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

April 29, 2017

FINAL WARNING! To land lease community owners!

Filed under: Uncategorized — George Allen @ 5:33 am

Blog # 444; Copyright @ 30 April 2017; community-investor.com

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

This blog posting is the sole national advocate voice, official ombudsman & historian, research report, & online communication media for North American LLCommunities!

To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance, a.k.a. COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

COBA7 Motto: ‘U Support US & WE Serve U! Goal of its’ print/online media = to
‘Not only inform & opine, but transform & improve MHBusiness model performance!’
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Final Warning!

Land Lease Community Owners Losing Autonomy
(i.e. ‘self-government, independence’) as Businessmen & Women!

Here again is COBA7’s explicit Goal for our industry and realty asset class; to,

‘Not only inform & opine, but transform & improve the manufactured housing business’ model performance in general, & that of land lease communities in particular!’

To this end, and since no one else except MHARR is sounding the ‘losing autonomy’ alarm; here’s our FINAL WARNING for you! But first, some background history…

You likely already know what happened at the turn of this century. As an industry, we (deservedly) lost our ‘easy access to chattel capital’ for new HUD-Code homes sold and sited within (then) manufactured home communities. To date, even ‘reasonable access to chattel capital’ continues to elude us. Shortly after the dawn of this century, we suffered the S.A.F.E. Act, when our national advocate(s) did not see this first wave of state, then federal financing regulations, coming, to negatively impact our traditional business model:

Supplying truly affordable, quality housing to citizens least capable of buying housing of almost any sort!

S.A.F.E. was followed by onerous $ regs from the Consumer Finance Protection Bureau (‘CFPB’). And such, the first step in the ‘lost autonomy’ die was cast.

Well, what you probably don’t realize, is this: Thanks to now near universal enforcement of installation regs dating back to year 2007, but lying dormant until present administrator of HUD’s manufactured housing program came aboard, moving them – along with Dispute Resolution, forward – we’re faced with forced levies of $5,000+/- per retrofitted rental homesite, when installing a new HUD-Code home on them!

What will this mean to your business plan, your business model? Hmm. Let’s say you’re going to site two dozen new HUD-Code homes during the balance of 2017. Well, that could require a minimum outlay of $120,000.00 in (unexpected & unbudgeted) capital expenditures for you, and ultimately, your homebuyer/site lessee customers! Are you ready for this expensive addition to your business model? Are your homebuyer/site lessee customers willing and able to pay a minimum of $5,000.00 more for their new home?

Yes, this present and emerging manufactured housing business environment is every bit that bad for land lease communities too; i.e. again, 1) lack of reasonable access to chattel capital to seller-finance on-site housing transactions; 2) increase in onerous financial regulations at state and federal levels; and now, 3) unnecessary replacement of perfectly good concrete runners and piers with expensive new ‘below the frost line’ concrete foundations for new HUD-Code housing installations in LLCommunities.

Some suggest there’s a fourth (4) ‘losing autonomy’ factor afoot – a conspiracy no less, to force all regs, along with major business decisions, re policy & procedures, back ‘inside the Washington beltway’, to benefit regulators and largest of home manufacturers and property portfolios. But that’s an expose’ for a subsequent blog posting at this website.

I fear less for the largest property portfolio firms, given their significant inherent economies of scale, resulting in super low operating expense ratios and mega profits. It’s the smaller portfolio folk, and owners of small to mid-sized land lease communities, I fear for most today. How so? Not only do they, the smaller owners/operators, now incur – for the first time in their careers, risks involved in buying and servicing new HUD-Code homes on-site (i.e. Since there are 10,000+/- fewer independent – street – MHRetailers filling vacant rental homesites today, than in year 2000); and they must oft supply seller-financing under the oversight and pressure of aforesaid onerous state and federal financial regulations. And now, going forward, will be wasting valuable, scarce capital upgrading rental homesites, that frankly, don’t need upgrading (i.e. Properly graded and drained sites, along with well-installed perimeter skirting, prohibits freezing under homes!).

A pre-WARNING question.! Just WHO, today, is representing land lease community owners on the national level, to 1) regain reasonable access to chattel capital; 2) reduce the burden of financial regulation on the only type affordable housing serving low to middle income citizens; and, 3) demand a roll back of the wholly-unneeded foundation retrofit requirement, and/or obtaining blanket approval of Frost Free Foundation methodology, when so-approved by HUD-Code manufacturers? Answers? MHARR vigorously holds forth on all three fronts; MHI touts # 1 & 2, but is generally and inexplicably silent on # 3; and, COBA7 is not yet in position (i.e. domiciled in Washington, DC.) to wield much influence or pressure to these ends – except in commentaries like this.

There is a possible dark horse in this race back to PROSPERITY (i.e. measured in new HUD-Code housing shipments) or frankly, OBLIVION (i.e. given a serious reduction in the number of new housing shipments, due to reasons # 1, 2,& 3 cited above). And that ‘horse’ could well be HUD, the federal agency tasked with manufactured housing oversight, if, for the first time since 1976, the department overtly markets and effectively promots manufactured housing as this nation’s most affordable type shelter – to citizens unable to afford $250,000.00 site-built behemoth homes.

Is anyone at HUD listening? Does anyone at HUD care? If so, NOW is the time to HELP! And begin, by backing off the apparent ‘power grab’ to end state control of all new home installations, then address the matters described in previous paragraphs.

The consequential WARNING! If not one, but all three ‘business model changers’ are not sunset or ameliorated in the near future, expect to see fewer new HUD-Code homes shipped into land lease communities, hence fewer new HUD-Code home shipments! After all, we shipped only 81,136 new homes in 2016; up yes, from 48,789 during the industry’s nadir year 2009 – but way way below that short-lived renascence of 1998, when 372,843 new HUD-Code homes rolled down the highway! And don’t forget, there’s an estimated 250,000 vacant rental homesites to fill throughout the U.S. Neither manufactured housing, or its’ land lease communities subset, can afford yet another body blow, like the three or more we’ve suffered since the turn of this century. And frankly, HUD’s new and historic public and ongoing endorsement of its’ regulated housing type, as preferred affordable housing, would go a long long way facilitating manufactured housing’s eventual recovery.

SO, who will stand in behalf of manufactured housing and land lease communities, to protect this most affordable housing type available today for the U.S. citizenry? Manufactured housing political interests are well represented by two national advocates, even in their disunity. But land lease communities have little to no national representation. (Not everyone will agree with the latter statement, but it is true). The leadership vacuum is upon us! Who will lead to restore our autonomy as businessmen and women in the manufactured housing industry and throughout the land lease community real estate asset class?

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We welcome your response to this blog posting, and ideas for restoring autonomy, via Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or gfa7156@aol.com

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George Allen, CPM & MHM c/o COBA7, Box # 47024, Indianapolis, IN. 46247

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