, Indiana, Arizona & elsewhere. Read this weekly blog for details and specific locations, or call…

*****

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

ETAOIN SHRDLU*1

A Potpourri of General, MHIndustry & LLCommunity Signs, Jokes, USPs, Reflections about Data Overload & Excessive Social Networking, and the Presaging of a C o n s p i r a c y Theory Many Believe but None Articulate

A (billboard) Sign of the Times’, observed in downtown San Francisco, CA., during the Urban Land Institute’s (‘ULI’) Manufactured Housing Communities Council (‘MHCC’) ‘Think Tank’ meeting in San Francisco this past Fall: ‘I was closer to retirement at 40 than I am at 50!’ How many of us can identify with that?

Joke of the Times. Is your local banker pining for ‘the good old days of 3 – 6- 3’? You know; when he borrowed money at 3%, loaned it out at 6%, and was on the golf course by 3PM.

What’s your business USP? That’s the well known abbreviation, in business marketing circles, for Unique Selling Point, Proposition, Perspective, or Promise! Synonyms? Sex appeal, or ‘Selling the sizzle and not the steak!’. For dentists? ‘Gentle & painless!’ For Starbucks coffee? ‘Handcrafted beverages!’ For churches? ‘Seeker sensitive!’ For Certified Financial Planners or CFPs? ‘Wealth preservation!’ For Don’s Gun Shop? ‘Hi, I’m Don, and I just love to sell guns!’ For multifamily rental properties? ‘Superb curb appeal!’ For manufactured housing? ‘Half the per square foot cost to build! And your landlease (nee manufactured home) community? Fill in the blank: __________

“I see (Twitter) as a kind of time suck I don’t need anymore of. Just too much “I got the most awesome new pair of sweatpants.”’ per Brian Williams opining at time.com. And this from David Hornik, upon observing groups of tech veterans and computer gurus carrying ‘good old – fashioned notebooks’ into meetings, forsaking the digital world for analog. He asks, ‘Why?’ Their answer? Data overload from emails, social networks, corporate wikis and portals, and knowledge management systems! Advantages of notebooks? Faster than laptops; unlimited storage; direct sunlight not a problem; only power management issue is when a pen runs out of ink; no requirement for connectivity; not susceptible to viruses; and highly portable. Hornik’s conclusion? “I’m a firm believer in a laptop in every room and a smart phone in every pocket. But, when it comes to keeping track of priority information, it appears notebooks are becoming the tool of choice for technology’s elite.” (USAirwaysmag.com) Next? Maybe resurgence of The Lead Pencil Club of years past?

Forewarned is forearmed. Be aware of niche investors and ezines, as well as freelance writers and teachers sans bona fide ‘cred’ in the MHBusiness! Some examples. ‘…we lease the park (LLCommunity) from you based on current economics, and then buy your park when the market returns at a price more in line with what you feel it’s worth. In the meantime, we buy and bring in homes to fill vacant lots (rental homesites) and address any other management issues.’ Hmm. Or, how ‘bout self – proclaimed experts, with shaky credentials, telling us online how to operate our businesses? And, for that matter, writers and teachers who ‘no longer practice what they preach’ (i.e. No longer own or actively manage LLCommunities, but continue to ‘tell and teach’ us how to do so.) Here’s how to separate the wheat from the chaff. Ask, how long they’ve been in the MHBusiness and in what capacities, and if they still are; then, request non – partner references along with contact information. And here’s the truth – teller, if claiming regional or national presence in the MHIndustry and or LLCommunity asset class: ‘Which state and national trade and advocacy organizations do you actively support with dues membership, and participate in their industry events as a ‘presenter’?’ For example: MHI & the NCC, ULI & the MHCC, NSAC caucus, annual INRs, even the MHCongress.

Up until now, many have talked about it, but no one I’m aware of, has written about it. What? The grand c o n s p i r a c y to regulatorily (Yep, that’s poetic license.) ease ‘HUD Code manufactured housing’ out of factory – built housing altogether, in favor of – well, you’ll just have to wait to read about that in next weeks blog! All I’ll tell you now, is what’s motivated me to bring this perennial c o n s p i r a c y theory cum reality (?) ‘out of the closet’ into broad daylight! Remember ‘The Perfect Storm Manifesto’ premise blog posting # 61 during November 2009? “Imagine No New HUD Code Homes Manufactured in Year 2020!” Well, that premise spawned strong reaction during the intervening three months; vast majority of which, via email, letters and personal as well as telephone conversations, has agreed with that sad inevitability, even some questioning whether the MH demise date might not be closer to 2015 – if we don’t get access to reliable, copious amounts of chattel (personal property) financing soon! Well, upon returning from MHI’s disappointing (For me, anyway.) Winter meeting in Savannah, GA., last week, a colleague demonstrated how taking 2009 year end total of 49,789 HUD Code homes shipped, then applying the negative performance trend of 2008 thru 2009, on out to year 2020, shows a total of only 215 new HUD Code homes to be shipped nationwide that year.*2 Now that’s motivation to talk about what else, besides lack of chattel financing, might be involved in HUD Code manufactured housing’s continuing death spiral. So, read more about the c o n s p i r a c y in next week’s blog….

In the meantime; have you read the 21st annual ALLEN REPORT yet? It’s available only from PMN Publishing, for $250.00 per copy; or ‘free’, when you subscribe to the new Allen Letter professional journal! That’s right, this ‘Who’s Who Among LLCommunity Portfolio Owners/operators Throughout North America!’ is available nowhere else. (317) 346-7156. And the 12th annual National Registry of Realty Lenders Specializing in LLCommunity Acquisition Mortgages & Refinance will be included as a lagniappe in the March issue of the new Allen Letter professional journal. Order it today!

*****
End Notes.

1. ETAOIN SHRDLU. ‘The twelve letters most often appearing in printed text, arranged in order of decreasing frequency. E, the commonest, appears an average of once every five letters.’ From The Dictionary of Wordplay by Dave Morice.

2. Using negative trend numbers between years 2007 & 2008 & 2009 & 2010, the year 2020 nationwide HUD Code home shipment total is 3,000; way down, again, from the 49,789 shipped during all of year 2009.

*****

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